Dive Brief:
- Warren-Buffett-owned PacifiCorp and the California Independent System Operator (CAISO) released a study showing how a combined regional power marketplace could reduce billions of dollars in costs over a 20-year span.
- By combining the two electrical grids to create a Western region marketplace, consumers could save between $3.4 billion and $9.1 billion through 20 years, according to the study.
- Both companies will need input from regulators and stakeholders as well as regulatory approval before they can combine forces. PacifiCorp and CAISO hope to begin integrating by late 2018 or 2019.
Dive Insight:
Significant savings are in store if California's grid operator and Warren Buffett-owned utilities join forces to create a regional power marketplace, PacifiCorp and CAISO announced Tuesday.
The study, commissioned by PacifiCorp and performed by Energy and Environmental Economics (E3), shows that a regional ISO could net an annual gross cost savings between $153 million and $355 million in 2024 for PacifiCorp and CAISO customers. Those savings subsequently climb to a range of $402 million and $1.2 billion in 2030.
But the savings aren't the only payoffs for a regional electricity market. Cutting greenhouse gases, meeting state environmental goals and lowered overall costs to build new renewable projects are also solid benefits.
The opportunity of California utilities to access lower cost out-of-state wind and sell in-state solar over-generation in other markets should help them meet the state’s 50% renewables by 2030 mandate, according to E3.
"This regional approach is foundational to support the historic [Senate Bill] 350 legislation and carbon reduction goals of nearby states," said Steve Berberich, CEO of CAISO.
PacifiCorp customers would mostly benefit from savings in fuel and energy procurement costs. CAISO wholesale customer savings would come from procuring lower cost renewables from out of state at certain times alongside the ability to sell -- rather than curtail -- California renewable over-generation at other times.
Last year, CAISO partnered up with PacifiCorp to launch an Energy Imbalance Market (EIM) to more effectively manage system imbalances across the region. The move defied the traditional mode of individual balancing areas operating independently to balance load and generation.
Previous studies had forecasted benefits to the two systems cooperating in an EIM, which represents about 5% of the total market, a PacifiCorp spokesperson told Utility Dive.
EIM benefits for PacifiCorps East (PACE) and West (PACW) alongside CAISO reached $10.18 million in 2015's second quarter, while total gross benefits for the eight months of EIM operation were $21.41 million, according to CAISO's 2015 Q2 report "Benefits for Participating in EIM"
CAISO's avoided renewables curtailment was calculated into the benefits of EIM. "The bigger footprint allows balancing renewables with neighboring states to help avoid over-generation,” explained Angelina Galiteva, CAISO's governor.
Update: An earlier version of this story mistakenly reported the estimated combined total savings at $12.5 billion.
