Time for Western Clean Energy Solutions
California has led the nation in setting ambitious climate goals backed by a commitment to 100% clean energy by 2045. Meeting this goal requires a lot more clean power to keep the lights on and energy bills affordable.
It’s becoming clear California can’t achieve its clean energy goals alone. The state must bring online nearly five times more new renewable energy every year than it has for the last decade. Building the necessary amount of wind and solar power to meet this demand requires 6,280 square miles – an area bigger than the State of Connecticut, and likely more land than the state has available.
California must consider clean energy solutions beyond its borders to prevent blackouts, reduce energy bills, and accelerate its transition to a zero-carbon economy. Under the terms of ACR 188 (2022), the Legislature received a report in February 2023 from the state’s grid manager – the California Independent System Operator (CAISO) – highlighting the importance of a regional transmission organization (RTO) for achieving California’s clean energy and environmental goals. The ACR 188 report’s conclusion: “California’s goals for renewable energy and greenhouse gas reduction can be achieved more quickly and with less cost to Californians through expanded regional cooperation.” It also determined expanded regional energy cooperation will be vital to maintaining a reliable grid.
What is an RTO?
Regional Transmission Organizations (RTOs) are independent, membership-based, non-profit organizations that operate electricity grids across state lines, oversee regional wholesale electricity markets, and provide regional reliability planning. In practice, Seven RTOs cover about half the states and two-thirds of U.S. energy demand.
THE WEST SHARES CALIFORNIA’S CLEAN ENERGY GOALS. AND, IT’S MOVING TOWARDS AN RTO WITH OR WITHOUT US.
Today, 80% of energy customers in the West are served by utilities with net-zero carbon energy mandates. The shift from fossil fuels has ushered in the closure of coal plants across the region. California has a new opportunity to work with its neighbors to overcome its energy challenges by participating in an RTO. Five Western states have passed laws requiring participation in an RTO or are actively engaged in RTO discussions. Meanwhile, an existing RTO, the Arkansas-based Southwest Power Pool, is asking Western states to join. The question is: Will California lead a Western RTO effort, or risk being isolated from one?
REGIONAL SOLUTIONS PROVIDE A LIFELINE DURING EMERGENCIES.
California already imports roughly a third of its power, which provides a lifeline to keep the lights on during emergencies. Many other parts of the country have created RTOs to provide the cheapest, cleanest, and most efficient energy around the clock, all year long. By applying lessons learned from these efforts, California has a unique opportunity to create a regional grid of the future to protect our health, lives, and livelihoods during blackouts, which are a growing summer threat because of wildfires and heat waves.
There’s no doubt an RTO would have helped California during its most recent heat-related emergencies. A state energy analysis of the 2020 blackouts concluded that significant wind resources were available in states like Wyoming and New Mexico but they could not reach California due to transmission issues and market barriers. During the September 2022 heat emergency, California kept the lights on by importing 7,500 MW of hydropower from the Pacific Northwest but found itself unable to bring online additional power from Arizona and New Mexico due to market barriers.
CALIFORNIA IS A REGIONAL ENERGY LEADER. MORE CLEAN ENERGY SOLUTIONS ARE POSSIBLE THROUGH AN RTO.
CAISO has been leading efforts to promote energy collaboration across the West.
- Western Energy Imbalance Market (WEIM): Launched by CAISO in 2014, WEIM is a wholesale energy market that serves 80% of the load for 14 Western states, two Canadian provinces, and Northern Baja Mexico. It allows participants to make energy purchases 15 minutes ahead and uses advanced technology to find and deliver the lowest-cost energy—usually renewable resources. WEIM has saved participants over $2.9 billion in total energy costs—over $200 million in California during July-September last year—and reduced greenhouse gas emissions by 712,270 metric tons, equal to removing nearly 150,000 cars from the road.
- Extended Day Ahead Market (EDAM): Launched by CAISO this year, EDAM will broaden regional energy management by allowing participants to plan energy purchases up to 24 hours ahead. If EDAM grows to serve the same territory as WEIM, CAISO projects EDAM will produce $1.2 billion in total annual energy savings across the West (including $309 million just in California). Through the growth of renewable power, EDAM will remove 2.92 million metric tons of emissions equal to removing nearly 635,000 cars from the road.
- RTO – The next logical step: Participating in an RTO will enable California and the West to plan energy deliveries even further ahead for greater power reliability and cost savings, provide a framework to seize climate advantages for developing and delivering new solar and wind power across the West, and aid the construction of interstate transmission lines that remain essential for large renewable projects to connect with a regional customer base. By joining an RTO, compared to today’s grid operations under WEIM, a report found California will see up to $563 million in annual energy bill savings, 138,700 new permanent, high-paying jobs (averaging $91,000 in annual compensation), $21.7 billion in gross state product growth, and 470 MW of new clean energy construction (enough to power nearly 90,000 homes).
AN RTO CAN HELP POWER AN UNPRECEDENTED GREEN JOBS BOOM.
California needs to generate 86 GW of new clean energy between now and 2035, according to the historic procurement goals set this February by the California Public Utilities Commission (CPUC). That is more than double today’s 75 GW maximum output. Meeting these goals will require massive increases in production of every single type of renewable energy source—and $30 billion in transmission investments to connect all of this power to the grid. All of this clean energy expansion means unprecedented job growth for California workers.
California’s clean energy system can only grow this big—this quickly—with a regional market for the state’s clean energy. While California shares its power with other states today, an RTO will help expand regional energy coordination, so Western states produce enough clean power to keep the lights on, while collaborating on the transmission investments needed to deliver it to customers throughout the region.
The federal Inflation Reduction Act provides $369 billion in funding for expanding clean energy production – including $270 billion in tax credits for clean power projects with prevailing wage and union labor requirements. A new study finds California will benefit more than any other state, with 140,000 new clean energy jobs produced by 2030.