Western Electricity from “Cali phobia” to Cooperation

By John Addison

John Addison is the author of two books - Save Gas, Save the Planet that details the future of transportation and Revenue Rocket about technology partner strategy. CNET, Clean Fleet Report, and Meeting of the Minds have published over 300 of his articles. Prior to being a writer and speaker, he was in partner and sales management for technology companies such as Sun Microsystems. Follow John on Twitter @soaringcities.

The 80-foot wide display showed California renewables at 41 percent of total generation as I watched for 20 minutes during a warm September morning. I was at the nerve center of California’s grid – CAISO (California Independent Systems Operator). CAISO is a wholesale market, a transmission planner, a legacy of monopoly fossil-fuel utilities, a future of renewable energy, a promise of networked microgrids, a non-profit, a billion dollar exchange, and a big grizzly that makes neighbors nervous. View today’s renewable and total generation at CAISO.

By 2020, states like California and Arizona will have so much solar generation that they could export the electricity to other states for hours during the day. At other times, Colorado and Oregon will have excess wind energy that they could sell to neighbors. When the going gets tough, Washington and Idaho have hydropower to export. Excess renewables at certain times is already a reality; by 2020 it will be a serious challenge.

A regional ISO makes so much sense that state energy czars are willing to let go of some of their power and do the right thing. A western regional ISO is supported by the Federal Energy Regulatory Commission and by a number of environmental groups like NRDC. But the idea makes politicians nervous. California’s last attempt at an energy market was deeply flawed, then gamed by corporations like Enron, and finally cost Governor Davis his job. Voters replace him with “Gubernator” Arnold Schwarzenegger.

A regional ISO could include many of the current 14 U.S. states in the Western Electricity Coordinating Council (WECC), but politics are likely to keep some out. States that may become part of the ISO include California, Oregon, Washington, Nevada, Arizona, New Mexico, Colorado, Utah, Idaho, Montana, and Wyoming. The Canadian provinces of British Columbia and Alberta are interested and are current members of WECC. Mexico, to achieve its renewable portfolio goal of 35 percent by 2024, is interested in Baja Norte joining the U.S. ISO.

Sharing makes sense. Southern states need more energy in hot summers to stay cool; northern states need more energy in the winter to stay warm. The availability of wind and solar is more constant and predictable over a broad geography.

High Stakes for the West

A regional ISO would help California, Colorado, and Oregon will reach their mandates of 50 percent renewables. Thanks to hydropower, Washington and Idaho are already over 50 percent. Wyoming, Montana, Utah, Colorado and New Mexico all would become less dependent on coal, reducing health damage and greenhouse gas emissions.

Yet, western states are different politically. Some are red; some blue. Some western states have specific carbon emission reduction goals. Others oppose them. Some are suing to stop the EPA’s Clean Power Plan. Wyoming is the nation’s leading miner of coal, and generates 88 percent of its electricity from coal. Coal is a major source of electricity for Montana, Utah and Colorado. These states have no intention of letting California, who has no coal power plants, tell them to use less coal.

California generates more electricity than any other western state. A regional ISO makes economic sense, but other western states are leery of giving California an outsized say in their energy future – “Cali phobia.”

California, Arizona, Nevada and Colorado have a long history of fighting over water, especially from the Colorado River. Yet, water shortage may bring states together around energy. Second only to agriculture, the power industry is the biggest user of water, especially in the cooling of coal, nuclear, and natural gas power plants. As old fossil-fuel plants are replaced with wind and solar, precious water is freed for homes, workplaces, and food.

Regional Exchange and Supergrid

Western states already import and export energy to each other. On many days, California imports over 25 percent of its energy from neighboring states. In the future, look for more and smart importing and exporting, whether or not a single regional ISO is formalized.

Started in 2014, an Energy Imbalance Market (EIM) uses software and data to automatically find the lowest-cost energy to serve real-time consumer demand. Participating western utilities in several states benefit with reduce carbon emissions when the EIM facilitates the efficient sharing of renewables.

Because EIM puts a price on carbon emissions, the software selecting the least expensive available energy adds solar and wind ahead of coal. Since implementing EIM, California’s import of coal power has dropped to less than one percent of generated electricity. The market works.

