Considerations for joining the Western Energy Imbalance Market – Part 2: What do I need to know before joining?
February 16, 2021

Tracy Rolstad

This is the second article in a three-part series about the Western EIM. You can read our first article, which provides an overview explanation of the EIM here. In this Q&A between Alex Lindner, PSC’s North American Sales Lead, and PSC Technical Director Tracy Rolstad, we explore some practical considerations of joining the Western EIM.

AL:  What’s a basic checklist of things utilities need to know to decide if joining the EIM is worth it for their organizations?

TR: First, utilities need to ask themselves whether they have the back-office systems in place to integrate with EIM – this isn’t cheap!

The EIM requires deployment of modern AGC-focused systems that are notably different from legacy systems. Additionally, participation in the EIM provides a data stream that should be brought back to the “back office” for use in economic analytics.

The EIM, just like any other enterprise system, requires full-time care and feeding. There is a real cost to doing business in the EIM. Utilities need to sharpen their pencils and determine if joining the EIM makes financial sense. Some things to consider:

  • Revenue quality metering: Participation in the EIM requires revenue quality metering on generators in the EIM dispatch fleet. Here’s a useful article on what this means to the Bonneville Power Administration.
  • Telemetry: Improvements in telemetering may be needed. The EIM requirements discuss this. Generally speaking, high-quality communication systems are needed along with relatively high-speed scan rates.
  • Cybersecurity: Is your system prepared for exposure? EIM participants need to factor security into the front end of any design of EIM associated systems.

AL: Should nonutility generator owners consider joining the EIM?

TR: For developers, the EIM presents an opportunity. To a great extent, the EIM represents a nascent energy market outside the CAISO footprint. This might be an instance of FOMO…Fear of Missing Out. Strategically, generator owners may want to join the EIM now given that the EIM likely becomes the principal market for energy trading in the West. Once the EIM is broadly deployed, there is nothing really keeping the EIM from becoming the go-to trading market in the Western Electricity Coordinating Council  (WECC) footprint. There is anecdotal evidence that the Mid-C trading hub is no longer as active as before broad participation in the EIM. So, developers with the need to obtain balancing (or shaping services) are prime candidates for joining the EIM.

AL: Participation in the EIM is set to explode in 2021/2022, with 11 utilities set to join, including BPA, Avista, and LADWP. The benefits continue to grow as participation increases. So, what’s the ceiling for the EIM?

TR: There are roughly 40 Balancing Authorities in the WECC footprint, representing the first ceiling for participation. It is likely that if the EIM morphs into a true market, then the sky is the limit. It seems reasonable that Load Serving Entities would want to join a future EIM market to avail themselves of the lowest cost energy available in the market on an ongoing basis.

 AL: Who else can join the EIM?

TR: Presently, the EIM is focused on balancing authorities. A balancing authority is responsible for ensuring in real-time that power system demand and supply are carefully balanced. The role of balancing authorities includes managing transfers of electricity with other balancing authorities. They are also responsible for maintaining operating conditions under mandatory reliability standards issued by the North American Electric Reliability Corporation (NERC).

 AL: Has COVID-19 had an impact on EIM operations?

TR: COVID-19 has impacted those activities associated with the physical presence of work like meter installs and the like. Some software activities have been done remotely as well.

 AL: Many utilities are looking to move toward more renewable generation and away from conventional sources like coal. What role does the EIM play in realizing greater use of renewables?

TR: The EIM spreads out balancing and load following across a larger geographical area. This leverages the behaviors of, for example, Montana wind resources against Columbia River Gorge wind resources.

 AL: What kind of costs might I be looking at to join the EIM?

TR: The cost for entry varies but it is most certainly in the several millions of dollars at a minimum.

In this post we’ve highlighted some of the costs and considerations before joining the EIM. Stay tuned for our third article in this three-part series on the Western EIM where we’ll look at member cost savings and the possible outcomes of the EIM being the defacto market for power in the west.

Read the next article in this three-part series about the Western EIM.

PSC provides clients with strategic consulting and engineering services related to entering the EIM. For more information about how PSC can support your organization with evaluation or entry to the EIM, contact us here or send us an email at [email protected].