{"id":26654,"date":"2026-10-08T11:01:12","date_gmt":"2026-10-08T16:01:12","guid":{"rendered":"https:\/\/blogs.edf.org\/climate411\/?p=26654"},"modified":"2026-10-08T12:05:09","modified_gmt":"2026-10-08T17:05:09","slug":"market-boundaries-matter-western-electricity-markets-can-better-share-affordable-power","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/climate411\/2026\/10\/08\/market-boundaries-matter-western-electricity-markets-can-better-share-affordable-power\/","title":{"rendered":"Market boundaries matter: Western electricity markets can better share affordable power"},"content":{"rendered":"\n

This blog was co-authored by Kelsie Gomanie<\/a> at the Natural Resources Defense Council<\/em><\/p>\n\n\n\n

The Western U.S. grid is entering a historic period of transformation. Today, moving low-cost power across the region is often complicated by a maze of separate trading agreements among grid managers, known as balancing authorities. New day-ahead markets are designed to change that by making it easier to share power across balancing authorities, helping reduce electricity costs, strengthen grid reliability and accelerate clean energy deployment across the West. However, the success of these benefits depends on the rules that govern how day-ahead markets operate and coordinate with one another.<\/p>\n\n\n\n

As two separately optimized day-ahead markets \u2014 the California Independent System Operator\u2019s Extended Day-Ahead Market and the Southwest Power Pool\u2019s Markets+ \u2014 are implemented, the Western grid will partition into multiple market footprints. This shift introduces critical market “seams” \u2014 operational and economic boundaries that create dispatch inefficiencies, trade hurdles and substantial administrative burdens if left uncoordinated.<\/p>\n\n\n\n

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What are seams?<\/h2>\n\n\n\n

A seam is a border between two separately run electricity markets. Power can cross it, but, because neither market can see the full picture on the other side, the trade of that power can be inefficient. This often leads to cheaper resources \u2014 often including wind and solar \u2014 being underutilized, which may impact electricity costs, access to reliable power and the potential for clean energy build-out.<\/strong><\/p>\n<\/blockquote>\n\n\n\n

To quantify the financial and operational stakes of this market division, the Natural Resources Defense Council and Environmental Defense Fund commissioned Aurora Energy Research to conduct a comprehensive analysis<\/a> that modeled the Western power grid across four distinct market footprint and friction scenarios. The study results present a road map for Western decision-makers: While a unified single market offers the highest economic benefits, implementing best-in-class seams management in a multi-market West can still unlock up to $840 million in annual cost savings<\/strong> that would be lost in uncoordinated, poorly-managed seams agreements.<\/p>\n\n\n\n

Crucially, these modeled cost figures represent a conservative floor, not a ceiling. Other factors related to utility operations and the real-world implementation of seams agreements can add extra costs that are difficult to model. In a time of rising energy prices, mitigating seams costs can go a long way to alleviating further strain on ratepayers and the function of the Western energy system overall.<\/p>\n\n\n\n

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Estimating seams costs<\/h2>\n\n\n\n

Aurora\u2019s modeling evaluated four scenarios for a 2032 study year, chosen as an example year when both day-ahead markets will be fully implemented, holding generation capacity and demand constant across scenarios based on published utility integrated resource plans, which are long-term plans that explain how a utility expects to meet future electricity demand. These scenarios include:<\/p>\n\n\n\n