Juice: Integrating the Western Grid

With California’s latest legislation to clamp down further on greenhouse gas emissions signed into law, we see increasing movement toward creating a western-wide grid authority and regional wholesale market.

The California Independent System Operator cracked open the door to integrating the Western grid a year ago by creating it’s energy imbalance market with PacifiCorp, allowing power to flow across state lines on a short-term basis to even out bumps and dips in supply from the growing fleet of renewable generation facilities across the West.

Now, enactment of SB 350 calls for the effort to be widened to create a fully integrated grid and accompanying market to help California meet its new renewable energy portfolio standard of 50 percent by 2030.

But while the new law provides direction to CAISO and formalizes the goal of creating an integrated regional grid, whether the California Independent System Operator becomes the main vehicle for a grid expansion including northwestern and western states, and/or the North West Power Pool, remains to be seen.

What is clear, however, is that a number of forces are raising the benefits of integrating the western grid.

Chief among the forces that are building pressure to regionalize the West’s grid are:

Environmental standards—including the Clean Power Plan, standards for coal power plants, tighter health standards for air pollution, and other policies. These directives increasingly are prompting the power industry to close down coal power plants.

Shutting them frees up space on congested interstate transmission lines, allowing for higher flows of wind and solar power across state lines. While coal plant closures in the East under EPA’s standards for mercury and toxic air pollutants have grabbed headlines, the West is not immune.

Already, plants, like the San Juan Generating Station in New Mexico, are downsizing to meet U.S. Environmental Protection Agency clean air standards. Public Service of New Mexico plans in 2017 to shut down two units, cutting the 1,800 MW facility’s capacity in half. It plans to install nitrogen oxide controls on the two remaining units.

An EPA rule to reduce regional haze requires downsizing of the 2,250 Navajo Generating Station in Arizona come 2019. It’s anticipated one of the plant’s three units will be closed and pollution controls installed on the remaining two to cut emissions of nitrogen oxides.

It’s hardly the first closure to address environmental standards. In 2005, Southern California Edison closed its 1,580 MW Mojave power plant outside Laughlin, Nevada, in the face of air pollution control requirements that made continued operation uneconomical.

Expect coal plant downsizings and closures to continue in the West as pressure to cut emissions of all kinds grows and as California utilities wind down their interests in out-of-state coal plants under a state law.

As coal plants dwindle, EPA’s clean power plan allows states to develop joint plans to cut power industry carbon emissions 30 percent by 2030 because that may prove more economical than going it alone.

California Air Resources Board Chair Mary Nichols and other regulators already have pointed out that regional compliance with the Clean Power Plan is the most efficient and cost-effective path to the federally-mandated carbon emission cuts.

Economic benefits from joint action already have been seen in the East. Kelly Speakes-Backman, Maryland Public Service Commission member, for example, noted how her state, a member of the Regional Greenhouse Gas Initiative, slashed power plant emissions 40 percent while growing the state economy by 8 percent between 2005 and 2013.

Renewable Portfolio Standards are in place in virtually all the western states, except for Wyoming, Idaho and Utah, though the latter has a renewable portfolio goal. Standards range from requiring as little as 15 percent of renewable energy up to California’s ambitious plan to meet half its electricity needs with wind, solar, and other renewable resources by 2030 (see related story).

The problem with renewable energy, of course, is its intermittent nature. At times there are surpluses and at times not enough to meet power demand in a given area, forcing utilities to ramp up fossil fuel plants or purchase replacement power. When there’s too much renewable energy, wind power and other plants have to be shut down. Either way, it’s inefficient.

That brings us to the third force driving grid integration in the West.

Economics are a strong incentive to grid integration. With the cost of wind and solar becoming directly competitive with fossil fuel, renewable energy is becoming more commonplace across the West. Now, creating a larger market in which to trade excess wind and solar energy can make the power more affordable and avoid waste.

The California grid operator’s regional real time energy imbalance market already is proving the concept of grid integration and so far has shown favorable results in the form of monetary savings for utilities and consumers alike. In the first 8 months of its operation, the imbalance market has saved CAISO and PacificCorp combined more than $21 million.

Now a study commissioned by PacifiCorp shows that fully integrating its and the California ISO’s sprawling grids could save consumers between $3.4 billion and $9.1 billion over 20 years.

The Oct. 13 study says the savings would accrue from better grid management and efficiencies gained by planning for the resource needs of a single system, rather than multiple systems. In addition, “development of a regional ISO is likely to reduce greenhouse gas emissions through coordinated planning, reduced curtailment of renewable energy, and lower overall costs to build new renewable resources,” according to the utility.

That brings us to the fourth force driving grid integration in the West.

The success of regional transmission organizations in the U.S. That includes PJM, which operates in 13 states largely in the East, and D.C.; the Midwest MISO, which operates in 15 states and the Canadian Province of Manitoba; and the Southwest Power Pool. The latter transmission entity moves wholesale power across all or parts of 14 states in the Central U.S. On Oct. 1, the pool became the first regional grid to have a federal agency—the Western Area Power Administration—join.