California’s subhourly wholesale electricity market opens to systems outside its footprint

On October 1, the grid operator for most of California will begin simulating the balancing of subhourly electricity supply and demand for (CAISO) to meet subhourly electricity imbalances, PacifiCorp anticipates enhanced reliability and cost savings, particularly in the face of higher levels of renewable energy generation in the West.

This marks the first time that CAISO will balance electricity supply and demand in their portions of the western North American grid and coordinate their operations with neighboring balancing authorities. Energy transfers between balancing authorities (i.e., interchange) are primarily done hourly, although earlier this year CAISO switched from hourly to 15-minute interchange scheduling.

CAISO’s energy imbalance market is used to procure electricity to cover unscheduled real-time mismatches between supply and demand. Because electricity demand is the aggregated demand of all electricity users on the system, there will naturally be at any given time. Supply can fluctuate because of unplanned generator and transmission line outages and variability in renewable energy generation. Fluctuations in renewable energy generation, which can occur suddenly and frequently within an hour, are difficult for western grid operators to manage because of the limited pool of generation resources under their control and the relatively infrequent dispatch of generators on an hourly basis. These fluctuations require western grid operators to maintain higher levels of extra power reserves to cover unexpected changes in supply and demand and ultimately lead to higher power prices.

While resources in the West will automatically respond to electricity imbalances in real-time, there is no commercial structure, such as a market, in most parts of the region that compensates for and optimizes this supply response. The , which includes 15-minute generation scheduling and 5-minute dispatch, provides PacifiCorp with optimized and controlled subhourly balancing and a way for supply resources to be compensated for their adjustments.

PacifiCorp from the market’s usage of lowest-cost generators dispatched more frequently and the market’s ability to draw from the much larger pool of generation resources available across the CAISO footprint.

Further cost savings may be achieved from the ability to absorb the output of renewable resources over a wider geographic area. For example, excess can be used to meet demand in PacifiCorp’s territories and vice versa. And as more renewable energy resources come online in the future, the pooling of geographically diverse renewable resources should help smooth out the variability in overall renewable generation.

PacifiCorp will retain all of its normal grid reliability and transmission service responsibilities after joining the imbalance market. CAISO will not assume any grid operator duties for PacifiCorp’s service areas apart from the subhourly scheduling and dispatch of PacifiCorp’s EIM-participating generators.

EIM-related power transfers between CAISO and the PacifiCorp territories will initially use transmission capacity made available to the EIM by PacifiCorp and capacity currently under CAISO’s operational control. For EIM-related power transfers between their footprints, CAISO and PacifiCorp plan to mutually waive normal transmission import/export fees.

(previously MidAmerican Energy Holdings). Other western balancing authorities are considering joining the EIM but are waiting to review PacifiCorp’s experience.

Principal contributors: April Lee, Bill Booth