Study: Multiple benefits to coordinated wholesale market

A new study commissioned by IREA and Holy Cross Energy finds that by enabling more efficient and transparent transmission coordination across Colorado, the average residential electricity customer could save $255 per year by 2040 compared to today. This amounts to an annual statewide electricity cost savings of $1.76 billion. The coordination of electric grid investments across Colorado would also facilitate integration to Western electricity markets and create 70,000 new jobs while reducing annual greenhouse gas emissions (GHG) from the electricity sector by 73% from 2005 levels.

The modeling, prepared by Vibrant Clean Energy LLC, further finds that, as an interim step to an RTO, Colorado fares better if all utilities and cooperatives join either the Southwest Power Pool (SPP)-organized WEIS (Western Energy Imbalance Service) or the California Independent System Operator (CAISO)-organized WEIM (Western Energy Imbalance Market). The most beneficial option is the CAISO WEIM, as it would provide lower costs, further reduce Colorado customer bills, enable Colorado to sell its wind and solar electricity to more customers, and grow local jobs across the state, particularly in rural areas. An EIM does not provide a fully functioning wholesale power market or centralized regional grid management, as does an RTO, but is easier to implement in the short term.

The integration of Colorado with the CAISO WEIM would produce, on top of the benefits of statewide transmission coordination, additional cost savings of $270 million annually for Colorado consumers and 6,000 new jobs, according to the study’s findings. It also would facilitate an easier transition to meet the aggressive state-mandated GHG emission reduction requirements in recently passed state legislation, HB 19-1261.

“The study strongly suggests that Colorado can be a key participant in Energy Imbalance Markets, but the benefits are amplified for all regions if the state acts in a unified manner,” said Dr. Christopher Clack, CEO of VCE. “Furthermore, there are clear steps that the state can take on its own that will benefit all Coloradans without risking reliable, clean and affordable electricity. These benefits will sharply increase if the Energy Imbalance Market advances into a full Regional Transmission Organization.”

The study shows that over 1,000 megawatts of low-cost, clean, renewable wind and solar could be left undeveloped if Colorado continues along its current path. Moreover, local distributed solar PV and storage combine to unlock more flexibility when transmission access is improved.

Vibrant Clean Energy LLC is a nationally recognized energy grid modeling firm based in Boulder. Visit our Political Advocacy page for more information about the VCE study.

What is an RTO?
A regional transmission organization (RTO) is an electric power transmission system operator that coordinates, controls and monitors a multi-state electric grid. RTOs are independent, membership-based, non-profit organizations that ensure reliability and optimize supply and demand bids for wholesale electric power. The purpose of the RTO is to promote economic efficiency, reliability and non-discriminatory practices while reducing government oversight.