Will a bigger energy grid make way for renewables?

Utilities are embracing California’s bid to expand its grid, but states aren’t so sure.

 

On the 10th floor of Xcel Energy’s downtown Denver office building, energy traders sit before banks of screens filled with flickering, colored digits, buying and selling electricity for the utility’s sprawling service areas. In one corner, a trader monitors the Midwest wholesale market and in another, the Southwest Power Pool — an odd name given that it actually covers the Great Plains, not the Southwest.

On a recent day, an electronic map showed North Dakota in blue, for the price of the state’s wind power was near zero, while southern Indiana was burnt orange, with the price of a kilowatt-hour near 8 cents. Five minutes later, Ohio turned pale green as the price dropped to 5 cents.

Meanwhile, on the other side of the room, the trader handling Colorado had no fancy, color-coded price map. When he needed to buy or sell, he had to get on the phone and call around to other utilities to find out what they had at what prices. Then he had to fix the price, coordinate the dispatch of the electricity and file the paperwork — all things being done automatically across the room by the Midcontinent Independent System Operator, or MISO, and the Southwest Power Pool, which covers all or parts of seven states.

There in a nutshell is the state of affairs when it comes to Western electricity markets. While 60 percent of the nation’s electricity is handled through computerized regional markets, the West is stuck in the 1980s.

Electricity sales in the West are Balkanized among 38 “balancing authorities” or local markets. “It is a bus with 38 drivers,” says Carl Zichella, director of Western transmission for the Natural Resources Defense Council, an environmental group. “It is tremendously inefficient.”

Transmission lines leaving Mead Substation in Nevada and heading west to California.

All provisions for necessary plants and power including back-up reserves must be made by the utilities in each local market, while the companies in the neighboring market do the same. Electrons don’t flow between them.

But in a bigger market, electricity  a perishable commodity that moves at the speed of light  can travel to wherever there is demand. There is less need for redundant back-up systems as someone is always making electricity and someone is always buying. “If Iowa wants to go to 80 percent [wind], they can because they belong to the Midwest ISO,” says Steve Berberich, CEO of the California Independent System Operator (CAISO), an in-state wholesale market.

But the day of a Western electricity market, also known as a regional transmission organization (RTO), may be at hand. CAISO and Portland, Oregon-based PacifiCorp, which operates power plants in six Western states, are looking to form a regional market. Berberich says he hopes that market can be extended across the entire West.

On the eastern end of the region, seven utilities, including Xcel, have formed the Mountain West Transmission Group, which extends from Wyoming into New Mexico and Arizona. The group — a precursor to an RTO — is trying to develop a uniform transmission charge, or tariff, for the region. Currently, each utility has its own charge for moving electricity through its wires. Once it has developed a uniform tariff it may join one of the nearby regional transmission organizations or create its own market.

Regional markets have a lot of moving parts. MISO operates a day-ahead market where wholesale power is sold from utility to utility for the coming day, and a real-time market to fill in for unexpected demand or outages. Electricity suppliers submit bids to MISO, which then fills orders for that power starting with the lowest price. The price at which all orders are filled is called the clearing price, calculated by algorithms and computers for the spot, or real-time market every five minutes.

In this bidding system, wind and solar, with their steadily declining prices, are becoming more attractive to utilities. “Any time you can avoid a fuel burn, you’ve got an opportunity for savings,” says Stephen Beuning, Xcel’s director of market operations.

At the moment, however, wind power from Wyoming or solar electricity from California can’t easily move around the West. On one day, CAISO had to dump 485 megawatts of wind and 657 megawatts of solar because there was no way to sell it to utilities outside its grid. “We can’t get to the goal of 50 to 60 percent renewable energy by 2050 without an RTO,” says Zichella.

In theory, a West-wide RTO would have allowed California to sell that excess wind and solar to, say, Utah or Colorado, thus avoiding the need to burn natural gas there. Similarly, Colorado utilities could ship excess wind power to California to back up solar during times of peak demand.

Setting up an RTO isn’t easy, though. “The software is a huge expense, and California has created it and is willing to share with the West,” says Nancy Kelly, a senior energy policy adviser with Western Resource Advocates, an environmental group.

California’s offer to share, however, is being met warily around the West by those who are concerned that while a Golden State-dominated system might be good for California it may be less so for others.

CAISO is controlled by the California governor and legislature. “That is going to have to change to be acceptable to the PacifiCorp states,” says Bryce Freeman, administrator of the Wyoming Office of Consumer Advocate. “Unless that is resolved, it’s a fool’s errand.” PacifiCorp operates in Oregon, Washington, California, Utah, Wyoming and Idaho.

In Utah, lawmakers are drafting a bill to give them veto power over joining the CAISO market. “We aren’t opposed,” says Jeffrey Barrett, deputy director of the Utah Governor’s Office of Energy Development. “We just want to make sure it is a good deal for Utah.” The state has among the lowest electricity rates  in the West, a competitive advantage it doesn't want to lose, Barrett says.

While 60 percent of the nation’s electricity is handled through computerized regional markets, the West is stuck in the 1980s.

Though they concede that a regional grid could help renewables, the Sierra Club is opposed to the current CAISO expansion plan because it would bring 24 coal-fired PacifiCorp units into the regional system.

“In bumping up the productivity of these coal plants, it will throw a lifeline to some, allowing them to operate for another 16 years,” said Travis Ritchie, an attorney with Sierra Club’s Beyond Coal campaign.

