I visited California ISO. I saw the future. It was awesome.

Do you know who California ISO is?  Its OK if you don't, but the truth be told, if you live in California then California ISO is a BIG part of your life.. every .. single ... day.

California ISO is the California Independent System Operator, it is a mandated non-profit entity headquartered in Folsom, California with the specific purpose of managing the bulk of the California electricity grid.  This means managing where electricity is being generated, where and how it is routed, what loads are serviced and the overall health of entire system, 24 hours a day, 7 days a week.  It is the brain center of the entire operation.

For anyone who is interested in Energy, especially Renewable energy and how it is affecting the entire grid system, CAISO is a bit of a magical place.  The incredibly bright staff at this facility are not only required to manage the day to day integration of all varieties of generation and loads, but also be a big part of the planning process for the future of the grid.  My esteemed colleague Russ Jones (a thanks to him for setting up the visit) and I had a wonderful tour of CAISO and met with some of their top grid operators on Oct 2, 2015.  Below are a few of most interesting parts of the visit.

What is CAISO and what do they do?

Formally, CAISO is a rate-payer funded, non-profit, public benefit corporation.  Their "boss" is FERC (...I guess everyone really does have a boss...:/) and CAISO has several responsibilities.  CAISO runs the wholesale energy market here in California, which is basically split into two segments 1) the day-ahead market, and 2) the real time market.  In aggregate, the total size of the California energy market is $10.2 - $10.4 billion / year, and the historically highest amount of power on the California grid was July, 2006, at 50,270 MW.  50 GW!  That's a lot of juice!

What is the Day - Ahead Market for energy?

The day-ahead energy energy market sets prices for energy in California for the following day, and it is done through a "bid stack process" by which owners of generating assets quote CAISO what they are going to charge to use their generation for the next day.  CAISO collects all of the bids, looks at their forecast and then sums / stacks the bid generation from lowest cost to highest cost until the entire day-ahead forecast is met, for some $/kWh price of X.  Then, everyone who bid at or below X will receive the business for the following day, which then sets the market price and clears the bids. Everyone who bid > X loses out, and their generation will not work the next day.  The day-ahead bidding ends at 10AM everyday, for generation the following day.

A few other interesting facts, the smallest generation asset on the CAISO system is 10MW.  Basically, you don't exist to them unless you are at least 10MW, which gives a real sense for the scale of the operation.  Also, renewable energy providers in CA above 10 MW often bid a price of $0.00 for their generation, all but guaranteeing purchase of their energy.  Why? Because the wind is going to blow, and the sun is going to shine, there a'int nuttin' to be gained by not using deployed renewable energy assets, so they will take it at any price.  

By far the biggest players in the CAISO process are the utility companies and the IPPs with generating assets in the State, which contract with other asset owners / operators through frameworks such as Power Purchase Agreements.

What is the Energy Imbalance Market / Real Time Market?

CAISO's goal is to be so good at predicting energy needs day-ahead that the real-time market for energy is very very small.  In actuality, the real time market is about 10% the size of the day-ahead, so it still a sizable chunk.

The real time market exists to fill the hole in generation between forecast demand and actual demand, and the price for energy on this market is higher than in the day-ahead, because it is required to be very flexible.  It needs to come on fast, stay on to service real time need, and then go off fast.  Batteries in grid-sized energy projects look to be one of the newest players in this market, with resources that can react quicker than natural gas peaker plants and the like.

Where is CAISO?

CAISO headquarters is in Folsom, CA.  No cameras are allowed inside the facility, but here is a picture of your truly at the front, and a picture of the control room from the CAISO website.  They have a very nice LEED Platinum office building with about 600 employees.

What are the tools of the trade in grid management?

The grid operators at CAISO exist to make sure all users are receiving high quality, stable electricity from the system.  But when you process over 27,000 transactions a day and are managing an infinitely complicated mix of generation and load, there are several tools that operators depend upon for load and generation management.  For example, CAISO has about 1400 MW of demand response, or loads which they can control as they see fit.  They also have the real time energy market, to provide generation in short notice when needed.  They also have more exotic options, such as a pumped hydro storage facility (pumping water up a hill) and a big resistor bank they call "the toaster" to burn off excess energy if needed.  No comment from them on if it actually makes toast.  

As explained, CAISO works hard to keep the frequency of the grid within a narrowly specified range.  Too much generation on the grid pushes the frequency higher.  Too much load will push it down.  CAISO has the ability every 4 seconds to make an adjustment and keep things in control.  Its like they can drop an oar in the water every 4 seconds to finely adjust the speed and direction of one of the world's largest aircraft carriers.  

At a top level, the CAISO website shows real time the generation, load and renewables mix on the grid in California.  It is beautiful.  

What is the current and future impact of renewables on the grid?

In just PV alone, California has about 6,000 MW of solar in the form of utility scale / larger scale solar power plants.  In behind-the-meter rooftop, CAISO estimates another 3,000 MW total.  In aggregate, that is already 20% of the states generating assets!  And the amount installed is only getting bigger.  CAISO estimates another 3,000 MW of behind-the-meter rooftop installed by 2020.

Dealing with this much PV is already proving tricky.  CAISO has doubled down on high tech weather forecasting efforts to help predict the availability of renewables.  But in talking about the future, CAISO is far more excited about "smart inverter" technology to smooth the impact of renewables than other techniques, such as battery energy storage.

PV inverters connected to the grid today are required to comply with "anti-islanding" regulations, which means if connection with the grid drops, then the inverter needs to stop generating and wait for the grid connection to return.  This is primarily for the safety of line workers.  But CAISO would prefer more dynamic inverters that can read the condition of the grid, such as an elevated frequency, and respond accordingly.  Because individual nodes would help in stabilizing the system at many points, this would make it easier for CAISO to complete the overall mission.

I think this is a terrific bit of insight and I would expect leading inverter companies to respond accordingly over the next several years with dynamic frequency response and the like.

When asked about how their strategies for managing large renewable penetration compare to other operators / countries, such as Denmark, staff at CAISO made two great points.  First, the CA grid is much larger and more complex than other grids with deep penetration.  Second, the "quality" of the electricity CAISO is required to deliver is often much more stringent than other countries and grid operators.  The frequency and voltage bands are often much tighter and require much finer control.  Its an altogether different type of beast.

What about battery energy storage?

There are certainly places in the world where large amounts of battery storage makes great economic sense today.  However, CAISO sees grid-connected battery storage as fairly small potatoes for the next 5 - 10 years, with only about ~20MW of experimental systems connected to the grid here in California, and maybe another 100 - 200 MW by 2020.

A recent report from IEEE to the DOE also echoes that other techniques in managing larger renewable penetration may be more cost effective than battery storage for the forseeable future.

So whats the final word?

My big take away from the visit, other than just being totally impressed with the entire operation and every staff member we met, was that CAISO is fully prepared for the challenges of a renewable energy dominated future.  They spend their time planning and strategizing about how and when renewables will dominate the CA grid, not if.  They are actively involved and in many cases leading the discussion on deeper renewable energy penetration, and the CAISO staff is clearly up to the task.

I sleep a lil better at night knowing the precious electricity needed to keep my ice cream frozen is coming from a great group of 24/7 warriors at CAISO's energy castle nestled into the hills of Folsom, CA.

~ Adam, Managing Director, OC Renewables