Part 4: Monetization of Operational Behaviors
This is the final entry of a four-part post on EIM benefits and how to maximize them.
Of all the factors affecting success in CAISO’s Energy Imbalance Market (EIM), one of the most influential (and powerful) is the monetization of operational behaviors. Here, there are key questions to ask:
- What does it cost to submit a late tag?
- What does it cost to over/under estimate ramp by 1MW/min?
- What does it cost when your plant can’t follow dispatch?
Oftentimes, these are difficult questions to answer, but the beauty of deregulated markets is that everything gets a price signal, and with a little bit of math, you can know how much an outage or late tag will cost you. You can effectively monitor and correct market operations and incentivize continual improvements.
The Importance of the Front and Back Office Feedback Loop
Particularly when you first enter a market, daily reviews between the front and back office should be happening on a regular basis. Once you’ve been in the market awhile and have already implemented some of the lessons learned, then it likely makes more sense to conduct weekly or bi-weekly FO/BO reviews to uncover and implement even small changes that can help maximize your operations and revenues. Getting just one percent better at market participation every week or two would obviously make for a significant impact on your operational efficiency and effectiveness by year-end.
CAISO EIM will continue to expand rapidly. Even if your company isn’t yet participating or doing any analysis for potential entry, EIM is already live within many trading organizations and coming to more. Spending the time to examine how you can capture and realize the opportunities afforded by the Energy Imbalance Market will help to ensure that you are not missing out on the benefits that other market participants are realizing today.