Part 3: Geographic diversity
This is the third of a four-part post on EIM benefits and how to maximize them.
Geographic diversity can provide significant benefits when participating in CAISO’s Energy Imbalance Market (EIM). Simply speaking, it’s easiest to equate two major factors to geographic diversity; forecasting and clouds.
Typically, the more nodes are taken into consideration, the more accurate your overall aggregate forecast. This is driven by the offset of forecast error in one direction at one node with forecast error in the opposite direction at another node. Individually, each node’s forecast probably isn’t that accurate, but in aggregate, it is quite accurate. This concept applies to both load and VER forecasting. So, while an individual solar plant’s forecast may not have a high degree of accuracy, the aggregated forecast for all solar plants is much more reliable.
With the explosive growth of solar generation in the West, cloud cover must be taken into account as it can present a significant threat to reliability. CAISO’s EIM mitigates a large amount of that potential threat since clouds are spread over many states laterally and stretch from Seattle to Phoenix longitudinally. What is the ‘action’ you need to take to fully realize this benefit? Well, there’s likely not much you can do about where your resources and load are located geographically, so the best you can do is operate as efficiently and effectively as you can so that, when geography is in your favor, you can realize as much of the available market benefit as possible.