Enhancing clean energy through the expansion of Western US energy markets—is this an achievable reality?
A potential solution for expanding clean energy capacity and reducing power costs in the U.S. West is gaining traction: the creation of a region-wide electricity trading market. This initiative, which has faced difficulties for over a decade due to disagreements among stakeholders, is now making significant strides towards realization.
The Extended Day-Ahead Market (EDAM), proposed by the California Independent System Operator (CAISO), is at the heart of this endeavour. Originally proposed five years ago, EDAM could enable annual savings of $500 million to over $1 billion by allowing members to share lower-cost power and grid resources. The West-Wide Governance Pathways Initiative, supported by Western utilities and state regulators, has recently approved a plan to overcome an initial obstacle towards the creation of a shared regional electricity market that includes California.
The decision-making authority in the EDAM is being shifted to a more centralized or coordinated governance structure to include other states and utility companies. This involves modifying regulatory and operational frameworks to allow regional participation and shared market rules. PacifiCorp, among the first to agree to pursue EDAM, has recently signed implementation papers to officially join it. Several utilities, including those serving Los Angeles, Sacramento, Portland, Idaho, and Nevada, have begun the process of joining EDAM.
The Southwest Power Pool (SPP) has brought forward an alternative day-ahead energy-market proposal called "Markets". However, several Western utilities have expressed a preference for Markets+ over EDAM, citing that EDAM, as it's currently structured, vests ultimate decision-making authority in CAISO.
The plan provides CAISO a pathway to share authority over a future West-wide energy market. This is an attempt to entice utilities by putting other states and utilities on equal footing with California in governing EDAM. The West-Wide Governance Pathways Initiative is also hoping to change the structure of EDAM to include the region's biggest energy market.
It's important to note that Idaho, Utah, and Wyoming have different priorities than other Western states, resisting state and federal efforts to reduce the use of fossil fuels for power generation. The challenges of decarbonizing energy systems are discussed in detail in the Down to the Wire column.
As the West moves towards a more sustainable and cost-effective energy future, the creation of a regional electricity trading market could play a crucial role. The progress made so far is a significant step towards achieving this goal.
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