CAISO Public Page 1

CAISO Public

Capacity Trading: The CAISO Experience

Session 4

Cross-border Energy and Capacity Trading

Mark Rothleder – VP Market Quality and Renewable Integration

August 20, 2018

CAISO Public Page 2

Today’s Electric Grid

CAISO Public Page 3

The balancing of supply and demand

Supply

Demand

Inter-Regional

Interchange Sales Purchases

Load

Losses

Power

Generated

Decrease Increase 60

Frequency

Supply

Demand

Inter-Regional

Interchange Sales Purchases

Load

Losses

Power

Generated

Decrease Increase 60

Frequency

CAISO Public Page 4

General Resource Adequacy Concepts

• System Capacity

– Capacity eligible to satisfy system planning reserve

margin including import capacity

• Local Capacity

– Resource capacity that is effective in relieving

constraint within defined transmission constrained

area

• Flexible Capacity

– Capacity of a resource that is operationally able to

respond to Dispatch Instructions to manage

variations in load and variable energy resource

output.

CAISO Public Page 5

Annual procurement & demonstration of generic RA

Local

regulatory

authority (LRA)

mandates

procurement of

90% of next

year’s peak

load forecast.

CPUC

LSE

LSE

Supplier

Supplier

CPUC CAISO

“You must procure”

Bi-lateral procurement activity

LSE penalties ($) CPM decision (MW)

Demonstrations

CAISO Public Page 6

Monthly procurement & demonstration of generic RA

CPUC

LSE

LSE

Supplier

Supplier

CPUC CAISO

“You must procure”

Bi-lateral procurement activity

LSE penalties ($)

Demonstrations

Outage replacement & CPM

Local

regulatory

authority (LRA)

mandates

procurement of

115% of next

month’s peak

load forecast.

CAISO Public Page 7

“Import Deliverability” is assigned every year to LSEs

• Assignment of RA import capability to LSEs –

Maximum import capability (MIC) on each intertie is available

to LSEs for procuring RA capacity from external resources; it is

not assigned directly to external resources.

• Process for allocating MIC to LSEs – Steps 2-13 in Tariff

Section 40.4.6.2.1, Available Import Capability Assignment

Process.

• Annual determination of MIC – MIC values for each

intertie is calculated annually for a one-year term.

CAISO Public Page 8

MIC Methodology - Step 1

• Historically Based

– Select 4 hours by choosing 2 in each one of the last two years

(and different days within the same year) with the highest total

net import level when peak load was at least 90% of the annual

system peak load.

– The average of net import schedules (0 MW is assigned when

net imports are negative) + the average of unused ETC

(adjusted for future year availability) technically should

represent the Maximum Import Capability (MIC) for each tie.

– In order to assure that all pre-RA import commitments (already

paid by ratepayers) are allowed to count for RA until they

expire, an uplift is added to the above established methodology

for certain branch groups and this higher number is published

and divided among LSEs as MIC.

CAISO Public Page 9

Forward-looking MIC – what motivated the change

• Low RA import capacity at certain interties limits ability

of external resources to provide RA capacity and their

ability to obtain project financing

– MIC is calculated on amount of energy ISO Balancing Authority

Area (“BAA”) imported historically during peak system load

hours

– Low MIC values at certain interties limited use of external

resources in those areas to meet RA requirements

– Inability to offer RA created a disadvantage for external

renewable resources seeking contracts with load-serving

entities within the ISO

– Project financing for new resources depends on sufficient and

stable long-term contractual revenue stream

CAISO Public Page 10

Expanding Resource Adequacy (“RA”) Import Capability

Solution consists of two components

• Expansion of RA import capability is an element of public policy

objective for Transmission Planning Process (“TPP”) to identify

needed transmission

– Based on amount of external resources in 33% RPS portfolios,

specify required or “target” Maximum Import Capability (“MIC”) MW

values for RA deliverability

– Determine whether additional network upgrades are needed to

support target MIC MW values

– Include these upgrades in Comprehensive Transmission Plan

• In annual MIC assessment, expand MIC values to target levels

as required in order to meet the public policy objectives

CAISO Public Page 11

Appendix

CAISO Public Page 12

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MW

Generation Breakdown --- 02/18/2018

Nuclear Geothermal/Biomass/Biogas Thermal Hydro

Net Interchange Wind Solar Curtailment

Total CAISO Load CAISO Net Load

Net Load = Load -Wind -SolarRenewablesCurtailment

On Sunday, February 18, 2018 the CAISO experienced a

minimum net-load of 7,149 MW @ 14:06 3-hr, 13,597 MW ramp met by:

- Import ~ 62%

- Gas – 28%

- Hydro – 10%

70.6% of the load

served by Renewable

Resources

CAISO Public Page 13

In 2017, the CAISO peak load was 50,116 MW and

occurred at 15:58:24 on Friday, September 1, 2017

15:58 to 18:44

• Net Load peaked 2

hours and 46

minutes after peak

demand

• Peak load

decreased by

2,148 MW

• Solar production

decreased by

7,199 MW

• Net Load increased

by 5,258 MW 0

4,000

8,000

12,000

16,000

20,000

24,000

28,000

32,000

36,000

40,000

44,000

48,000

52,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Lo

ad

& N

et L

oad

(M

W)

Generation Breakdown --- 09/01/2017

Nuclear Geothermal/Biomass/Biogas

Thermal Hydro

Net Interchange Wind

Solar Curtailment

Total CAISO Load CAISO Net Load

Net Load = Load -Wind -Solar

Load