arrow Back to Newsroom

Energy Imbalance Markets: The Grid Mod and Strategic Plan connection

20190426-energy-imbalance-markets-the-grid-mod-and-strategic-plan-connection
Why is BPA considering the Western Energy Imbalance Market? Find out more on how this market opportunity fits within our grid modernization effort and can help drive BPA’s long-term financial and commercial success.
wave

“Any new markets will be driven by two things – big data and the ability to rapidly respond to market signals. Our grid modernization projects are squarely tackling those factors, and the EIM represents not only a means to recapture dwindling secondary sales but also a proving ground for us to hone those skills that will be necessary for future market participation.”

Joel Cook, senior vice president of Power Services
The utility industry is constantly evolving with new technologies and markets, including the emergence of energy imbalance markets. Increasingly in the northwest, the Western Energy Imbalance Market has made headlines as more of the region’s utilities, public power utilities and power generators consider joining the market.

Why is BPA considering joining the EIM?

As energy and capacity markets change, BPA must look to preserve and enhance the value of the Federal Columbia River Power and Transmission Systems. Today’s market opportunity is an evaluation of joining the Western EIM operated by the California Independent System Operator.

In the past decade, sub-hourly markets emerged – first at 15-minute intervals and then at 5-minutes. New and potential markets include day ahead and extended day ahead as well as capacity-based markets.

"Any new markets will be driven by two things – big data and the ability to rapidly respond to market signals,” said Joel Cook, senior vice president of Power Services. “Our grid modernization projects are squarely tackling those factors, and the EIM represents not only a means to recapture dwindling secondary sales but also a proving ground for us to hone those skills that will be necessary for future market participation.”
 
If BPA has not advanced technologically and operationally to the point of being able to participate in an EIM, it is unlikely we would be well situated to participate in other new, sub-hourly markets that are driven by automation and big data analytics. Additionally, as the EIM grows with more participants across the west, our ability to recapture secondary sales that migrate to other organized markets will become more important.
 
“Think of it from a sports perspective: The ability to perform at a high level in an EIM or other emerging market is like being a top-of-the-line athlete. Your natural skills and physical conditioning can only keep you at the height of performance for so long – you need constant practice, development of new techniques and strategies in order to persevere as a champion in a sport,” said Steve Kerns, BPA’s director of grid modernization. “This is what we’re building in Bonneville – a world-class utility with the agility to respond rapidly to market and customer needs and the resilience to provide enduring value, year after year, decade over decade.”

How will BPA make a decision on whether or not to join?

BPA must determine that market participation is in the agency’s best interest and brings value to the customers BPA serves.  BPA’s decision to join must also be consistent with its statutory, regulatory and contractual obligations. 

What does the road ahead look like?

In July, 2018, BPA’s EIM team started a stakeholder process to determine how and under which conditions BPA could join the EIM. As the agency makes its evaluation to make a decision to join this summer, the team is preparing to draft a letter to the region with a 30-day public comment period this summer to develop a record of decision to sign an EIM Implementation Agreement with the CIASO, the market operator.  This will be the first in many decisions that will need to be made prior to market participation in the spring of 2022.
If BPA signs the agreement, BPA would start spending money on the EIM projects identified on the Grid Modernization Roadmap.
The planning date to begin trading in the EIM is spring of 2022, which would allow more than two years to develop the tools, systems, practices and policies needed to trade in the EIM. The CAISO’s standard timeframe to begin trading in the EIM is 18 months, but BPA is taking additional time to ensure that systems and processes that impact BPA and our customers are ready.
The current expected schedule shows needed work streams to determine how, as a balancing authority, BPA would join and operate in the market, and allow our customers to determine what role they wish to assume.
A final decision to join the market is scheduled for December of 2021 with BPA issuing a draft Close Out Letter with a 30-day public comment period in October of 2021. The draft Close Out Letter will allow customers and stakeholders an opportunity to comment holistically on whether BPA should join(or “go-live” in) the EIM.
Several grid modernization projects would need to be completed in order to prepare for market participation in 2022. Those EIM-related projects have been identified in the Grid Modernization Roadmap.
Stakeholder engagement, both internal and external, will continue until market participation begins, assuming BPA signs the EIM Implementation Agreement this summer. There are six milestones that need to be met with the CAISO before market participation. During that time, BPA will work internally on EIM projects to operationalize the EIM, receive training from the CAISO, and simulate and test operations, like day-in-the-life and parallel operations. Due to the voluntary nature of the EIM, BPA can decide not to join the EIM if a significant issue emerges that displaces the anticipated benefits of BPA’s participation.  Similarly, if BPA joins and finds participation unbeneficial, it can leave the market.
For more information on CAISO’s Western EIM, and BPA’s EIM and grid modernization work:

Tags

Related News