LONDON May 21 Grid operators in the western
United States are joining forces to design a new computer-run
system to balance power across a wider combined area, improve
handling of increasing amounts of fluctuating renewable power
and save money at the same time.
They could achieve even greater benefits by going a step
further, following the lead of their counterparts in Europe, by
linking wholesale markets.
In the United States, operators called balancing area
authorities (BAAs) control electricity transmission, with each
responsible for keeping supply and demand in sync at all times
within its defined area.
The Western Interconnection region, which includes 14
western U.S. states, two Canadian provinces and portions of one
Mexican state, contains 38 such BAAs, linked by interconnectors.
The BAAs make decisions to dispatch power, both within and
between their areas, typically once every hour. Any mismatch in
the meantime is covered by firing up power plants, such as
so-called peaking gas plants, within the balancing area.
The new approach, called an Energy Imbalance Market (EIM),
is based on closer links between BAAs and between grid
operators. It is part of a trend towards integrating wind and
solar power into grids that were mainly designed to handle
steadier sources of supply.
Under a U.S. EIM, a computer algorithm would establish
whether or not there is an energy imbalance between grids and
issue orders in five-minute intervals to power generators across
multiple BAAs to dispatch power as needed at least cost.
The system is voluntary. Power generators can dip in and
out, offering electricity for sale on the EIM or not.
Grid operators gain access to a wider geographical spread of
generation resources and so avoid having to build more reserve
capacity. The more frequent dispatch decisions also increase
predictability and can help utilities avoid having to call up
more expensive, fast-starting power plants.
A recent report by the National Renewable Energy Laboratory
(NREL) calculated that the annual cost savings from more
frequent, faster dispatch decisions would amount to $1.3 billion
in the Western Interconnection region. ("Examination of
Potential Benefits of an Energy Imbalance Market in the Western
Interconnection," NREL, March 2013)
In addition, the region would save another $146 million a
year from the sharing of resources across a wider area, the NREL
Balancing across a wider area is useful to smooth out the
variability of renewable power.
For example, a local effect such as a cloud can cause a big
change in the amount of power generated by one solar farm, but
that variability can be reduced by tapping a number of solar
farms over a wider area.
Two Californian balancing authorities, PacifiCorp and CAISO
(the biggest BAAs in the state), announced a memorandum of
understanding in February 2013 committing to work jointly toward
creating an EIM by October 2014, in a sign of early commitment
to proceed with the wider market.
The European Union approach, called market coupling, creates
links between wholesale power markets which often correspond to
EU members' national borders.
It also uses a computer algorithm to match interconnector
capacity with energy demand data, as supplied by grid operators.
The difference with the U.S. EIM approach is that the
resulting electricity flows are marketed to traders on wholesale
power market exchanges, for them to buy and sell in various
Under an EIM, the electricity flows are not made available
on wholesale power markets to traders; they remain confined in
bilateral deals between generators and energy consumers.
The purpose of an EIM is to ensure that unfulfilled demand
is matched better with available supply at the lowest price.
The European market coupling system in addition ensures that
power flows from cheaper to more expensive markets to achieve
the aim of price convergence.
This approach may not yet be possible in the United States,
however, because each major region includes a mix of regulated
markets and fully competitive, wholesale markets.
The EU example raises the question whether the U.S. drive to
integrate more renewable power should also aim to speed up the
rollout of competitive wholesale markets and achieve even
greater social benefits by driving down the prices of relatively
(editing by Jane Baird)