 Good afternoon. This is Guillermo Saladilla, your host, and welcome to Perspectives on Energy here on Think Tech, Hawaii. So today we're going to be talking about the energy and balance markets. So this is a EIM for short, and I will be referring to this as EIM as the acronym, but definitely something that's been around for decades. And of course, myself as the Director of International Services for the Health and Safety Institute, these are some of the things that we go ahead and train on sometimes in our industrial skills particular set of training classes. So, there's been a lot of questions regarding what we do with these renewable resources, right, that when you have that viability and those challenges, well, at least for almost 10 years now. Parts of the WEC, which is where California is at and all that other market, they have a pretty robust EIM. And let's break down what that means. So energy and balance market basically it finds a way in a nutshell to accommodate viability and whether you have changes in output for renewable resources. Or if you have a challenge, for example, you have when the sun doesn't shine or the wind doesn't blow, you'll have a slight deficit, right. Or when you have, for example, a drop in demand, but you have a lot of wind and a lot of sunshine and nowhere to place that energy in because you don't have enough demand for it. You still have it there. So there's a way for you to be able to sell that power to your neighbors, or even different balancing authorities in your area to be able to consume that power. So ideally that power is not going to be, in essence, wasted, right. And really, it's by wasting meaning that you probably have to curtail the curtail production of some of those resources, which sadly enough that that's really, I hate to say free power, but you've already sunk the investment, the initial capitalized cost of building that resource. So at this point, right, whatever output you get out of it is really free power in this case, right. So there's still a lot of costs associated with the production of that energy, but at the same time, you know, that's, that's already a sunk cost. Let's see the amount of money you spent building that particular facility so, so anytime you have to curtail production of a solar site or a wind farm it's really bad for business. So what are the opportunities here right so one of the things that has been a concern right when dealing with renewable resources, often has been this variability. Normally, through NERC, and all these regions, there is an energy market, right, where they, it's interchanged market where they buy and sell wholesale power. And for the longest time it was always done an hour by hour increments, meaning, if I'm going to sell power now for the next hour, and I guess in Hawaii right now it's going to be right now it's about one o'clock we're going into our ending to right so we will be going into our ending to so usually the hour is planned maybe 75 minutes ahead. So, these markets are usually done in, you know, like an hour and a lot of cases they do a day ahead market where they plan all the resources right into a day where it's it's a lot more, it's a lot more scheduled than plans when the sense that you're already looking at a resource is looking at your load forecast, you have all your, all your, all your generation committed so at this point you can decide whether you're going to buy that power or you're going to sell that power, and you're going to have a commitment of several hours a schedule will run for like basically a peak of the day is six hours seven hours eight hours, sometimes 16 hours. And those schedules run 24 hours. So those are different ways that it has been traditionally run and those systems still run to this day they have those like long types of schedules already in place and that that market structure has been around for ages right now over the years and you've had to have adaptability that they can ramp a lot quicker so these would be a 15 minute market. And that really came about because of the whole fast moving generators and also these renewable resources that tend to be a lot more variable right. In a lot of cases you may have an area that's that's not producing enough but they have demand, and their neighboring area somewhere is has an excess. So, in that market there's an opportunity to be able to sell that power from that excess to that demand, and capitalize on that particular opportunity. And at the same time right it allows for more reliable operations and then you're also meeting the demand in this case based on when you're balancing your resources. The man balancing was which is what they mean by balancing authority you're balancing generation and load generation in this case could be you know it's it's a it's your it's your source source or whether it's a conventional generator that spins and cranks on megawatts, or it's a wind which is still a generator powered by wind and moving blades or it can be a solar site. That, of course, depends on the on the, the amount of sunshine is hitting it and then what time of the day, and then even the batteries in this case right so a lot of these different resources. Now, it's it's you're looking at five minute increments in this case where it's gone from an hour to 15 minutes to now the level of granularity right on this EIM allows them to actually make adjustments you know for for the different five minutes which becomes really interesting because I mean that tells you the nature of the variability of these renewable resources right. Now, how does this impact reliability. So, the question here is this is happening rather quickly, and a lot of these processes are the bids the scheduling the, the actual