western energy imbalance market and regional energy activities

ISO PUBLICISO PUBLIC

Western Energy Imbalance Market and Regional Energy Activities

Valerie Fong and John PrescottWestern Energy Imbalance Market Governing BodyMay 20, 2019

ISO PUBLIC

California ISO – Western EIM Market Operator

• Uses advanced technology to balance supply and demand every four seconds

• Operates markets for wholesale electricity and reserves– Day-ahead, Fifteen and Five

minute markets• Manages new power plant

interconnections• Plans grid expansions• Operates the real-time EIM that

dispatches low cost energy across eight states

ISO PUBLIC

What is the Western Energy Imbalance Market?

• The Western EIM:– Is a real-time 5 and 15 minute energy only wholesale

power trading market– Utilizes advanced market systems to automatically

find the lowest cost energy to serve real-time customer demand across participating Balancing Authorities

– Balances load and generation in real-time– Enables lower cost real time energy transactions

between buyers and sellers in eight western states

ISO PUBLIC

Western EIM provides an easily-scalable extension of real-time market to the broader region

• Automated dispatch minimizes cost, facilitates renewables, resolves imbalance & avoids congestion

• Greater operational visibility which enhances reliability

• Low-cost, low risk, no exit fees, voluntary

• Preserves Balancing Authority Area autonomy, including compliance, balancing, and reserve obligations

ISO PUBLIC

Western EIM currently has 9 entities participating

• Seven western entities are scheduled to participate in the Western EIM

–BANC/SMUD, 2019–LADWP, SRP & SCL, 2020–PNM, NWE & TID, 2021–Avista & Tucson, 2022

• With the addition of NorthWestern Energy, the market will span across ten western states by 2021

ISO PUBLIC

The Western EIM utilizes robust existing transmission capacity

ISO PUBLIC

Most demand is met in advance of the market through utility-owned or bilaterally procured resources

% T

otal

dem

and

Year-ahead Month-ahead Days-ahead ISO real-time market

Utility-owned energy

Bilaterally procured energy

EIM market transactions

ISO PUBLIC

Why should we care about the EIM?

• The west is rich with renewables• When the sun shines, there is oversupply

– Supply is higher than demand– Occurs daily and seasonally

• Two solutions:– Curtail generation– Find a market for the excess generation

• EIM is a market solution allowing excess generation to be sold over an expansive geography

• EIM keeps clean renewable resources generating• Participation is voluntary for resources in the EIM

ISO PUBLIC

Energy Imbalance Market helps avoid curtailment

2016 2017 2018 2019

ISO PUBLIC

How are Greenhouse Gases handled in the EIM? (1 of 2)

• California rules for GHG compliance:– Generation inside CA has a compliance obligation– Generation outside CA has a compliance obligation

when serving California load– Generation outside CA does not have a compliance

obligation when serving non-California load• EIM participating resources submit a separate GHG bid

MW quantity and price which expresses willingness to support EIM transfer to ISO

ISO PUBLIC

How are Greenhouse Gases handled in the EIM?(2 of 2)

• When energy is transferred into CA, secondary dispatch outside of CA may occur– Other resources backfill to serve external demand– Emissions associated with backfilling may or may not

result in higher emissions• Adopted solution:

– Maximum attribution quantity = Top of Energy Bid Curve – Base Schedule

– Base schedule is amount of resource planned to serve load outside of ISO

ISO PUBLIC

Gross economic benefits since start of EIM have reached $650.26M

Slide 12

ISO PUBLIC

EIM Participation and Governance Structure

Energy Imbalance Market Participants

Body of State Regulators

Regional Issues Forum

EIM Governing BodyCAISO

Board of Directors

ISO Stakeholder

Process

ISO PUBLIC

Stakeholder process encourages robust participation

• Several ongoing initiatives in the policy and plan development stage fall within the EIM Governing Body’s decisional authority

• Additional initiatives planned for 2019 will fall under the EIM Governing Body’s primary and advisory decisional authority

Slide 14

ISO PUBLIC

Local Market Power Mitigation Enhancements

• Real-time market power mitigation process enhancements

• New default energy bid for use-limited resources with storage capability– This would apply to hydroelectric resources with

reservoirs

• Ability to incorporate changes in real-time costs into default energy bids

ISO PUBLIC

Day-ahead market enhancements address net load curve and uncertainty previously left to real-time market

Slide 16

• Flexible ramping product will address uncertainty that materializes between day-ahead and real-time markets

ISO PUBLIC

Extending DAM to EIM Entities

• Key regional benefits:– Allows EIM participants to take advantage of day-ahead

market enhancements– Day-ahead unit commitment and scheduling across larger

footprint improves market efficiency and – More effectively integrates renewables

• Key principles:– Each balancing authority retains reliability responsibilities– States maintain control over integrated resource planning

• Resource adequacy procurement, transmission planning and investment decisions remain with each balancing authority or local regulatory authority

ISO PUBLIC

EIM Governance Review

• Phase 1 – Primary authority of EIM Governing Body expanded to include changes to generally applicable rules of real-time market when the initiative’s primary driver is EIM

• Phase 2 – Establish a Governance Review Committee to review broader governance structure

• Role of the EIM Governing Body – E2, Advisory Authority; shared with ISO Board of Governors

Slide 18

GRC commences

work

Initial discussions

with EIM Governing Body

and Board

EIM Governing Body initiates

charter-mandated

review

Post GRC proposal,

stakeholder comments,revisions

Decision by EIM

Governing Body and

Board

Sector nominations, appointment of members

ISO PUBLIC

Updates on Western EIM

Slide 19

• Energy Imbalance Market– More than 2/3 of WECC load will participate by 2022

• EIM Governance Review– Draft Charter and Straw Proposal for formation of a

Governance Review Committee posted April 1st

– Stakeholder comments submitted April 29th

• Extended Day Ahead Market– Feasibility assessment currently underway– Anticipated implementation date in 2022

ISO PUBLIC

Resources

• EIM Computer-based training at: https://www.westerneim.com/Pages/Resources.aspx

• EIM Quarterly benefits reports at: https://www.westerneim.com/Pages/About/QuarterlyBenefits.aspx

https://www.westerneim.com/Pages/Resources.aspx

https://www.westerneim.com/Pages/About/QuarterlyBenefits.aspx

western energy imbalance market and regional energy activities

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