PacifiCorp and the California Independent System Operator (CAISO) have released a memorandum of understanding that commits the two largest western U.S. grid operators to work toward creating a real-time energy imbalance market (EIM) by October 2014. Authorization to proceed with negotiating a formal agreement between the companies will be considered by CAISO's board of governors during its general meeting in March.
If the agreement is implemented, PacifiCorp, which controls two balancing authorities primarily covering portions of six states, including part of northern California, would participate in a co-optimized real-time energy market facilitated by CAISO. However, CAISO notes that the joint agreement applies only to the EIM service; PacifiCorp is not joining CAISO and will maintain control of its assets and responsibilities for serving its customers.
‘Increased coordination of energy systems in the West is critical if we are to meet important challenges, such as ensuring reliability, keeping costs down for customers and effectively integrating renewable resources,’ says PacifiCorp Chairman and CEO Greg Abel. ‘We're hopeful this agreement between PacifiCorp and the ISO signals a significant step toward broader coordination across the West.’
According to CAISO, participants in the EIM voluntarily take advantage of generation resources across the entire EIM region, with the added benefit of more frequent dispatching in real time to optimize available energy supplies with actual power demand. Without an EIM, only generation assets within each balancing authority can be used to cover these short-term gaps.
Dramatic increases in the amount of wind and solar power in recent years require grid operators to hold more flexible generation in reserve to account for the variability of renewable resources, which are dependent on weather conditions. CAISO says this announcement marks a step forward in the West to more ably manage current and future energy challenges.
The announcement has earned praise among stakeholders in the renewable energy industry. The American Wind Energy Association (AWEA), for example, says the move will save consumers money and help facilitate renewable energy growth throughout the western U.S. AWEA also notes that the EIM will use computer technology to exchange electricity at five-minute intervals, instead of by telephone every hour, as was formerly the case.
‘We hope other utilities across the West will join this proven solution for reducing electric bills and allowing more clean energy onto the power grid,’ comments Rob Gramlich, AWEA's interim CEO.
The PacifiCorp/ISO agreement initiates a public input process, as well as further analysis and negotiations between the two parties before full implementation of the expanded EIM