This presentation describes how a new wholesale electricity market for energy imbalance ancillary services could be implemented and operated.

In the Western Interconnection, there is significant interest in improving approaches to wide-area coordinated operations of the bulk electric power system, in part because of the increasing penetration of variable generation. One proposed solution is an energy imbalance market. This study focused on that approach alone, with the goal of identifying the potential benefits of an energy imbalancemarket in the year 2020.

The anticipated increase in variable renewable generation, such as wind and solar power, over the next several years has raised concerns about how system operators will maintain balance between electricity production and demand in the Western Interconnection, especially in its smaller balancing authority areas (BAAs). Given renewable portfolio standards in the West, it is possible that more than 50 gigawatts of wind capacity will be installed by 2020. Significant quantities of solar generation are likely to be added as well. Meanwhile, uncertainties about future load growth and challenges siting new transmission and generation resources may add additional stresses on the Western Interconnection of the future. One proposed method of addressing these challenges is an energy imbalance market (EIM). An EIM is a means of supplying and dispatching electricity to balance fluctuations in generation and load. It aggregates the variability of generation and load over multiple balancing areas (BAs).

This paper considers several alternative forms of an energy imbalance market (EIM) proposed in the nonmarket areas of the Western Interconnection. The proposed EIM includes two changes in operating practices that independently reduce variability and increase access to responsive resources: balancing authority cooperation and sub-hourly dispatch. As the penetration of variable generation increases on the power system, additional interest in coordination would likely occur. Several alternative approaches could be used, but consideration of any form of coordinated unit commitment is beyond the scope of this analysis. This report examines the benefits of several possible EIM implementations--both separately and in concert.