Still, economic forces and renewable-energy policies look to be pushing the West toward a regional market. A CAISO study released in July found the proposed RTO would lead to up to $1.5 billion in savings annually in California by 2030, equal to a 3-percent cut in electricity rates.

It would also lead to a reduction in toxic and greenhouse gas emissions across the West, according to the study, although there would be a slight bump up in the early years from the PacifiCorp coal-fired plants.

The analysis, however, didn’t look at benefits outside California. “A big question is, will costs and benefits be equal across the system,” says Elta Kolo, an analyst with GTM Research, an energy consulting firm. “It will be crucial to get consumers on board.”

The West presents some unique challenges. The New England ISO covers six states, but is an area one-thirteenth the size of the size of the West, with its mix of sparsely populated states and heavily urban ones, states with ambitious renewable energy standards and those heavily tied to coal.

“They are different, but still similar in that they need electrons, they need reserve capacity, they need to make money,” says Amanda Ormond, managing director of the Western Grid Group, which advocates for a more efficient grid to promote renewable energy.

“A Western market is almost certainly inevitable,” Ormond says. “Most of the utilities in this country and the rest of the world operate in organized markets because it is more efficient. It is going to happen.”

Correction: This article has been updated to reflect the fact that MISO changed its name from Midwest Independent System Operator to the Midcontinent Independent System Operator.

High Country News Classifieds
  • CARPENTER WANTED
    CARPENTER WANTED. Come to Ketchikan and check out the Rainforest on the coast, HIke the shorelines, hug the big trees, watch deer in the muskeg...
  • AUDIENCE ENGAGEMENT EDITOR
    High Country News (HCN) seeks an audience editor to attract and acquire new audiences and deepen engagement with them - in our newsletters, on our...
  • COMMUNITY MARKETER
    High Country News (HCN) is looking for a Community Marketer to build and strengthen relationships between HCN and other organizations and individuals, with the aim...
  • FINANCE & OPERATIONS MANAGER
    Job Announcement: Finance and Operations Manager Announcement date: July 16, 2021 Applications will be reviewed on an ongoing basis and first review will begin: August...
  • DEVELOPMENT DIRECTOR
    Job Announcement: Development Director Announcement date: July 16, 2021 Applications will be reviewed on an ongoing basis and first review will begin: August 9, 2021...
  • HECHO POLICY AND ADVOCACY MANAGER
    Hispanics Enjoying Camping, Hunting, and the Outdoors (HECHO) was created in 2013 to help fulfill our duty to conserve and protect our public lands for...
  • HECHO NEW MEXICO SENIOR FIELD COORDINATOR
    Hispanics Enjoying Camping, Hunting, and the Outdoors (HECHO) was created in 2013 to help fulfill our duty to conserve and protect our public lands for...
  • IDAHO STATE DIRECTOR
    The Wilderness Society is seeking a full time Idaho State Director who will preferably be based in Boise, Idaho. This position is part of our...
  • CAUCASIAN OVCHARKA PUPPIES
    Strong loyal companions. Ready to protect your family and property. Proven against wolves and grizzlies. Imported bloodlines. Well socialized.
  • DEPUTY DIRECTOR
    The Nature Conservancy in Alaska is dedicated to saving the lands and waters on which all life depends. For more than 30 years, TNC has...
  • STAFF ATTORNEY, CLIMATE AND ENERGY PROGRAM
    STAFF ATTORNEY POSITION OPENING https://westernlaw.org/career-opportunity-climate-energy-staff-attorney/ ************************************************** Position Title: Climate and Energy Program Staff Attorney Reports to: Climate and Energy Program Director Location: Helena, Montana; other...
  • STAFF ATTORNEY, WILDLANDS AND WILDLIFE PROGRAM
    STAFF ATTORNEY POSITION OPENING https://westernlaw.org/career-opportunity-wildlands-staff-attorney/ ************************************************** Position Title: Wildlands and Wildlife Program Staff Attorney Reports to: Wildlands and Wildlife Program Director Location: Portland or Eugene,...
  • DISCOUNT SOLAR PANELS
    New w/25 year warranty. Shipped anywhere in the lower 48. Minimum order of 10 units. Call, text or email for current prices. .50-.80/ watt
  • SWEET MOUNTAIN HOME
    3.8 acres in pine and fir forest on a year round creek. Custom home, 2x6 framing, radiant heat, wrap around decks and established berry patch....
  • ENVIRONMENTAL GEOPHYSICS
    "More Data, Less Digging" Find groundwater and reduce excavation costs!
  • CUSTOMER SERVICE ASSISTANT - (PART-TIME)
    High Country News, an award-winning media organization covering the communities and environment of the Western United States, seeks a part-time Customer Service Assistant, based at...
  • LEGAL DIRECTOR AND STAFF ATTORNEY
    Friends of the San Juans' Legal Director and Staff Attorney ("Legal Director") leads our legal advocacy and litigation practice and participates in many other organizational...
  • SPRING-FED PARCELS ON THE UPPER SAC RIVER
    Adjacent parcels above the Upper Sacramento river, near Dunsmuir. The smaller is just under 3 acres, with the larger at just under 15 acres. Multiple...
  • EXECUTIVE DIRECTOR
    Wilderness Volunteers Wilderness Volunteers (WV), a 24-year leader in preserving our nation's wildlands, is seeking a motivated person with deep outdoor interests to guide our...
  • POEM+ NEWSLETTER
    Start each month with a poem in your inbox by signing up for Taylor S. Winchell's monthly Poem+ Newsletter. No frills. No news. No politics....