Increased coordination between 11 Western states could save up to $3.25 billion a year, according to a study led by researchers at the University of California San Diego. But the states need not create a regional transmission organization (RTO) or agree on clean energy policies to realize savings.
At the lower end of coordination, expanding energy imbalance markets (EIMs) in the West could realize between $330 million to $610 million in annual savings. Coordinating transmission planning alone could save $125 million to $2.23 billion, while enhanced coordination in generation planning could yield a further $17 million in savings, according to the study.
While many studies have suggested the Western US could benefit from an RTO because regional grid coordination could accelerate decarbonization, disparate political beliefs about the value of clean energy have prevented the West from realizing this potential. So, the researchers at UC San Diego decided to try a different approach: evaluating the impacts of more incremental coordination that could occur even if the West does not agree on a more uniform, RTO-like regulatory structure. And several actions, from energy market expansion to improved coordination in transmission planning, could have a sizable impact on energy costs in the West.
Expanded reserve sharing across the 11 states in the study — Washington, Oregon, California, Nevada, Idaho, Utah, Arizona, New Mexico, Colorado, Wyoming and Montana — is probably a baseline minimum action required to realize savings from any other actions. After that, improved coordination in transmission planning could result in the greatest potential savings — up to $2.23 billion, according to the study. But an expanded EIM could also save hundreds of millions per year, regardless of whether states coordinate their transmission plans. Coordinated resource adequacy planning or generation planning could also help Western states save — regardless of whether the region ultimately agrees on a uniform clean energy standard or not. Some of the greatest financial benefits could come from states like California that have more strict energy standards adopting a more lenient policy around importing power from other states.