commitment happens, happens, you know, it's also offer a base and preset so in a lot of cases right they're setting a bid price you're setting for example a and ask price, and then that transmission space is really what becomes really important to determine because that power cannot flow from one area to the other. There being the correct transmission space and having all of these like power flows potentially studied ahead of time. So, a lot of processing comes into play and software is available now that wasn't perhaps available 10 years ago. So, these processes for example the these long term planning next day planning, and almost like real time operations that looks at contingency analysis by looking at your your state estimator, looking at your network analysis and then looking at how these flows impact everything that's happening in your system, and then it's looking at the predictive analysis of where you're going to be an hour from now. So here, if you're looking at, say control area a versus control area B and it has X amount of space on that line. Well, it'll determine I can still fit another 1015 20 megawatts 100 megawatts on that line, and still be okay. And that space allows you the opportunity to be able to ship that power from one area to the other. And that's something that apply the other way around. And so a lot of dynamics happening here and against a very dynamic system, but at the same time right this really promotes reliability, which had to happen in order for all these renewable processes to be able to a be be consumed right by, by the by the load. And then this also for example making sure that that the variability wasn't having such a negative impact on reliability. So here we are finding right with the EIM markets very well developed and then now they're spreading out throughout the world. And usually these EIMs are more effective when you have a very robust transmission system with a very robust study of the transmission space and their reservation process. So that's happened very quickly right so usually there's no time for actual manual inputs a lot of this automated, but there's certain parameters set in place to make those determinations right depending on economics. But once again right as we look at this, the main driver of this market of course is the renewable variability. So what would happen if that variability began to go away, whereas you're storing more of that like excess energy and to your storage for batteries, or what happens for example, when you are getting some of the renewable resources more, they're more efficient at producing power. So one of the questions that arises right is that at some point right this energy and balance market may find itself obsolete, depending on how these resources are managed. So, so when you have to like actually be able to pivot every five minutes. That tells you right they're either selling buying or selling ancillary services which is for example, regulation, you're buying and selling for example reserves because all of these like your utilities have to have regulating reserves have to have a contingency reserves and a lot of those are spinning. And the purpose of that is if you lose generation right you need to be able to have enough to be able to survive losing your, your most severe single contingency meaning that you know if you need to be able to survive losing your biggest power plant. So a lot of it has to be available at any given time. So having that available means you have any as a resource in your system, you have available to do it for quick start, or you're able to like buy it. And you have to be able to do it for neighbors really quickly, should the need arise. So these answer the resources are also available in over a span of the day. So, when you have for example a, a, a balancing authority that's interconnected with all the other balancing authorities in the region. So these, you're going to come to a point where the renewable resources are so many, right, such that everybody is feeding the same amount of variability, and especially if you're, if you're over a region is large, and it's facing the same type of weather conditions and all throughout. So ultimately right you're looking at potentially right a, a market either relying on a lot of smaller increments actually like survive or you're looking at at no activity because everybody has the same thing going on and then there there's no profitability and buying and selling power back and forth. So, what will be the answer there when especially from a reliability standpoint right so so one of the things that comes up really is the possibility of storage. Right. So, and that by itself also becomes another service, ancillary service that could be sold by this market right somebody has excessive excessive outputs for example on a renewable resource or they don't have enough solar, it rains, so it gets cloudy somewhere where there are no centers at but the, but the area where they have the solar sites in the wind is hundreds of miles away. So now you have an excess with nowhere to go so in this case right then if they don't have, if they, they've charged up all the batteries they have and they still have a lot of access and power, rather than curtailing the output of those resources they will then go ahead and pay to take the access and then they'll be able to store that access energy and now that storage becomes really important because unlike in the past where energy is either producing consumed instantaneously now you have storage where you can go ahead and buy that really that energy really really cheaply at this point really cost effectively sometimes with negative prices they'll probably pay you to take your access energy right to take