Overview of Regional Market Development in the Western Interconnection
The rapid growth of renewable energy prior to 2014 was one of the many drivers that led to the formation of the EIM, with utilities seeking cost-effective tools that could reliably integrate these variable resources. A number of factors, including state renewable portfolio standards, federal tax credits, and the increasingly cost-competitiveness of renewables, has resulted in even greater renewable energy deployment since 2014.3 Western Interconnection utilities have responded by growing their own renewable energy portfolios, while simultaneously realizing millions of dollars in cost savings through their participation in the EIM. Newly confident in the benefits to be realized through more efficient market operations, Western utilities now appear eager to examine additional market services.
As a result, competition for market offerings in the West has drastically increased in recent years. While developing a West-wide RTO remains elusive, there seems to be widespread support for an incremental approach to further market development. This incremental approach is characterized by the latest market proposal to add day-ahead market services to the EIM – also known as the “EIM + Day-Ahead Market” or “EDAM.” The following discussion begins with a summary of the currently available market options in the West and concludes by highlighting takeaways and lessons learned from this region’s past successes and failures with regional market development.