California ISO outlines market enhancements to integrate large amounts of renewables

The California ISO released a roadmap on Oct. 11 providing a conceptual outline of market enhancements necessary to integrate large amounts of intermittent renewable resources.

California has been at the forefront of establishing energy policies and goals for more renewable energy sources, the ISO said in its “Renewable Integration Market Vision and Roadmap,” noting that the state legislature has increased California’s renewable portfolio standard target to 33% by 2020.

The market vision and roadmap provides a conceptual outline of market enhancements that the ISO plans to implement in three time periods: short term, now to 2013; mid term, 2013 to 2015; and long term, 2015 to 2020.

The short term, the ISO added, is about implementing market enhancements already proposed or under development that add operational flexibility and enhance resource management. These enhancements involve, for instance, providing incentives and opportunities for resources to be more responsive and flexible.

The mid-term period is the initiative’s primary focus, the ISO said, noting that this period will see large increases in the amount of renewable resources connected to the ISO grid and in the amount of resources indirectly affecting the ISO grid by being connected to the distribution systems.

The governor has called for 12,000 MW of distributed solar generation in California and the utilities are already seeing rapid growth in the level of these distributed energy resources. The ISO also said that plug-in electric vehicles, which may become sources of price-responsive demand that can be used to help manage the grid, are also starting to ramp up in the state.

A primary objective is to maximize the ability to manage the grid using markets, the ISO said. Most renewable generation, especially intermittent resources like wind, submit self schedules and not bids, since their marginal costs for producing electricity are negligible, or even negative when tax credits and renewable energy credits are taken into account.

For those renewable generators in the participating intermittent resource program (PIRP), the incentive to submit bids is reduced even further because the current program does not allow a resource to submit decremental bids to reduce output and still remain in PIRP for those hours.

The ISO added that it is proposing a set of rule and cost allocation changes that will provide PIRP resources the ability and incentive to submit decremental bids, while not excluding these resources from the program unless their bids are accepted, thus allowing PIRP generators to respond to operational needs through market mechanisms and providing the ISO with a way to help mitigate over-generation through market bids.

Policy development on that will begin the spring of 2012, with ISO board review occurring in the fall. Projected implementation is in the fall of 2013.

Among other things, the ISO said it proposes to create an interim mechanism – using the existing capacity procurement mechanism as a starting point, but specifying attributes needed to qualify as flexible capacity – that administratively procures flexible capacity resources. Policy development on that will begin this month, with an ISO board review next spring. The projected implementation date is January 2013, the ISO added.

Concluding, the ISO said it will continue to work with stakeholders to refine the renewable integration market and product review roadmap as new information becomes available, and will provide periodic status reports to its board on the planned evolution of the market design.

About Corina Rivera-Linares 3286 Articles
Corina Rivera-Linares was TransmissionHub’s chief editor until August 2021, as well as part of the team that established TransmissionHub in 2011. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial from 2005 to 2011. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines.