In order to increase wind or solar power capacity, regulators must continue to ensure that energy supply meets energy demand, as well as plan for new transmission infrastructure. Regional Transmission Organizations (RTOs) and Independent Systems Operators (ISOs) are third party grid operators that oversee these responsibilities, ensuring homes and businesses continue to receive power. However, some state electricity markets lack a central balancing authority, such as an RTO or ISO. States with separate, uncoordinated balancing authorities are missing out on a significant opportunity to plan for increased renewable deployment, pool resources, and decrease costs.
After Minnesota combined separate balancing authorities into a single, central body, the need for balancing services was reduced by up to 50 percent due to reduced variability of power loads and increased pool of energy generation sources. A central balancing authority also decreases costs: a National Renewable Energy Laboratory (NREL) study projects that the Western Electricity Coordinating Council will save a total of $2 billion as a result of balancing cooperation.
In order for states to use their renewable energy sources in an efficient and cost-effective manner, the state legislature and public utilities commission could establish a coordinated balancing authority. States could look to Texas’s Electric Reliability Council of Texas (ERCOT) or interstate models such as Midcontinent Independent System Operator (MISO) to create an effective balancing authority.
In 1996, the Electric Reliability Council of Texas (ERCOT) became the first independent system operator (ISO) in the nation. ERCOT’s responsibilities include management of wholesale electricity prices, systems planning and operation, and facilitation of transmission access. ERCOT operates as a membership-based 501(c)(4) nonprofit corporation, with oversight from both the Public Utilities Commission and the Texas Legislature. While ERCOT only serves the State of Texas, the Midcontinent Independent System Operator (MISO), oversees electric markets and transmission reliability in fifteen different states. MISO was federally approved as the nation’s first regional transmission organization (RTO) in 2001.
The creation of a unified balancing authority not only decreases costs and market regulation requirements, but also allows for more efficient use of wind and solar energy, which typically peak at complementary times. States that lack a balancing authority could institute one within its own borders or create a unified balancing authority with a neighboring state. Regardless of whether a given state partners with nearby states, a balancing authority would decrease costs and allow for more solar and wind-powered energy on the grid—potentially boosting in-state demand for wind and solar manufacturing.