CAISO’s net energy exports have increased sharply this year, with imports being displaced by increased output from California’s hydroelectric and natural gas resources, the ISO’s Department of Market Monitoring (DMM) said Dec. 1.

Speaking during a call to discuss the DMM’s market report for the first and second quarters of 2023, Amelia Blanke, the department’s manager of monitoring and reporting, said the trend reflected the reduction in imports and a “tremendous amount” of exports coming out of CAISO into the Western Energy Imbalance Market, flowing into the Southwest and Northwest, with substantial volumes going into BC Hydro’s territory.

The flows tended to reverse during CAISO’s net load peak hours, she said — except for the exports into BC Hydro. Most of the imports into CAISO came from the Desert Southwest.

While the DMM hasn’t released the Q3 report, Blanke noted the quarter saw “absolutely unprecedented levels of exports.”

The Monitor highlighted the significant role hydro played for California this year.

“The weather pattern that prevailed coming into 2023 is one that resulted in relatively high rainfall and snowfall in the CAISO BA,” Blanke said. There was less precipitation in the Northwest, though, resulting in a relative shift of hydroelectric output between the Northwest and CAISO’s footprint.

The strong hydro equated to low prices during many intervals in Q1 and Q2. Those quarters typically see the highest levels of hydropower in combination with solar and wind, increasing the frequency of intervals with very low — and even negative — prices.

Blanke also highlighted the new resources that have been added to the CAISO fleet, including a “very large penetration” of battery resources.

The year began with high natural gas prices, which declined across the system in Q2, bringing wholesale electricity prices down as well, Blanke said.

Q1 electricity prices average about $97/MWh in the day-ahead market, $93/MWh in the 15-minute market and $87/MWh in the five-minute market. Q2 saw much lower prices across the board, though there was still a persistent gap between the five- and 15-minute markets, and lower 15-minute prices on average compared with the day-ahead, boosting the profitability of virtual supply.

“Historically, that’s been due in large part to a consistent imbalance conformance for the CAISO BA,” Blanke said, referring to the process by which the ISO dispatches units up and down to match grid conditions to prevent frequency deviations.

While CAISO has assumed that it can rely on flexible ramping resources to reduce the need for imbalance conformance, that did not hold for most of the period in covered by the analysis.

But CAISO did change some operational practices in the middle of Q2 to reduce the need for conformance.

“It was the first time in many years that our quarterly metrics show a reduction in imbalance conformance,” Blanke said.