UPDATE: Since the July 2016 publication of this original blog post, California Gov. Jerry Brown announced that he will wait until January 2017 to introduce legislation to expand California’s Independent System Operator (CAISO), which manages the state’s electric grid, beyond its borders.
The governor’s plan is good news for California and the other western states. With only a few weeks left in California’s legislative session, stakeholders were still working out remaining questions about how a western regional grid can deliver the significant benefits to the West’s economy and the environment (as shown in the SB 350 studies).
Stakeholder groups, including Environmental Defense Fund (EDF), lawmakers, and regulators covered a lot of ground this session. Working together, we identified the important issues related to successfully implementing a western regional grid that should go into legislation.
EDF strongly thanks the governor’s office and legislative leaders for the focus and time dedicated to regionalization, and looks forward to working diligently over the next few months to help develop the benefits of a regional energy market for California and its neighbors.
Technology constantly advances, as do related industries. So, why does it seem like time stands still for the electricity industry? Compare telecommunications: Since the arrival of the telephone in the late 1870s, we’ve seen consistent upgrades to phones and transmission technology, including larger and larger coverage areas. But in the West, the way we make, move, trade, and regulate electricity still involves old coverage maps and 38 difference balancing authorities. California is exploring a way to change that on a large scale.
State lawmakers and the California Independent System Operator (CAISO), which controls much of the state’s electric grid, are now considering the first steps to create an integrated, western regional energy market. This process, which many are calling “regionalization,” would connect grid operators throughout the West, so they can share resources more easily and efficiently – a common approach in the eastern and midwestern U.S.
The geographic size of a regional grid would help integrate more renewable energy. Due to California’s impressive clean energy leadership in the last decade, we now produce so much solar power that, at times, we cannot use it all when it’s available. If California’s electric grid were connected to neighboring states, California could export its excess clean energy when the sun is shining here, and buy wind from Wyoming when it isn’t. This would increase our ability to rely on renewables and lower our costs.
Final CAISO studies released earlier this month project a West-wide system operator would lower greenhouse gas emissions considerably by 2030 and help affordably integrate the renewable energy brought online by SB 350. What’s more, it can accomplish this while being designed to respect the diverse policies of each individual state.
For these reasons, EDF, Natural Resources Defense Council (NRDC), Union of Concerned Scientists (UCS), and Center for Energy Efficiency and Renewable Technologies (CEERT) sent a letter late last week to California legislative and gubernatorial leadership supporting regionalization, and asking them to ensure greenhouse gas reductions and local air quality benefits.
Potential benefits of a western regional energy market
According to the CAISO studies, a western regional grid could accomplish the following:
- Reduce harmful pollution – Greenhouse gases that cause climate change would drop considerably in 2030.
- Save customers money – California households could save $300-500 per year due to lower-cost renewables, lower energy-import costs, and other savings stemming from a larger, more integrated grid.
- Create more jobs – A regional grid could create between 10,000 and 19,000 jobs each year in California between 2020 and 2030, depending on the state’s choices about its Renewable Portfolio Standard (RPS). At least 13 percent of the possible 10,000 jobs and 23 percent of the possible 19,000 jobs are expected within disadvantaged communities. But the choices about the RPS’s “Bucket System” – the mechanism that categorizes types of renewable energy based on location and other factors for eligibility to meet the state’s clean energy goals – affect these numbers dramatically. In fact, the studies show removing the Bucket System would cost 110,000 solar construction jobs in California between 2020 and 2030.
With potential benefits like these, a well-designed regional grid – one that protects California’s and other western states’ interests – is worth pursuing.
Designing a successful regional grid
Specifically, the letter EDF, NRDC, CEERT, and UCS submitted to California’s leadership recommends the following:
- Ensure greenhouse gas emissions benefits – Though the studies show a long-term reduction in greenhouse gases, we understand that a regional grid is designed to be “policy neutral,” meaning it would not impose any particular policies on participating states. To understand the potential impact on California’s greenhouse emissions (as well as emissions outside of California), it will be important to consistently verify greenhouse gas emissions across the region. But tracking emissions doesn’t have to burden the regional market: we could use data from existing processes and states interested in greenhouse gas policies could pay the cost.
- Air quality measures for California communities – Any potential impacts of a western regional grid on harmful air pollution in California’s disproportionately impacted communities must be understood and fully mitigated. This could include directing the California Air Resources Board and the California Public Utilities Commission to work together to authorize clean energy resources that reduce reliance on natural gas in these areas and directly benefit these communities.
- Fair processes for all – The market should include a stakeholder process that provides opportunities for meaningful public participation. Part of that participation should guarantee access to data underlying decisions and the chance to propose alternatives. Importantly, the process should include representatives from a wide variety of interests, including utility and distributed clean energy representatives, customers, and environmental groups.
- State autonomy – California and other states can and must retain control over the ability to develop their own energy policies. In order to achieve this, the regional grid’s governance must acknowledge and respect the rights of all states to oversee how their utilities procure electricity.
A regional energy market is worth it
It is worth creating a regional grid that truly works for California and the West. In doing so, the grid can undoubtedly accommodate even higher levels of clean, renewable resources while reducing pollution and protecting each state’s energy policy autonomy. While regionalization is a complicated process, there is significant experience the west can draw from, as many states outside the region are already successfully participating in multi-state energy markets. By implementing the steps above, California can play an important role in taking the first big step toward a 21st century grid for the West.