The EIM board members represent major utilities, generators, regulators and an environmental group: Arizona Public Service, Xcel Energy, Braun Blaising, PacifiCorp, PG&E, Montana Public Service, Iberdrola Renewables, Puget Sound Energy, Calpine, NV Energy, PUC of Nevada, CEC, and NRDC.

Flexible Supply and Demand

In the western region, there are over one thousand generation facilities, which need to be dispatched or curtailed to keep everything in balance. There are large natural gas, coal and nuclear power plants owned by utilities like SDG&E, NV Energy and PacifiCorp. In the world of distributed generation there are facilities owned by agricultural districts, universities, major corporations, independents and aggregators. The western states would benefit from a single organization keeping it all in balance.

A few years ago, wind and solar were seen as intermittent and unpredictable sources of energy. With the advances of big data, software, smart grid and storage, renewables are now seen as a variable load, which can be managed.

Similarly, smart buildings and intelligent homes can now respond to price signals to shift operations of everything from dish washing to car charging, thus making demand flexible. PJM, a regional ISO for Mid-Atlantic states is effective with demand response (DR). For example, Washington Real Estate Investment Trust has 21 buildings in Maryland, Virginia, and Washington DC enrolled in a program where they are paid to curtail electricity demand a few hours daily each summer. Using EnerNOC software, buildings are cooled, clothes washed, and ice made off-peak. Although some western utilities use DR, demand response could be greatly expanded with a regional ISO.

PJM may lead in DR, but CAISO leads in intelligent storage management. Hotel chain Extended Stay uses large lithium batteries and Stem software and big data to reduce energy bills at 68 of its California hotel sites. The system is totally automated, with energy stored during lowest cost night hours and used at peak. Stem is actively participating in the CAISO day-ahead and real-time markets by aggregating the excess capacities of several customer-sited systems. Acting as a demand response provider, Stem sets its price target and then its predictive software automatically accepts market bids and dispatches available power to the grid.

Southern California Edison (SCE), serving 14 million people, is meeting a growing demand for electricity even as it shuts down two large nuclear power plants and 30 small natural gas peakers. SCE is deploying multiple forms of large-scale electricity storage. Advanced storage provider AES is installing 100 MW of large-scale lithium battery. Stem, using big data and second-by-second-analytics, is managing 85 MW of distributed, behind the meter, lithium battery storage. Advanced Microgrid Solutions will install 50 MW. Ice Energy Holdings will install 25.6 MW of thermal storage, making ice off peak for use in cooling during peak.

The inflexible 24/7 constant supply of electricity from central power plants is becoming a liability. Utility PG&E identified this inflexibility as one reason that California’s last nuclear plant will be shutdown by 2024. Inflexibility is a reason that coal power plants have declined from providing half of the US’s electricity to one-quarter today.

2030 Looks Promising

One regional ISO can optimize the modern grid using big data, advanced software, high-voltage lines in ideal locations and upgraded transmission. Smart buildings, homes, and car chargers can respond to price signals so that flexible supply matches flexible demand.

Solar, wind, and storage prices keep falling and record amounts keep being added. In 2016, California reached a record day where 56 percent of the states electricity came from renewables. With hydropower, Idaho and British Columbia have reached 100 percent. In future years, most western electricity will be from renewables every day.

This will happen sooner if we have a single western ISO, but we may instead make progress incrementally, one generator at a time, one grid connection at a time. However we get there, western states will exchange more wind and solar power, shaping supply and demand with pricing coupled with smart software. Fossil fuels will be reduced, billions of gallons of water saved, and millions enjoying a more reliable and resilient delivery of clean energy.

Discussion

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1 Comment

  1. Tim Flood

    A “single Western ISO” maturing “incrementally” is the smartest way to go. As energy suppliers realize the cost savings inherent in partnership, this feels like the shape the future will take. With time we can also transition away from fossil-based energy sources like coal and inflexible sources like nuclear. Care should be taken to help displaced workers find a new place in this new world. And information security will be paramount to protect the collective grid.

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