(BRK.A), (BRK.B)
A study commissioned by PacifiCorp and conducted by Energy and Environmental Economics (E3), which looked at combining the electric grids operated by PacifiCorp
and the California Independent System Operator (ISO) to create a regional power marketplace, finds there could be billions in savings over the next 20 years.
The combined grids would not only reduce energy costs, but would also help states meet tough environmental goals, including California’s 50 percent renewable energy mark.
The Savings Are Already Happening
In 2014, when Berkshire Hathaway Energy’s PacifiCorp agreed to become the first participant in the new Energy Imbalance Market (EIM), it was touted as a way to balance electricity in-flows and out-flows on a regional basis that would bring millions of dollars in benefits to participating utilities.
The predicted benefits for PacifiCorp have proven to be true, and the California Independent Service Operator (CAISO) has been able to quantify the benefits from the April, May, and June 2015 to be $10.18 million. Annual benefits will be around $30 million.
The EIM improves the integration of renewable resources and increases reliability by sharing information between balancing authorities on electricity delivery conditions across the entire EIM region. The only real-time energy market in the Western U.S., advanced ISO market systems automatically balance supply and demand for electricity every fifteen minutes, dispatching the least-cost resources every five minutes.
Creating a regional ISO
The new study finds that integrating the two largest high-voltage transmission grids in the West to create a regional ISO could produce between $3.4 billion and $9.1 billion in shared cost reductions in the first 20 years through better grid management and efficiencies gained by planning for the resource needs of a single, rather than multiple systems.
Environmental Benefits Too
The study also projects that development of a regional ISO is likely to reduce greenhouse gas emissions through coordinated planning, reduced curtailment of renewable energy, and lower overall costs to build new renewable resources.
“The study clearly highlights the benefits of a regional grid for all customers,” said Steve Berberich, President and CEO of the ISO. “It shows that a regional grid creates the opportunity to integrate higher levels of renewables more efficiently and effectively across a more diverse area. This regional approach is foundational to support the historic California SB 350 legislation and carbon reduction goals of nearby states.”
Another of Berkshire Hathaway’s utilities, NV Energy, which serves the Nevada market, will save millions a year when it enters the Energy Imbalance Market on Nov. 1, 2015.
© 2015 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.