California Energy Markets / Bottom Lines
[February 3, 2017 / No. 1422]
EIM Produces Benefits, but Questions Linger About GHGs
The Western energy imbalance market produced $28.27 million in benefits in the fourth quarter of 2016, bringing total benefits to date to $142 million, according to a CAISO report.
The grid operator said the fourth-quarter benefits of the EIM, which launched in 2014, came despite the typical lower electricity demand in the fall.
Of the total benefits in the fourth quarter, PacifiCorp recorded $8.9 million and CAISO $8.6 million. Arizona Public Service recorded $5.98 million, NVEnergy $3 million, and Puget Sound Energy $1.5 million.
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CAISO attributed the total fourth-quarter benefits to more efficient and least-cost dispatch, though the market also produced unquantified benefits in avoided renewables curtailment and flexible-capacity savings. In the fourth quarter, CAISO estimated that balancing areas in the EIM reduced needed flexibility reserves by 399 MW to 482 MW. Supposing those needs would have to eventually be met by new peakers, the savings are substantial.
CAISO also noted the market had avoided renewables curtailment of 23,390 MWh in the fourth quarter, which displaced 10,011 metric tons of carbon dioxide. (At $13/ton of CO2-equivalent, about the cost of allowances in California, that's about $130,000 in savings. Of course, that figure doesn't capture the lower cost to dispatch renewables.)
CAISO's calculations of greenhouse-gas benefits, however, raise questions. In its EIM reports, the grid operator has never provided data to indicate dispatch by resource type. The data on transfers (see chart) indicates a lot of power is moving from PacifiCorp East (PACE) to APS, and from APS to CAISO. The generation mix of PACE and APS is relatively low on clean power sources. More than 600,000 MWh of power moved from APS to CAISO in the fourth quarter. According to APS' website, it has more than 4GW of coal capacity and 2 GW of gas, but only 800MW or so of utility-scale renewables. As for PACE, it has been estimated that 80 percent of Rocky Mountain Power's capacity is either coal or gas.
What then to make of another CAISO chart, showing that GHG emissions to serve load have sharply declined from 2014 to 2016?
"I would bet that higher renewables, higher water and lower gas prices were the key drivers of this result; the EIM may (or may not) have helped at the margin, but was not the driver of this aggregate result," said independent consultant Kevin Woodruff.
At 23,000 MWh of avoided renewables curtailment in the fourth quarter, perhaps CAISO is right that the market is producing minor GHG-reduction benefits. After all, avoided renewables curtailment represented less than 10 percent of total EIM transfers in the last quarter. That number would have been far higher if CAISO was exporting more energy.
But until CAISO releases data with its EIM reports on five-minute transfers by resource type—if not the GHG emissions intensity of those resources—we just don't know. -Chris Raphael
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