In Part 1 of this series, I reported on how California is launching a regional “energy imbalancing market” to reduce the spike in the price of electricity each day during sunset hours under the state’s new green-energy power grid. This is called the “duck chart problem” in California, as the time profile of energy use looks like a duck when solar power fades out at sunset each day and conventional energy has to ramp up to supply the grid before wind power ramps up. (See chart at right. Click to enlarge.)

Argonne National Laboratories points out several major problems this regional electricity rebalancing market.

First, it is a speculative assumption that all generating sources in the Western U.S. would commit 100 percent of their hydropower and other clean power sources to participation in California’s imbalance market.  One of the major reasons cited by Argonne is the “market price risk” of reserving power for a time window of 4:30 to 6:30 pm each day that runs the risk of having to bid at prices that are under the cost to produce the power.

Moreover, only about 10 percent of the blocks of electricity offered for market bids by the Southwest Power Administration end up as power actually dispatched.  Grid congestion during sunset hours is another problem not addressed in California’s regional balancing market.

Limitations on use of federal hydropower due to environmental lawsuits to protect fish also limit the capability to respond to rebalancing market bids.

So it’s no wonder the official government studies of imbalancing markets are “benefit-only” studies, not cost-benefit studies (see here, here, and here). In other words, the government isn’t sure what the ultimate costs will be, something that any normal private business would do as a matter of course.

According to a report prepared for the American Public Power Association and the National Rural Electric Cooperative Association, cost  savings from the imbalancing markets are estimated to be from $146 million to $294 million per year.  However, this only reflects 0.72 percent to 1.36 percent of total regional electric production costs. Worse, if both the Western Area Power Administration and the Bonneville Power Administration, which run federal hydroelectric power plants, do not join California’s imbalance market, the cost savings would be even punier.

That’s why U.S. Department of Energy Secretary Steven Chu urged only one-sided benefit-only studies of imbalancing markets be conducted, instead of balanced cost-benefit studies (see here, here, and here). (Chu since has left office.)

Costs, Redundancies and Cost Shifting

The American Public Power Association says the costs of an imbalancing market could run $1.25 billion, or $3.50 per megawatt hour, over the first 10 years of operation.  More worrisome for the APPA is that an imbalancing market would morph into a redundant grid-regulating bureaucracy called a Regional Transmission Organization.

Because an imbalancing market would operate regionally over the entire Western U.S., there would be what is called cost shifting.  This is where electric generation paid for by customers in one region (likely Utah, Arizona, Oregon, Wyoming, or Idaho) would be dispatched to benefit other customers  (in San Francisco or Los Angeles).  California would duck its energy price-spike during sunset hours of each day by an indirect subsidy of cheaper, imported hydropower portrayed as a rebalancing market.

As Kenneth Rose stated in his Critique of the National Renewable Energy Laboratory Analysis of the Proposed Energy Imbalance Market in the Western Interconnection:

“The three large California investor-owned utilities (Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric, all non-participants in the rebalancing market) account for 24.5 percent of the total estimated benefit.”

If It Walks and Quacks Like a Duck, It’s a Federal Subsidy

California’s “energy imbalancing market” is a plan mainly to use cheap federal hydropower from the Bonneville and Western power administrations — and Warren Buffet’s Pacificorp’s portfolio of dams, power plants, and wind farms — to bail out California’s green-power grid from a design defect in its green-power plan.  Ironically, green power would make California more dependent on imported power at critical peak ramping times.

California’s green-power mandate already needs a partial bailout of cheap federal hydropower during the critical sunset hours of each day. Probably most troublesome of all is that there is no apparent contingency plan if California’s plan doesn’t turn out all “ducky.”

California is trying to create what officially is called an “energy imbalance market” to cut off an emerging daily two-hour energy-pricing crisis. The crisis isn’t so much a technical problem of how to ramp up the grid fast enough, as how to cut down a sudden increase in electricity prices during the sunset hours of each day.

An energy imbalance is the difference between live demand and prearranged, scheduled resources.  To deal with that, the grid operator schedules power deliveries across regional balancing authorities to rebalance the system. California is part of the Western Interconnection Coordinating Council, which includes 33 control areas shown in the graph nearby.

In response, California’s electric grid operator, the California Independent System Operator, is negotiating with the Warren Buffett-owned PacifiCorp electric power company to provide cheap hydropower to rescue California’s attempt to shift to 51 percent green power by 2020 or sooner. 

On p. 10, the ISO’s 2014-2016 Strategic Plan reads:

“Two years ago, the ISO identified the need for more regulated collaboration as a key strategy to help manage resources and our infrastructure effectively and cost-effectively. We are now offering to provide our existing real-time energy imbalance market, which has been in effect since 2009, as a service to other balancing authorities. The ISO is currently working with stakeholders to develop policies that will provide this service to PacifiCorp, with the potential to expand the operation to other utilities. The energy imbalance market automates optimal generation dispatch, on a five-minute basis. When the system goes into operation in 2014, the ISO and PacifiCorp are confident of being able to demonstrate that the energy imbalance market reduces costs and emissions” (boldface added).

However, an “energy imbalance market” was never envisioned in the ISO’s Five Year Strategic Plan 2009-2013.

And the California Energy Commission addressed an energy imbalance market in its Integrated Energy Policy Report of 2012, but not in its 2010 report. California’s energy imbalance market is a hastily improvised plan to cut off an emerging crisis.The Federal Energy Regulatory Commission has approved California’s implementation of an energy Imbalance market by October 2014.

In today’s California energy market, the grid operator already runs an intra-state rebalancing market to balance loads and resources within its borders.

CA ‘duck chart’ problem can’t be ducked

An emerging problem with California’s new green power grid is how to ramp up enough conventional power each day between two events: 1) when solar power is sunsetting (going dark); and 2) when the mostly nighttime wind power isn’t spinning enough yet to take over.

In California, this ramping problem is called the “duck chart” problem,” seen in the nearby chart, (click to enlarge) where the lines like a duck with a tail, protruding belly and beak. The “neck” area is sunset every day when conventional energy “ramps up” to replace solar power. As shown on the chart, this ramping problem becomes more pronounced from about 4:15 pm to 6:15 pm each day (between 16:15 and 18:15 pm on military time or 24 hour calculated day).

The “duck chart” shows there is a demand in California to ramp up 13,500 megawatts of conventional power in a narrow two-hour window of time at sunset each day to replace solar power going offline.That would be enough power for about 6,750,000 homes per hour.

Warren Buffet to the Rescue

An imbalancing market would be a real time backup energy market that could dispatch power within five minutes’ notice.  But the primary purpose of a regional balancing market would not be to assure the delivery of ramp-up power, but rather to balance out the high prices that would result during the peak sunset hours of the day. Even green power advocates admit there is plenty of backup power available to be imported from other states. Each electric utility also has “demand management” plans in place to shift power usage to non-sunset hours to duck the “duck chart” problem.

An energy imbalance market would mainly have to rely on cheap hydropower in the Western United States to offset high green power prices and high “peaker” power prices during the sunset hours of the day. 

Ironically, California refused to classify hydropower as “renewable energy” under the AB 32, the California Global Warming Solutions Act because it didn’t want such cheaper, clean power to drive green energy out of its protected position in the market.Now, cheap hydropower, much of it provided by Warren Buffett’s PacifiCorp, will have to come to the rescue of the green power grid.