The CAISO Board of Governors and the Western Energy Imbalance Market Governing Body on Wednesday adopted storage and resource-sufficiency upgrades intended to promote grid reliability.

Exercising joint authority on WEIM matters, both boards approved changes to the interstate market’s resource sufficiency evaluation (RSE). The test is meant to ensure that each WEIM participant enters a trading hour with enough capacity and ramping capability to supply its own needs and to prevent participants from “leaning” on the market to meet internal demand.

The two bodies adopted a first phase of changes to the RSE in February. Scheduled to take effect this summer, they include provisions to measure a participant’s available supply more accurately and allow demand response programs to count toward the RSE. (See CAISO, WEIM Adopt Resource Sufficiency Changes.)

The second phase of changes approved Wednesday will allow transfers into balancing authority areas that failed the RSE, subject to surcharges.

“These optional transfers, termed ‘WEIM assistance energy,’ will enable BAAs that are short supply to access the WEIM’s efficient dispatch while still providing incentives for BAAs to participate in the WEIM with sufficient resource to meet their own load,” Anna McKenna, CAISO’s vice president of market policy and performance, wrote in a Dec. 7 memo to the ISO and EIM boards.

Market participants helped develop the changes through CAISO’s RSE enhancements stakeholder initiative. NV Energy (NYSE:BRK.A), for example, raised concerns in February about the RSE being too restrictive and reducing the market’s ability to help in potential energy emergencies, which Nevada and California have faced in summer heat waves the past three years.

The utility asked CAISO to develop a mechanism to allow excess supply to “be available to the distressed EIM entity at an appropriate scarcity price,” Market Policy Manger Lindsey Schlekeway wrote in a Dec. 14 letter to the boards.

“NV Energy supports the CAISO’s final proposal for the resource sufficiency enhancements phase 2 because it creates a financial mechanism that EIM entities can opt in to,” Schlekeway wrote. “We recognize this is not a final solution for the resource sufficiency enhancements, but it is of critical importance not to delay the implementation of this reliability enhancement past the summer of 2023 for grid reliability.”

The ISO’s Market Surveillance Committee (MSC) said in a written opinion that the change will likely produce mixed results, “but we understand that the one or two BAAs that may utilize it believe it will be beneficial. However, it is our belief that these changes still leave the RSE almost certainly in need of further refinement.”

Another change exempted CAISO from counting low-priority exports in its RSE obligations.

“This change accounts for interactions between WEIM energy transfers and ISO exports that can occur in the real-time markets and can result in [CAISO] erroneously failing the RSE when it has sufficient internal supply resources to meet its load obligations,” McKenna wrote. “WEIM BAAs receiving these exports would still be permitted to count the supported supply towards meeting their RSE obligations.”

The MSC supported the change as “it clearly constitutes improvements in the RSE relative to current practice.”

Storage Enhancements

Additional reliability enhancements approved Wednesday are meant to better manage an increasing amount of battery storage in CAISO and the WEIM.

The ISO’s energy storage enhancements stakeholder initiative, begun in February 2021, generated the proposals. California and WEIM participants in the Southwest need battery backup power as solar ramps down late in the afternoon but demand remains high in heat waves from air conditioning use.

CAISO has been adding battery storage rapidly since the rolling blackouts of summer 2020, when it had only 200 MW, and it now has 4,700 MW online, with a goal to add 10 GW or more. Other WEIM entities are expected to add significant amounts of storage in coming years.

The ISO’s relatively recent experience with battery storage has led it to make corrections and adjustments, which it expects to continue as it moves forward.

“Most of the storage policy and the market tools that we’re using on the system today were implemented at a time before we had very much storage capacity actually operating and performing,” Gabriel Murtaugh, the ISO’s storage sector manager, said in Wednesday’s meeting. “So, this policy really is the ISO looking back on performance of these resources over the last few years and thinking about where we need to go and how we need to evolve.”

The grid reliability enhancements include software tools to better account for a storage resource’s state of charge when the resource is providing regulation service, requiring it to quickly charge or discharge to meet grid needs. In a September heat wave that brought CAISO close to ordering blackouts, some batteries discharged early and were not available when needed most.

A second component of the effort establishes new bidding requirements for storage resources that provide ancillary services. It requires “scheduling coordinators for storage resources to submit economic energy bids to charge when awarded upward ancillary services, or economic bids to discharge when providing regulation down,” McKenna wrote. “This, coupled with the first change, will ensure that a storage resource is available to provide awarded ancillary services.”

McKenna noted some stakeholders — particularly Vistra (NYSE:VST), a major operator of utility-scale battery storage in California — had expressed concern about the new bidding requirements “potentially reduc[ing] how much ancillary services storage resources may be awarded, which could impact resource profitability.”

“The ISO recognizes this limitation, [but it] has experienced operational issues during some periods in which storage resources that are scheduled to provide ancillary services may be unable to do so due to either too high or too low of state of charge,” she wrote. “This situation can threaten grid reliability if operating reserves from such resources are unable to be deployed during a contingency outage event. This typically occurs when storage resources are at very high or very low levels of state of charge and can be less responsive.”

The changes require FERC approval before they can take effect. Vistra indicated in a letter to CAISO that it might challenge the ancillary service proposals, which it said “would lead to inefficient [and] potentially harmful market outcomes in implementation if these proposals are approved by FERC.”