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CAISO floats changes to day-ahead market

In a bid to better position its system to accommodate net load variability, the California ISO plans to propose changes to its day-ahead market, including a shift from hourly to 15-minute scheduling.

The potential changes, set to be discussed at a March 7 stakeholder meeting, also include combining the integrated forward market and residual unit commitment processes and procuring imbalance reserves in the day-ahead market. CAISO said the proposed changes are intended to improve grid reliability and the efficiency of its day-ahead market and would allow the grid operator to extend the day-ahead market functionality to those participating in the energy imbalance market.

"Extension of the CAISO's [day-ahead market] (with fifteen minute scheduling granularity) will allow for more efficient unit commitment of resources and effective integration of renewable resources across a larger footprint," the grid operator said in a paper describing the straw proposal.

The day-ahead market enhancements initiative also is a "core element" of CAISO's plan for meeting its strategic goals of leading the transition to a low-carbon grid, keeping the grid reliable as the energy industry transforms and expanding collaboration to unlock regional benefits.

CAISO explained that although day-ahead procurement of resources in hourly blocks historically was adequate and the real-time market could manage any deviations, that no longer is the case.

"As the grid has advanced, the resource fleet has changed, and the policies regulating operation of the grid have evolved, the day-ahead market hourly procurement has resulted in a strain on the real-time market," the grid operator said.

CAISO said shifting to 15-minute scheduling granularity will ensure the day-ahead market commits resources with sufficient ramping capability by modeling ramping that more closely aligns with real-time conditions.

The grid operator will propose that bid submission remain hourly for both the day-ahead and real-time markets. In the day-ahead time frame, the bids submitted for an operating hour will be used for all four 15-minute intervals, CAISO said. Under the proposal, scheduling coordinators still will submit hourly bids for energy, ancillary services, imbalance reserves and convergence bidding. The bid amount will be the same for the hour, but the awarded amount will be able to change for each fifteen-minute interval in the hour, CAISO said.

Along with combining the integrated forward market and residual unit commitment processes, CAISO wants to introduce the procurement of imbalance reserves in the day-ahead market to ensure upward and downward capacity will be available to resolve imbalance that occurs in real-time.

"These reserves will address uncertainty between the day-ahead and real-time market and better position the CAISO system to address both under- and over-generation in the real-time," the grid operator said.

CAISO's plan is that imbalance reserves be procured based on the grid operator's net load forecast, not on the cleared demand from the integrated forward market. CAISO said the proposed imbalance reserves will address the problem posed when the integrated forward market clears below the forecast but upward uncertainty that residual unit commitment cannot address still exists because the target is based on the forecast of CAISO demand and not uncertainty.

"The imbalance reserves will also address the problem created today when the [integrated forward market] clears above the CAISO forecast [residual unit commitment], creating the risk of over-generation," the grid operator said.

The first round of comments on the straw proposal is due March 21. A final proposal could go before CAISO's board of governors in July.