Insight Conversation: Elliot Mainzer, CAISO

In the last few years, the California Independent System Operator has experienced record-high peakload, repeated heat waves, years-long drought, rotating outages and significant renewable generation and battery storage additions. The ISO is also working to expand power markets across the Western Interconnection and is facing competition to do so.

While CAISO doesn't build or maintain transmission lines, it does the planning for a reliable and affordable generation fleet and transmission grid across the state. The planning process gets more challenging each year given the significant market and climate changes taking place.

CAISO President and CEO Elliot Mainzer spoke with S&P Global Commodity Insights North American Power Editor Kassia Micek in November about the state of the ISO and what's on the road ahead.

How is the ISO addressing near-term market challenges and reliability issues related to the state energy transition and the climate impacts on drought and wildfires?

We are working to support California state agencies and other regulatory authorities in California to make sure we're able to bring the next generation of clean capacity online. We're very focused on supporting the state by making sure that our transmission planning and interconnection queuing processes are as efficient as possible.

In 2021, we brought on a record amount of new capacity onto the grid in California. We're going to have to basically replicate that for multiple years going forward just to onboard new capabilities. We've got over 4,400 MW battery storage on our system now – the largest in the world. We're expecting more of that, so interconnecting resources and making sure the price signals from our market incent those batteries to provide the most essential reliability services is a big part of our focus.

We want to have a much deeper stack of load flexibility resources that will be available to us prior to grid emergencies to help prevent them.

What is the ISO doing to manage load growth against an evolving fuel mix with growing renewable resources?

Load growth is a real variable here in California. In general, loads are growing rapidly – heat, load volatility, demand for electricity, the big push to vehicle electrification, the big push to move natural gas heating onto the power grid – and those forecasts are woven into the resource portfolios that are being developed by the California Public Utilities Commission and the public power utilities.

Our job is to try to make sure we have the transmission capacity built and operating to onboard those resources.

How are you addressing the challenges caused by supply chain disruptions regarding wind, solar and battery projects, and are those challenges interring with work toward achieving the state's clean energy targets?

The governor's office has established a specific task force to track energy development that works with utilities and state agencies. It's really watching very carefully the specific projects that are supposed to be coming online and monitoring their development milestones, and also looking out for supply chain disruptions that would impact the online dates of new resources. We get regular briefings on those.

So far this year, onboarding resources has gone reasonably well.

There are still some significant concerns about the supply chain for batteries in the next couple of years, although the big concern about solar energy tariffs that were partially mitigated earlier this year seemed to have calmed worries about solar panel availability in the short term. That's a problem that could come back in 2023 and 2024, depending on how the tariff disputes are ultimately resolved.

With competition heating up to expand power markets across the West, what key changes does the ISO have planned? How is the extended day-ahead market development progressing?

The WEIM has very much proven the value of wider area coordination and the benefits of leveraging the transmission connectivity that exists between California and the different parts of the West, and the real resource diversity that exists across the West.

It also was very evident to those of us watching the market that an extended day-ahead market [EDAM] would have been even more valuable during the heat wave in September by providing even greater transparency and visibility into the broad footprint across the West. It would have increased confidence that the footprint as a whole was going to be reliable and would have reduced the need to declare [Energy Emergency Alerts] on a day-ahead basis, which would have calmed down electricity prices.

Confidence that the footprint was sufficient would have provided greater incentives for owners of assets to bid generation into the market, which would have further increased liquidity and further helped support reliability and affordability.

We've made real progress on governance. We have folks inside California recognizing that as the market has evolved, the governance also has to evolve. If we are to continue growing together and integrating together across the West, governance will have to evolve even further. We certainly acknowledge and embrace the fact that there are other market alternatives out there. That competition can be healthy. But we really deeply believe that the West does best when we optimize transmission and resource diversity across that broader footprint.

Will the Western Energy Imbalance Market evolve into a full western regional transmission organization someday?

We recognize there is a lot of folks across the West who are very interested in an RTO. Our philosophy is to take this as an evolutionally process, sort of one step at a time.

The next logical step is the move into the day-ahead timeframe. If EDAM works well, and we continue to make progress on governance, it's very conceivable it could be followed by a move to a full RTO and we're certainly laying the groundwork for that. But we want to get EDAM done first – consolidate those gains and make sure everybody is seeing a real value proposition in taking that next step together.

What are the top three issues facing the ISO?

Preserving reliability is always issue number one for us – maintaining a reliable system.

Second is making sure we have efficient transmission planning and interconnection queueing processes so we can onboard the second generation of clean energy resources.

Third is continuing to make progress across the West in evolving our energy imbalance market into a highly functional and valuable day-ahead market that will further improve reliability at lower costs for electricity ratepayers.

Those big three have us very focused.

This article first appeared in the December 2022 issue of Commodity Insights Magazine