ORIGINAL REPORTING: The Differences Between Energy Markets

Want to know how to pick an energy market? Watch the Mountain West power providers; Xcel Colorado just joined California’s imbalance market, SPP will offer imbalance services, and researchers have proposed a Colorado-centric system, but what do power providers want?

Herman K. Trabish, Jan. 4, 2021 (Utility Dive)

Editor’s note: Since this story ran, both CAISO and SPP have accelerated their efforts and added participants.

In the race between system operators to capture power providers in the rich Mountain West energy market from New Mexico to Idaho, the California Independent System Operator (CAISO) took the lead in 2020, but two competitors are at its heels.

CAISO pulled ahead of the Southwest Power Pool (SPP) by adding Xcel Energy's Colorado subsidiary to its Western real-time balancing market and filing its initial proposal for expanding to day-ahead trading during the summer. But SPP recently won approval from federal regulators for a Western real-time market to expand its regional system. And some Colorado power providers want their own market.

click to enlarge

A January Brattle Group study showing "greater potential to lower production costs" for Xcel in CAISO's energy imbalance market (EIM) than in SPP's proposed energy imbalance service (EIS) was decisive in its choice of CAISO, Xcel Energy - Colorado President Alice Jackson said. But CAISO's day-ahead market is undefined, SPP's WEIS is not yet fully defined, and "a single market solution for Colorado would be preferable," she acknowledged.

Economic pressures and policy initiatives driving traditional generation closures and variable renewables growth make an imbalance market for the West's 39 balancing areas necessary, power providers and stakeholders said. But SPP and CAISO offerings are just emerging, and some in Colorado say a single state marketplace for Colorado power providers would be wiser until other options are defined with more certainty.

click to enlarge

President-elect Biden is committed to meeting climate challenges and national policy is building from the states toward clean energy and zero emissions targets, Western Grid Group Managing Director Amanda Ormond said. "To meet those goals, utilities need to be part of . The only bad option is not choosing one."

With major utilities in the Southeast and the Mountain West now moving to seize the economic and reliability opportunities that power markets offer, the decision by Mountain West policymakers, power providers and stakeholders on which path to take could be instructive about what market structures most effectively offer those opportunities… click here for more

click to enlarge

Tweet