The California ISO provides open and non-discriminatory access to the bulk of the state’s wholesale transmission grid, supported by a competitive energy market and comprehensive infrastructure planning efforts. Power demand is primarily supplied by natural gas, with hydro and solar supplying the majority of renewable generation. Due to strong solar resources and generous incentives, PV capacity experienced an exceptional rise since 2010, increasing from ~100 MW to more than 8.5 GW in 2016.
How is the market structured?
CAISO is structured as a competitive wholesale market with energy transacted on a day-ahead and real-time (15 minute and 5 minute) basis. CAISO also operates several markets for ancillary services. Capacity requirements are addressed through bilateral transactions under the California Public Utilities Commission’s Resource Adequacy program.
What are the geographic boundaries of the market?
CAISO covers most of California and a portion of Nevada. CAISO is interconnected with Oregon to the north, and Nevada and Arizona to the west.
What are the relevant price and delivery zones?
The main pricing hubs in CAISO are SP-15 (Southern California) and NP-15 (Northern California). Nodal pricing exists throughout CAISO with pricing varying with local supply/demand conditions as well as transmission considerations more generally. Nodal pricing is aggregated to calculate energy prices for separate energy zones, as well as the energy price at interconnection points with neighboring regions.
Can I buy long-term power in the traded markets?
Buyers and sellers can hedge their exposure in the forward market within a ~5 year window via over the counter trading platforms.
Who do I need to contract with to buy power?
Many consumers receive power from their local utility (the utility covering the geographic area in which the load is located). Consumers can also opt to buy power directly from a generator, or through a retailer (in states where competitive retail markets exist) though the utility will continue to charge certain fees (i.e. transmission/distribution/other system fees).
Retail choice, known as Direct Access, is available in investor-owned utility service territories within CAISO. Direct Access is capped to a certain percentage of annual load.
How are system costs and other social charges levied?
In general, a bill can be broken into three components: generation, transmission and distribution. Generation costs are broadly correlated with wholesale energy prices, transmission costs are socialized across all consumers, and distribution costs vary based on the local cost of each utility. Other system and social charges (such as to support energy efficiency programs) are generally socialized across consumers and are also reflected on the bill from the local utility.
How do I prove I've bought renewable power?
In the US, renewable generation is certified and tracked using RECs (Renewable Energy Certificates). One REC is issued for every MWh of eligible renewable energy that is delivered to the electric grid. A REC contains unique identifying details of the energy generated, including the renewable fuel type, project name and location, the vintage of the project and the generation, and serial number.
Within CAISO, the Western Renewable Energy Generation Information System (WREGIS) is used to track generation ownership and attributes, including RECs.
How are RECs (Renewable Energy Certificates) procured? Short-term and long-term contracts.
Are renewable Power Purchase Agreements (PPAs) available? Yes
Are Green Tariffs available? Yes. Investor Owned Utilities offer a Green Tariff Shared Renewable Program, with a capped enrollment of 600 MW statewide.
What are the key institutions?
Key Government Departments:
- The California Air Resources Board (CARB) is responsible for clean air policies across multiple sectors and administers the Cap and Trade Program (linked with the Canadian provinces of Quebec and Ontario)
- The California Public Utilities Commission (CPUC) regulates and oversees the electricity industry in the state (except publicly owned utilities)
- The Federal Energy Regulatory Commission (FERC) is the federal agency that regulates the transmission and wholesale sales of electricity in interstate commerce
- The North American Electric Reliability Corporation (NERC) is a not-for-profit international regulatory authority whose mission is to assure the reliability and security of the bulk power system in North America
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