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Power rush in the Wild West: tracking the progress of US regional power market pioneers

CAISO and SPP have led the development of western US regional power markets – how are they taking shape?

2 minute read

Adebimpe Isafiade

Lead Analyst, Power Market Intelligence

Adebimpe is a wholesale power industry analyst with a focus on the western US region.

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There have been several attempts to establish regional power markets in the western US. This idea gained popularity over the past few decades with the growth of renewable energy, as utilities looked for ways to integrate variable renewable resources. It took root when California ISO (CAISO) launched the Western Energy Imbalance Market (WEIM) in November 2014, and continued with the Southwest Power Pool (SPP) and its Western Imbalance Service (WEIS).

These initiatives were created with similar objectives. Each aims to reap the benefits of a more integrated Western Interconnect, with hopes to eventually decarbonize the grid.

However, there are differences in market operations and policies, leading western balancing areas to decide which aligns more with their objectives and operations.

CAISO WEIM: the first real-time energy market in the western US

The WEIM initiative under CAISO was created to allow participants to buy and sell power across the west in real time. This gives system operators real-time visibility across neighboring grids, so excess supply in one balancing authority can serve demand in another.

There were several attempts to establish such a market before WEIM. Many were unsuccessful because of the hesitance of losing full control over regional market development. The WEIM overcame these issues because it is voluntary and flexible.

This initiative has many economic benefits, which are estimated at around US$3.4 billion since launch. And in 2022, for the first time, total benefits exceeded US$1 billion in one year.

In addition to financial benefits, the WEIM boasts reduced carbon emissions and grid reliability to balancing areas and utilities across the west.

Currently, there are 19 participants in the market. Avangrid, El Paso Electric and the Western Area Power Administration’s Desert Southwest Region plan to join this year. These entities will represent almost 80% of the total load served in WECC including significant portions of Arizona, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming, and the US border with Canada. This scale makes it a successful Western Integration initiative.

CAISO EDAM: building on the WEIM initiative’s foundations

CAISO has expressed interest in expanding the WEIM initiative into an extended day-ahead market, or EDAM. Its final proposal was published in December 2022 and approved in February 2023.

The EDAM will be a voluntary day-ahead electricity market designed to deliver economic, environmental and reliability benefits to balancing areas and utilities throughout the West. It’s expected to provide increased visibility into supply conditions across the west in the day-ahead market and the real-time market. This will make it easier to meet demand with the most cost-effective resources. Grid reliability would improve, while costs and emissions reduce, as oversupply of renewable generation in one balancing area can meet demand in another.

What kind of cost and emissions savings are possible? What are the concerns about CAISO’s approach? For more on this, plus a look at SPP’s WEIS, and an exploration of how maximum import or export scenarios would impact congestion, fill in the form to continue reading.

CAISO conducted a study to compare potential EDAM benefits to those of the WEIM administered by CAISO and the WEIS administered by SPP. It found that if every balancing authority area (BAA) in the West participated in the EDAM, and there was no limitation to transmission between these entities, the entire region could see savings of up to US$1.2 billion and a 1.5% reduction in C02 emissions annually.