California ISO Delivers Modern, Efficient Grid

Jim McIntosh, California ISO

On April 1, 2009, the California Independent System Operator Corp. (California ISO) launched a new, improved market design and new computer systems to keep the market running.

California’s wholesale power grid is friendlier to diverse resources and sends key signals about where to expand infrastructure. Benefits include increased grid and market efficiencies, reduced barriers to alternative power resources such as demand response and green generators, and new grid operator tools for managing transmission bottlenecks and dispatching the least-cost power plants.

Our market is now a modern, efficient and flexible system that enhances reliability and provides the information our industry needs to plan and build the future grid. The new market structure represents major steps in how the ISO, power generators and utilities do business. Though these changes affect only the wholesale electricity market, consumers should see long-term benefits as new and more efficient approaches to buying, selling and delivering power begin to ripple through the wholesale market.

The ISO control room operates around the clock 365 days a year, directing the flow of electricity.

The California ISO market structure historically represents 5 percent or less of the energy needed to serve California’s needs on a given day. Utilities and other load-serving entities supply the bulk of the state’s needs through long-term contracts or generators they may still own. But all of that energy is scheduled through the California ISO system a day before it will flow. If the market identifies less expensive sources of power, that can be substituted for the more expensive resources.

Another reason the new market structure is so important is that grid operators no longer must scramble to manage transmission line overcrowding in real time. The new system provides a full network model and an integrated forward market. These two tools allow the ISO to begin managing potential overloads on the grid a day ahead of time, well before they could occur. Day-ahead electricity schedules are financially binding–there are financial consequences if market participants do not adequately plan where they are getting their power and how it will be delivered.

The new market is based on locational marginal pricing (LMP). More than 3,000 pricing nodes exist instead of only three pricing zones. The nodes show the cost of generating power at a certain location, as well as the delivery price to areas that might not have sufficient transmission capacity. The finer detail provides key market signals and also means grid log-jams can be more easily addressed. This prevents the need to buy more expensive power at the last minute.

Our systems look for the most economical and efficient megawatts available, squeezing maximum capacity out of a transmission network that, similar to our crowded California freeways, suffers congestion in certain locations, especially during peak summer high demand.

The California ISO also is implementing new tools that help improve situational awareness for control room operators. In summer 2009, the ISO deployed a Space-Time Market Composite, a geospatial visualization and analytics application designed to graphically display the 3,000 market pricing nodes. Key components include:

1. Layers of information from multiple sources are intuitively, geospatially visualized on 3-D satellite images;
2. Color-coded visual alerts alert California ISO of price differentials; and
3. The ability to drill down into more detail from the satellite image, to dive deeper into pricing information and telemetry.


Space-Time Insight overlays a visualization of wholesale energy pricing for several market time frames on 3-D satellite images of California on separate side-by-side geospatial screens. The system also can overlay operational information about underlying telemetry, including sensor data about voltage, frequency and power flows to intuitively display congestion information on the electric grid.

Price ranges are color-coded, making it easy to see and assimilate the meaning behind price differentials from one location to another. This visualization helps ISO operators understand why prices are higher in one area than another. They can click on any price node to view detailed reports about pricing in that area.

The underlying technology is being applied in new ways to provide our grid operators with tools to help them keep the grid reliable, efficient and cost-effective. These new tools make it easier to assimilate a lot of data quickly and to understand what that data means to the grid. This is just another way the ISO uses new technology in some innovative applications.

Jim McIntosh is director of grid architecture and renewable integration at the California Independent System Operator, a non-profit public benefit corporation that manages electricity flow on California’s open-market wholesale power grid. Its mission is to safeguard the reliable delivery of electricity and ensure equal access to 25,000 circuit miles of electron highway. As the impartial operator of the state’s wholesale power grid, the California ISO conducts a small portion of the bulk power markets. These markets are used to allocate space on the transmission lines, maintain operating reserves and match supply with demand in real time.


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