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California ISO eyes changes to day-ahead market

Houston β€” The California Independent System Operator is proposing major changes to its day-ahead market, including moving from hourly to 15-minute increments, partly so the grid operator can better handle net load variability, ramping and periods of over-generation.

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Putting the changes in place will allow Cal-ISO to extend its day-ahead market function to participants in the Western Energy Imbalance market, according to a straw proposal released Wednesday.

Cal-ISO said the proposal would help it meet its three main strategic goals: reducing carbon dioxide emissions; managing the grid as the energy sector evolves; and, collaborating for regional benefits.


A key part of the proposal calls for a 15-minute day-ahead schedule. Cal-ISO currently procures hourly blocks in the day-ahead market, which makes it challenging to ramp between operating hours, especially in the morning and evening, the grid operator said.

"Fifteen-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," Cal-ISO said.

Increasingly, Cal-ISO is seeing periodic late afternoon ramps in the 12,000-MW to 13,000-MW range as solar generation falls off.

The grid operator said following the load curve more closely will result in less strain on the real-time market.

Shifting to a 15-minute day-ahead schedule could open up opportunities for Northwest hydroelectric resources, according to Cal-ISO.

"By moving to fifteen-minute granularity in the [integrated forward market,] the hydro fleet can be better utilized to meet the forecasted steep ramps in the CAISO and receive imbalance reserve awards to address uncertainty that may materialize," the grid operator said.

Under the proposal, bid submissions will remain hourly for the day-ahead market, but they will be used for all four 15-minute intervals as they are in the current real-time market.

"Scheduling coordinators will still submit hourly bids for energy, ancillary services, imbalance reserves, and convergence bidding," Cal-ISO said. "The bid in amount will be the same for the hour; however, the awarded amount can now change for each fifteen-minute interval in the hour."

Cal-ISO is also proposing to allow bid-in load and variable energy resources to shape their economic bids based on the relative forecast, an option that is already available for variable resources in the real-time market.

Cal-ISO's day-ahead market needs to be changed in light of the region's growing renewable energy fleet, according to the grid operator.

Currently, the integrated forward market may procure less than Cal-ISO's demand forecast. When that happens the "residual unit commitment" procures enough resources to meet real-time demand. Resources that receive a RUC award must submit economic bids in the real-time market. The process isn't suited to handling over-generation, according to Cal-ISO.


Cal-ISO is proposing to combine its integrated forward market and residual unit commitment processes and begin procuring imbalance reserves in the day-ahead market to ensure that 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.

The imbalance reserve requirement will be based on potential imbalance needs that occur between the forward market and real-time market, Cal-ISO said. The requirement will be split between 15-minute and five-minute eligible resources in both the up and downward direction. Cal-ISO said it will have a balancing authority area imbalance reserve requirement and will be able to procure reserves in sub-regional zones, similar to ancillary services procurement.

All generators, imports and exports can submit bids to provide upward and downward imbalance reserves, which will replace the current residual unit commitment availability bids.

The costs for the imbalance reserves will be allocated to resources that cause the need to use the reserves by deviating from their forward market schedule.

Cal-ISO has scheduled a March 7 stakeholder meeting on the proposal and initial comments are due by March 21. The power grid operator expects to have a final proposal ready for a board vote in late July.

--Ethan Howland,
-- Edited by Matt Eversman,