There is a growing debate over whether California is overproducing renewable energy, forcing the California Independent System Operator (CAISO) to either curtail renewable generation or export excess electricity to neighboring states at a loss. Critics speculate that the rapid growth in renewable production is driving up consumer retail electricity rates. These skeptics urge state policymakers to reconsider the push toward 100% clean energy, arguing that the goal is either infeasible or prohibitively expensive. The reality, however, is far more complex, as renewables are being used as a scapegoat.
Analysis performed by ZGlobal examines imports and exports separately at each of the 26 interties between CAISO and neighboring out of state BAs for each hour in 2022, 2023, and 2024. The results were not what everyone expected. The cost of CAISO imports is lower than the CAISO system-wide average price and lower than revenues from exports. In addition,
negative pricing of imports occurs twice as often as negative pricing for exports. CAISO is not giving its clean energy away.
Imports (2022 to 2024): Finding #1 CAISO imported 162 TWh for ~ $10 Billion at a cost of $59/MWh:
a) CAISO imported three times more than it exported, The average annual cost for gross energy imports was also lower than the average system-wide energy cost, which means that when California bought energy from neighboring BAs at a price lower than the overall system average. California bought energy from out of state at a cost ($59/MWh) 20% lower than the three-year system average ($68/MWh), saving $1.6 billion in energy costs.
b) Surprisingly, the cost of energy imports into CAISO from out-of-state BAs was consistently lower than the revenues from energy exports from CAISO to the BAs. This means that when CAISO purchased energy (gross imports) from the BAs, it did so at a cost that was lower than when selling energy (gross exports) to the BAs. California bought energy at an average price of $59/MWh from out of state and sold energy to out of state at $82/MWh including export transmission costs. Looks like California is buying low and selling high!
c) A portion of the imports was priced negatively; CAISO data shows 1,334 hours when imports cleared at negative prices. During these hours, out-of-state generators delivered 5.9 TWh into CAISO and collectively paid $66 million to do so, i.e., out-of-state generators were effectively paying CAISO to accept their output.
Exports (2022 to 2024): Finding #2: CAISO exported 50TWh for ~ $4 Billion at a cost of $68/MWh
(a) The average annual energy revenue for gross exports was $68/MWh, but when we include export transmission fees, the average jumps to $82/MWh. This was significantly higher than the average system wide energy cost (68$/MWh).
(b) The $82/MWh revenue from exports is 42% higher than the average cost of imports of $59/MWh. Even if transmission export fees are excluded, the $68/MWh revenues from exports are still higher than the $59/MWh cost of imports
(c) A portion of exports was negatively priced. Entities that export energy from CAISO were paid for buying energy at the negative prices, but they paid the CAISO transmission access charge (TAC) regardless of whether the market price was positive or negative. Over the study period, there were 1,234 hours, during which exports cleared at negative prices. Over this period, market participants exported 2.6 TWh and were collectively paid $35 million by the CAISO, or
$13.40/MWh for energy. The exporting entities paid CAISO $30 million for the TAC.
(d) Transmission Export Revenue: CAISO collected a total of $744 million in transmission export fees— a direct benefit to CAISO consumers.
(e) Although not quantified in this report, the fact that export prices have been higher than import prices does not mean that neighboring BAs got the “short end of the stick”. They may still have been buying energy more cheaply than they could run their own generation.
Conclusion: The combination of importing electricity to displace more expensive electricity produced from in-area resources and exporting energy at a higher price than the marginal cost to produce that energy results in a favorable trade balance
to California.
Conclusion: The combination of importing electricity to displace more expensive electricity produced from in-area resources and exporting energy at a higher price than the marginal cost to produce that energy results in a favorable trade balance to California.