MIT tour of the California ISO Control Center March 31, 2015 Clyde Loutan, California ISO --- Sr. Advisor, Renewable Energy Integration

California ISO is the largest of ten BAs in California and now operates in seven western states Energy and environmental goals drive change New operating conditions emerge Flexible resource capability Advanced technologies Demand Response, Storage and Energy Efficiency Vehicle to Grid Integration 65,226 MW of power plant capacity (net dependable capacity) 50,270 MW record peak demand (July 24, 2006) 30 million people served $10 billion annual market 80% of the load served in California

California ISO faces unique challenges driven by success of state initiatives and environmental policies Greenhouse gas reductions to 1990 levels by 2020 Limits on availability of air emission credits for replacement generation 33% of load served by renewable generation by 2020 (50% by 2030) Possibly 12,000 MW of distributed generation by 2020 Less predictable load patterns – rooftop solar, electric vehicles, and smart grid Scheduled phase out of approximately 12,000 MW of once- through cooling in coastal power plants Delta bay plan managing water flow affecting hydro availability Slide 3

Solar production varies from one day to the next --- first week of March 2014 4,500 4,000 3,500 3,000 Average 2,500 MW 2,000 1,500 1,000 500 6 7 8 9 10 11 12 13 14 15 16 17 18 -500 Day_1 Day_2 Day_3 Day_4 Day_5 Day_6 Day_7 Average

Wind production varies from one day to the next --- first week of March 2014 3,500 3,000 2,500 2,000 MW 1,500 Average 1,000 500 1 2 3 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Day_1 Day_2 Day_3 Day_4 Day_5 Day_6 Day_7 Average

A Balancing Authority (BA) is responsible for operating a transmission control area Electricity is produced, delivered, and consumed at the speed of light. The ISO balances the system in two timeframes: Market down to 5-minute resolution AGC on a 4-second basis WECC is the regional entity for the provinces of Alberta and British Columbia, the northern portion of Baja California, Mexico, and all or portions of the 14 Western states between Let’s start with some terminology – A balancing authority, or BA is responsible for operating a transmission control area. This picture of the western interconnection represents the 38 BAAs or balancing authority areas. The key here is that BAs match load with generation. They are responsible for maintaining “balance” of load and generation. When there is more load, for example people turning on lights, than generation there is an “imbalance” between the two. More generation must be called upon, or “dispatched” to resolve the imbalance. Currently many balancing authorities will make sure that they have extra generation on hand and will manually dispatch generation to resolve the imbalance. The energy imbalance market is another, more efficient way to maintain balance. PacifiCorp BAs are among the BAs list shown on this slide. The California ISO is a balancing authority also. However we are a little different from other balancing authorities in the west (except for Alberta) in that we use multi-party centralized market to balance wholesale supply and demand as opposed to an informal, bi-lateral market. Our market, is automated and runs every five minutes. It looks at all the load that needs to be served, all the available generation and optimizes the dispatch in the most efficient way considering the cost of the generation and the potential congestion on the transmission lines. Slide 6

To be prepared for increased supply variability, fleet flexibility requirements to be understood MW Generation Requirement Hour Ahead Schedule And Load Following Regulation Hour Ahead Adjustment Load Following Day Ahead Hour Ahead How do we make operating decisions? Operating Timelines? Load – DA errors, HA errors, RT errors Wind – DA errors, HA errors, RT errors Solar – DA errors, HA errors, RT errors Stochastic variations among the three Autocorrelation Cross correlation Schedule Schedule t Operating Hour ISO 33% RPS Study of Operational Requirements and Market Impacts

Balancing Authority ACE limit (BAAL) BAAL is designed to replace CPS2 Control opposes frequency deviation BAAL relaxes area regulation needs ACE is allowed to be outside BAAL for up to 30 minutes Slide 8

The ISO has already begun to experience the need for flexible resources Load, Wind & Solar Profiles --- Base Scenario January 2020 34,000 9,000 7,000 MW in 3-hours 32,000 6,700 MW in 3-hours 8,000 Load & Net Load (MW) 30,000 7,000 Wind & Solar (MW) 28,000 6,000 26,000 5,000 24,000 4,000 22,000 12,700 MW in 3-hours 3,000 20,000 2,000 18,000 16,000 1,000 14,000 Net_Load Load Wind Total Solar Net Load = Load - Wind - Solar Slide 9

Load, Net Load, Wind & Solar --- 06/30/2014 Solar production is significantly reducing the need for conventional resources on peak demand days Load, Net Load, Wind & Solar --- 06/30/2014 43,000 5,200 40,424 MW 4,634 MW 41,000 4,800 39,000 4,400 37,000 4,000 35,000 3,600 33,000 3,200 31,000 Wind & Solar (MW) 2,800 29,000 Load & Net-Load (MW) 2,400 27,000 2,000 25,000 1,600 23,000 1,200 21,000 19,000 800 17,000 400 15,000 Load NetLoad Wind Solar Net Load (Red Curve) = Load - Wind - Solar Slide 10

ISO’s net-load vs. actual RTD energy prices for April 12, 2014 Energy prices were zero or negative for 43% of the 5-minute RTD intervals Slide 11

Negative energy prices indicating over-generation risk start to appear in the middle of the day during high renewable production days Increase in real-time negative prices shifting top the middle of the day Slide 12

2014 Monthly Load vs. Net Load profiles --- Weekdays

2014 Monthly Load vs. Net Load profiles --- Weekends

2021 Monthly Load vs. Net Load profiles --- Weekdays

2021 Monthly Load vs. Net Load profiles --- Weekends

2014 vs. 2021 net load distribution --- Weekdays Potential negative RTD prices

2014 vs. 2021 net load distribution --- Weekends Potential negative RTD prices

Today vs. EIM Limited pool of balancing resources Inflexibility Each BA must balance loads and resources w/in its borders. In an EIM: The market dispatches resources across BAs to balance energy BA BA BA BA BA BA BA BA Limited pool of balancing resources Inflexibility High levels of reserves Economic inefficiencies Increased costs to integrate wind/solar Diversity of balancing resources Increased flexibility Decreased flexible reserves More economically efficient Decreased integration costs Slide 19

Meeting the operational challenges beyond 33% RPS with generation, storage and demand response from internal and external (EIM) resources Storage Generation Voltage Support Wider Operating Range (lower Pmin) Regulation Dispatchable Wind/Solar Fast Ramping Over Generation Mitigation Frequency Response Dispatchable Quick Start Load Shift Peak Load Reduction Demand Response Slide 20

Questions!