POWER December 2012 - 52

RENEWABLES
or solar array, said Charlie Smith, executive
director of the Utility Wind Integration
Group. Moving to this sort of model is not
cost-free, however, as transmission improvements
to tie together far-flung generating
units likely will be required. " Transmission
is the critical issue, " Smith said. " You can't
have well-functioning markets with congestion, "
which results from inadequate transmission
resources. What's more, efforts to
move to a sub-hourly and even 5-minute market
will likely require enhanced communication
capabilities between regional dispatch
authorities and generating resources.
CAISO views market rules as critical to developing
products and services that incentivize
efforts to balance the bulk power system as renewable
resources are added. " The system in
California and across the entire industry is very
much in flux, " said Mark Rothleder, executive
director of Market Analysis and Development
for CAISO. In an interview with POWER,
Rothleder outlined market mechanisms critical
to keeping California's grid in balance.
First, CAISO introduced incentives intended
to compensate entities that provide ramping
services, a condition that Rothleder said
poses " significant challenges " for CAISO.
The idea is to allow resources to bid into the
market to provide both up and down ramping
services as loads and resources change.
Second, because CAISO expects too much
generation to be available at times, it set a bid
floor equal to -$30. That negative price floor
has proven inadequate given that wind and
solar resources often operate with tax credits
and power purchase agreements that make it
economically rational for them to continue to
produce power even after prices go negative.
To correct that, CAISO wants the bid floor
reduced to -$150 to incentivize a price-based
reduction in supply.
" If the system is in an over-generating
condition and at a point where we still have
too much energy, we want an incentive for renewable
resources to offer bids to back down
to the minimum, " Rothleder said.
Revising Rule 21
Grid-balancing authorities and regional dispatch
areas are not the only places where
reform is under way to cope with increasing
amounts of DG resources. State utility regulators
also play an important role.
For example, the California Public Utilities
Commission (CPUC) in September approved
a deal involving the state's major utilities and
renewable energy advocates that is aimed at
streamlining the process for connecting DG
resources to the grid. The CPUC's action will
make it easier for small amounts of distributed
resources-such as rooftop solar PV
systems-to connect. The agreement also
revises upward the amount of DG that can be
connected to a specific power line segment
without the need for supplemental studies.
The agreement revises the CPUC's 13-yearold
Rule 21, itself a landmark. Rule 21 set a
threshold for instances where the amount of
DG on a line section exceeds 15% of that
line's annual peak load. The so-called " 15%
threshold " was later adopted by FERC and by
most states as a model for developing interconnection
rules. The CPUC's action revised
California's standard to allow aggregate interconnected
DG capacity equal to 100% of
minimum load on a distribution line section.
The settlement agreement was filed with
the CPUC on March 16 and involved 14 parties,
including Pacific Gas and Electric Co.,
San Diego Gas & Electric Co., Southern California
Edison, Sierra Club, and the SEIA. The
SEIA's vice president of regulatory affairs,
Don Adamson, told POWER his organization
filed a motion in February with FERC (Docket
No. RM 12-10), urging it to replace the federal
15% threshold with a standard equal to 100%
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POWER December 2012

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