Colorado Springs Utilities this spring will join a power provider pact that’s expected to save millions of dollars annually that will help reduce customers’ bills and increase its use of renewable energy.
The joint dispatch agreement among Xcel Energy, Black Hills Colorado Electric and Platte River Power Authority eases the process by which the participants buy and sell energy among themselves to ensure their customers pay the lowest price. The deal also helps to prevent waste of electricity production potential in the case that power generated by wind turbines or solar panels can’t be used immediately or stored.
In March, Utilities will join the pact, gaining access to an array of energy resources, including ones that can lower its overall carbon emissions, said Utilities CEO Aram Benyamin.
Platte River Power Authority, which provides electricity to cities including Longmont and Fort Collins, has committed to a goal of 100% renewables by 2030.
Xcel, Colorado’s largest electricity provider, said last December that it would supply zero-carbon electricity by 2050 to utility customers in the eight states it serves. By 2030, it hopes to slash its emissions by 80% from 2005 levels.
Wind energy makes up much of Xcel’s generation portfolio, Benyamin said. Under the new agreement, Utilities could buy that electricity to help power local homes and businesses at nighttime, when the turbines are still turning, but the demand for electricity is lower and the price of that power falls.
“The worst thing you can do is curtail renewable energy when it’s available to generate,” he said. “This will open the door for us to make sure that renewable energy can be introduced into the system safely and that we can do it without curtailing that generation.”
Utilities expects a fifth of its electrical generation will come from renewable sources by the end of 2023.
The provider now buys and sells electricity, scaling back its power generation at Martin Drake coal-fired Power Plant and its other assets accordingly, to keep prices relatively low for customers. But each of those sales or purchases must be authorized by a new agreement, Benyamin said.
The joint dispatch agreement will streamline the process, in part by requiring that each participant agree to a set of predetermined rules of engagement.
“Everybody plays by the same rules. Everybody puts their bids in in the morning, for example,” he said. “It gives us a little bit bigger footprint.”
That footprint could grow bigger yet.
Utilities and its joint dispatch agreement partners announced plans this month to join the Western Energy Imbalance Market in 2021. The power trading market, launched by California Independent System Operator in 2014, now includes nine participating entities in California and other Western states, according to the market’s website.
Nearly a dozen more participants are expected to join in the by the end of 2022, including Seattle City Light and the Los Angeles Department of Water and Power, the website says.
Renewable energy experts have hailed the expansion of the Western EIM as a winning solution that allows power providers to save their customers money while also reducing the greenhouse gas emissions of utilities reliant on coal and other fossil fuels.
“For Western utility customers, these markets mean lower costs, cleaner energy and a more efficient use of the grid, which is currently encumbered by a lack of efficient systemwide coordination,” Carl Zichella, the Natural Resources Defense Council’s Western transmission director, wrote in a September blog post welcoming two more power providers to the Western EIM.
In the market’s five years of operation, participants have seen more than $800 million in benefits, according to the Western EIM’s website.
Through the end of the third quarter of 2019, those participants had also absorbed nearly 977,000 megawatt-hours of excess renewable energy, avoiding production curtailments and reducing carbon emissions by an estimated 418,000 metric tons since the beginning of 2015, according to the market’s most recent quarterly report.
Improvements will have to be made to Utilities’ existing grid before it can join the Western EIM. An implementation agreement is also in the works, according to a news release from Utilities and the three other Colorado power providers seeking to enter the market.
Benyamin said Utilities would be falling behind if it wasn’t working to join the Western EIM.
“As the market grows, we will be ready to grow with it,” he said. “This is the future of the energy market.”