Nevada’s biggest utility, NV Energy, quietly took a big step yesterday that could help repower the Western grid with affordable renewables. In a letter to the California Independent System Operator (CAISO), NV Energy stated its intent to seek approval from the Nevada PUC to join the CAISO’s Energy Imbalance Market (EIM). The EIM will allow utilities across the region to share generation resources and significantly lower the cost of keeping the lights on with significant new levels of solar and wind.
Think of an EIM as a carpool lane – instead of each person driving their own car to the same destination, sharing a car lowers the cost of commuting and helps speed things up. In the case of an EIM, utilities share reserve generation, which is an entire category of facilities with the job of matching fluctuations in electric generation and consumption in real-time, especially during high-usage times. This cooperative approach eliminates the need for each utility to operate and maintain costly generation that it doesn’t need all the time. It also allows them to better plan for and use variable solar and wind generation, which may be lumpy within individual utility balancing areas due to local weather conditions and the like – but is smoother and more predictable when assessed across bigger geographic areas. The regional EIM makes the most efficient use of combined resources can significantly lower the cost of integrating these renewable resources on the grid. It requires traditional energy players to rethink grid operation, but its benefits are well worth the work.
Back in February of this year, the CAISO and PacifiCorp, which serves 1.8 million customers in six western states, announced they had entered into a memorandum of understanding to develop a west-wide EIM. In May, PacifiCorp’s parent company, MidAmerican Energy Holding Company, announced it was merging with NV Energy. Given PacifiCorp/MidAmerican’s enthusiasm for the EIM, yesterday’s announcement is not too surprising. All the same, NV Energy’s decision adds much needed momentum to this nascent regional effort. While a study by PacifiCorp and CAISO showed millions of dollars in savings for customers in California and PacifiCorp’s service areas, more substantial savings and benefits can be achieved if more utilities join. The ultimate goal is to have all of the utilities in the Western Interconnection — which covers all or parts of 13 states, 2 Canadian provinces and a small part of the Baja California Peninsula — join the EIM and take this low-cost approach to the grid integration challenge.