DEREGULATION PRESENTS WHAT IS PERHAPS THE BEST opportunity yet for renewables to stake a lasting claim in the electricity market.
Since most energy from renewable sources still isn't...
The California ISO's intermittent resource program addresses a key market barrier to wind power: how to schedule wind energy in forward markets.
On July 1, the California Independent System Operator will launch its Intermittent Resources Program-the first of its kind in the nation. The new scheduling system encourages renewable resources such as wind to bid into the ISO's markets. The program will open with about 300 MW of new wind capacity this summer, with another 2,000 MW possible for the ISO's markets by the fall. Current estimates suggest that a total of 4,000 to 5,000 MW of new wind power capacity may be integrated into the California transmission grid over the next 15 years.
This projected growth from wind and other intermittent renewable resources is in response to the passage by the California legislature of the Renewable Portfolio Standard (RPS) last year. The law requires California to double the amount of renewable energy resources consumed in the state-from 10 to 20 percent-by 2017. This new law will encourage investment and construction of a substantial amount of new wind power capacity in California. Consumers will benefit because wind power is the lowest-cost renewable power generation option currently available.
The ISO's intermittent resource program addresses a key market barrier to wind power: how to schedule wind energy in forward markets without subjecting wind generators to major imbalance penalties when they do not deliver energy as forecast. The ISO's program is designed to achieve this objective in an open, competitive market environment without cross subsidies from other resources.
The development of the new program for intermittent resources will help grid operators anticipate the amount of energy that intermittent resources such as wind power will produce in any given hour and more easily achieve a balance in real-time between demand loads and supply resources. This program supplements the traditional protocols and payment schemes geared to the operating characteristics of dispatchable natural gas-fired electricity generators.
It was not easy arriving at an integrated program that addressed both the financial needs of a wind power industry struggling to adjust to a deregulated system of scheduling and the real-time pressures of California ISO grid operators to secure power deliveries to keep the lights on. But a consensus process involving market participants and governmental agency stakeholders came up with a novel way to satisfy everyone.
Indeed, this consensus process developed such an innovative compensation and availability forecasting system for wind power projects that the Federal Energy Regulatory Commission (FERC) incorporated its key features into its standard market design (SMD) proposal. The American Wind Energy Association (AWEA) has endorsed the SMD based on the incorporation of the ISO program's framework.
Wind in a Competitive Market
The market structure created by Assembly Bill 1890, California's restructuring legislation passed in 1996, broke up utility monopolies, and created a new wholesale transaction spot market and a centralized transmission dispatch system. The California ISO was among the new regulatory institutions that assumed control of the transmission grids of the state's investor-owned utilities. While this new market structure was designed to limit discrimination in transmission allocation,