$1.5 billion in annual net benefits to California consumers with a Western electricity market

$1.5 billion in annual net benefits to California ratepayers, cleaner air, and the creation of thousands of California jobs are possible by expanding California Independent System Operator (CAISO) to gain the market efficiencies of a larger geographic footprint and more diverse energy supply, including low-cost wind power.

These benefits for California’s economy and environment are highlighted as part of a new study required by California Senate Bill 350, also known as the Clean Energy and Pollution Reduction Act of 2015, the landmark legislation passed late last year requiring the state to obtain 50 percent of the state’s electricity from zero-carbon renewable energy sources within 15 years.

“AWEA applauds the continued leadership of Senate President Pro Tempore Kevin de Leon, Assembly Speaker Anthony Rendon, and Governor Jerry Brown for asking the CAISO to take a thoughtful and careful look at the many benefits that are achievable in an expanded western grid,” said Tom Darin, Western State Policy Senior Director for the American Wind Energy Association (AWEA). “Importantly, the study found that a strong market across a large area provides the broadest array of benefits to Californians. Moving to a regional market also creates operational efficiencies that facilitates the low-cost integration of renewable energy and improves overall system reliability with maximum benefits to consumers.”

The study released by CAISO, “The Impacts of a Regional ISO-Operated Power Market on California,” was prepared by independent research groups The Brattle Group, Energy and Environmental Economics (E3), the Aspen Environmental Group, and Berkeley Economic Advising and Research. The study’s goal was to determine how the state’s 50 percent renewable energy by 2030 renewable portfolio standard (RPS) would impact the regional economy and the environment.

“We’re pleased that CAISO is committed to a deliberative process with all stakeholders to answer key questions and vet study assumptions, as well as taking the time necessary to really get this right to ensure that any system change of this magnitude works for all Californians,” said Tom Darin, AWEA. “An expanded regional market is the essential baseline platform that can enable California to cost-effectively and reliably cut carbon pollution, meet its long term greenhouse gas reduction goals, and achieve or exceed its fifty percent renewable energy standard.”

Highlights from the study of the economic and environment benefits available to California by 2030 because of regional grid expansion include:

  • $1.5 billion per year in net savings to California ratepayers by 2030
  • Reducing carbon dioxide emissions across the West by 10 million metric tons per year by 2030
  • Up to 19,300 California jobs created because of increased disposable income for California consumers due to lower electricity bills, in which wind power plays a key role
  • Transitioning to a regional market would result in a higher California Gross State Product, real economic output, real wages, and state revenue
  • Benefits for disadvantaged communities, including job creation and cleaner, healthier air in urban areas

Today’s study reinforces results observed in other parts of the country where organized markets covering multiple states bring a variety of benefits in terms of reliability, flexibility, and consumer savings.

Growing wind power in California has already resulted in $11.9 billion in added capital investment to the state’s economy and up to 4,000 jobs throughout the state. Wind energy in California generates enough electricity to power 1.1 million typical U.S. homes and avoids 1.3 million cars’ worth of carbon emissions.