Yes, new renewable energy generation and new transmission are needed in order to grow clean energy’s role in our lives. But how energy markets and distribution are organized is of vital importance, as well, and in the U.S. West some grid operators are promising that a new structure will make it easier to boost clean energy penetration while also reducing costs.
The new entity under development is called an energy imbalance market, which would allow different balancing authorities – the companies or organizations responsible for keeping energy supply and demand in sync in a defined area – to share generation resources and do so nearly in real-time. This could be of particular benefit in making sure variable renewables like wind and solar can find a place on the grid, and do so at the lowest possible cost.
“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,” Greg Abel, chief executive of Portland-based PacifiCorp, said in a statement [PDF].
PacificCorp run utilities and controls two balancing authorizes in parts of six Western states – in far Northern California, Oregon, Washingon, Idaho, Utah and Wyoming – is one half of a memorandum of understanding to develop the EIM. The other is the California Independent System Operator, the balancing authority for much of California.
“This is a vital opportunity for us and for the larger western grid as we look for ways to efficiently and more economically dispatch resources, optimize systems and integrate renewable power to the benefit of all customers,” the ISO’s Steve Berberich said in a statement.
As Allison Clement noted on the NRDC Switchboard blog, the move to develop this EIM “represents landmark progress toward addressing a significant issue identified in last week’s Bipartisan Policy Center Grid Initiative Report … that the lack of coordination between balancing authorities in the West is making the cost of integrating renewable resources onto the grid unnecessarily expensive.”
Clement pointed out that a “Southwest Power Pool, which operates an EIM for multiple balancing authorities within its footprint, has found approximately $100 million in annual benefits over several years.”
The West is uniquely in need of better coordination because it has so many more balancing authorities compared to other regions – nearly 40, according to the California ISO. The EIM is being developed with Cal ISO and PacifiCorp to start, but other balancing authorities are being encouraged to join.
A one-page PDF from the Western Governors’ Association provides some good background on EIM development in the West.