SPP goes west

On 1 February 2021, Southwest Power Pool (SPP) launched an energy imbalance market to the west of the SPP regional transmission organization (RTO). The new imbalance market serves the utilities of Basic Electric Power Cooperative, Deseret Power Electric Cooperative, Municipal Energy Agency of Nebraska, Tri-State Generation and Transmission Association, Western Area Power Administration and Wyoming Municipal Power Agency.

Before SPP's Western Energy Imbalance Service (WEIS), these utilities were generating electricity to serve their demand through bilateral contracts. The integration into SPP WEIS means that SPP will centrally dispatch electricity in merit order on a five-minute basis for all of the utilities, eliminating the need for bilateral contracts (though utilities can still use them), which in turn increases efficiency and reliability for all the utilities.

Dispatching resources in merit order will play a big role in further integrating renewables, as solar and wind usually have the lowest offer price. For example, if Utility A had no renewable generation available but Utility B had surplus wind generation, SPP WEIS would dispatch Utility B's wind power to meet Utility A's demand, saving Utility A from having to use coal or gas-fired resources to supply their power. This not only reduces wholesale costs but also increases total renewable generation. Additionally, SPP WEIS will provide coordinated congestion management to all utilities involved, further increasing efficiency across the market.

While SPP WEIS does provide a real-time imbalance market, it is not a fully integrated RTO due to how the US grid is set up. There are three main alternating-currents (grids) in the US: the Eastern Interconnection, the Western Interconnection and the Texas Interconnection. The primary way for power to flow across these interconnects, which operate on the same frequency but are not synchronized to each other, is through high-voltage direct current transmission lines, known as DC Ties.

There are two DC ties from the Eastern Interconnection into the Texas Interconnection and seven DC Ties from the Eastern Interconnection into the Western Interconnection. These are the principal lines that can transmit power across the interconnects, meaning that transmission is very limited between the interconnects. Most power flowing over these DC ties needs to be scheduled well in advance. Consequently, it's easier in the short term for the utilities in SPP WEIS to form this real-time imbalance market and maintain separation from SPP RTO. For the time being, SPP WEIS will not impact SPP RTO operations and no part of SPP WEIS is included in SPP RTO day-ahead or real-time pricing, ancillary services, virtual transactions, etc.

Despite the challenges, SPP is studying the possibility of eventually integrating SPP WEIS with SPP RTO under a single RTO market. An SPP Brattle Study found a full-scale integration into one RTO would save utilities in SPP RTO and SPP WEIS millions each year. The added benefits to the SPP WEIS utilities would include more reliability coordination, a day-ahead planning market, more market liquidity around trading hubs, increased congestion hedging through the TCR Auction and increased renewable opportunities. While integrating utilities across multiple interconnects is a challenge that no RTO has ever taken on before, SPP is poised to break this barrier and coordinate reliable power supply and delivery ranging from Montana to Louisiana.

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