Regional Coordination and Markets: Key to a Renewable Energy Future

Switchboard: National Resources Defense Council Staff Blog, July 23, 2015

In the Western U.S. a major change in how the electrical system is operated is underway. It is driven by economics, environmental policy, and system reliability concerns. This change, from a balkanized, inefficiently operated grid to a coordinated, consolidated grid may just be the key to our renewable energy future.

We have heard much recently about California’s ambitious new climate and renewable energy goals. In his 2015 State of the State address, Governor Jerry Brown listed three main goals to be accomplished within the next 15 years: First, increase the amount of electricity the state derives from renewable sources from one-third to 50 percent. Second, reduce petroleum use in cars and trucks by up to 50 percent. Third, double the efficiency of existing buildings and make heating fuels cleaner.

For California these goals are needed to maintain progress on a trajectory to a much bigger target. The real goal is an 80% greenhouse gas (GhG) reduction by 2050, the emissions reduction the vast majority of the world’s climate scientists believe is necessary to forestall a global disaster and keep warming to two degrees Celsius.

We cannot reach our ambitious goals without a more coordinated grid. Years of research on deep penetrations of renewable energy (RE) into the region and nation’s electricity system agree that regional coordination, balancing area consolidation and related measures are essential elements for success.

Been there, studied that

Papers by NREL (Renewable Electricity Futures, Low Carbon Grid Study andstudies on wind and solar integration in both the Eastern and Western Interconnections) all emphasize the need for regional coordination the stress the value of geographic diversity in facilitating renewable energy integration cost effectively.

The consulting firm E3, in work it has done for California utilities (Investigating a Higher Renewables Portfolio Standard in California, Pathways), concluded we need regional coordination to meet deep penetrations of renewables affordably.

The same also holds true across the rest of the West. E3’s work for the Western Electricity Coordinating Council and the Western Interstate Energy Board (Western Interconnection Flexibility Assessment) revealed that 50% of regional energy supply can be reliably met with renewables, but that regional coordination is the “low-hanging fruit” for integration solutions because it reduces the need for fossil reserves to balance generation and demand fluctuations. It both saves money and reduces pollution.

Other studies done by the highly respected Regulatory Assistance Project (Meeting Renewable Energy Targets in the West at Least Cost, Teaching the Duck to Fly,Clean Energy Keeps the Lights On), analyze the renewable energy integration and grid operating experience across the country and highlight the critical role played by regional coordination among an array of measures that allow deep penetrations of renewable power in the grid.

We know how to do what’s needed for a renewable future and we know it saves money and makes the system more, not less reliable.

So, here in the western U.S., what is stopping us?

Imagine a bus with 38 drivers

The current regional electricity system is balkanized (38 Balancing Area Authorities), causing an inefficient use of the grid. This outmoded control approach relies on bilateral contracts for energy dispatch on an hourly basis in which each of the 38 control areas must build their own balancing generation and manage electricity transfers between them. This is more expensive and less reliable than a coordinated system.

Fighting the last war?

Some worry that a market could somehow prop up or extend the life of aging coal plants. Before supporting a market they want assurances that existing coal plants will be retired ahead of schedule. To them, defeating every coal boiler in the West by a date certain is the ultimate climate goal.

But putting this strategy ahead of improving the electricity system in favor of renewables could be self-defeating. We need to both fight coal plants and scale up renewables to green the electricity sector. The coal industry is in deep decline and showing no signs of recovery. Yes, let’s shut down remaining plants as fast as we can. But let’s not make it harder for renewables to take their place.

We will never get the renewable energy development we need to replace fossil generation in the current balkanized grid. Establishing regional markets, experience elsewhere has taught us, helps renewables and hurts dirty baseload generation.

Thinking several moves down the chess board

A regional electricity market is the very tool that unravels operational complexity in the western grid by consolidating control of the system, taking advantage of the region’s complementary renewable energy variability over large distances, reducing the cost of renewable integration, and preventing the wasteful duplication of transmission and generation infrastructure. It makes the grid cleaner, cheaper, faster, and more reliable. As coal continues to decline as a generation source, regional markets and grid coordination are emerging as perhaps our most important tools for building a clean energy future.