for example utility a has a surplus. They will probably have what they call negative prices for those resources meaning that they're paying their neighbors to go ahead and actually absorb that excess energy and then that neighbor can capitalize on that and store that excess energy, which is really for them because then now they can turn around and get energy they were paid to store, and then they can turn on and sell that energy somewhere else as when it's needed and that it can be the same hours, same day or a few days later, those batteries are usually stored and they keep it charged for a while. So this in itself becomes really interesting when when when you have the prospect of having a lot more energy storage devices and setup. The same thing with like, for example, hydrogen even though right now we're quite a bit away from quite a bit away away from making that commercially available. The idea of using all these like access. This, this access output and renewable resources can be used later on to to produce green hydrogen, for example right or that could be used to store. Granted there's enough capacity to do that right. The, the other challenge here is, is at the same time if you have anywhere that there's like, well, I don't like to use the word hydro but if you have pump storage which is the same principle as hydro, but it's it's recyclable So, usually a reservoir at a higher elevation a reservoir lower elevation. Well, you know, it can the water at the lower elevation that's already been used can be pumped back up again and stored so you can be somewhere in the middle where it's halfway full on both sides, you can then either generate power but by by moving water from the high side to the low side, or you can become a load and consume that energy and use that to pump water from the low reservoir to the high reservoir and then of course that's in a way you're building up your battery you're charging a battery but really it's it's from the physics of hydroelectric power right. So that's another example. I don't see if I see a lot of pump storage plants coming into play, but there are a few projects in in the Blue Ridge where they're making some of those like they're refurbishing a few of the existing ones and they're probably looking at a few of them they're going to build soon. Not a lot of not a lot of that happening in the in WEC, but definitely opportunities in areas like islands like Hawaii for example and areas like the, the islands of Mallorca Mallorca. And they know that there was a project right now in in the canary islands, for example, where they, they collect for example a lot of like run off from from the mountains, drips down and collects and then of course all that water is used for their water needs as well so a little bit of irrigation, but then a lot of that's also used for for pump storage, which is really really beneficial to them. So a lot of different things so so with this EIM the energy and balance market course creates a lot of opportunities but really was done as a as a as a solution to a problem they were having right really what do you do with with all this excess power from the renewable variability and then and then who needs, who needs power because their renewables for example came short. And they're trying to match buyers and sellers, especially sellers that have an excess and buyers I had to have that are surplus where, and they match them with buyers I have for example shortfall. Great solution, it just got really really really advanced in a sense that they went from a one hour markets with 15 minute markets and now a five minute market, which is definitely interesting. And I'm excited to see how this is going to play a role as you see more and more of these as we approach that renewables need to discuss words that you're going to get to the point where you're not going to have enough inertia and the system spinning resources to be able to properly handle for example a fault on a line or or or you deal with a generator loss. I'm curious to see how that'll happen, because ultimately these are inverter based resources right have do have their limitations. And I think once you get to like 40% 30 or 40% things 40% of your resource out there. That is, is these inverter based resources, things begin to behave a little bit wonky when it comes to responding to certain faults out on the on that particular part of the brook electric system. I'm really curious to see, but ultimately, I think there's going to be a blend of a portfolio right in this regard where you're going to have a lot of combined cycle plants that I guess is the cleanest of all the fossil fuels. And it's a last fuel really that that's going to be used as we transition over to this whole free energy future but I think relying too much on one one or two types of resources is very dangerous and baffin reliability. So I see again I see nuclear and I mean small modular reactor nuclear, making a bigger impact over the last four or five years. I see a lot more storage, and that really has to get a lot more cost effective and a lot more responsive. Quite a few companies right now like the energy storage solutions ESS has very promising designs, and they've already been running commercially for for certain for many years. So for them it's like the most feasible of all, and they don't have as much supply issues when it comes to materials and supply chain. In the SMRs I think there's at least four companies now already getting ready to feel that the first actually commercially available designs, and that new scale is doing feasibility studies for us for a co op in Alaska. GE is doing another one, the Westinghouse is doing another one and then there's a South Korean nuclear company that normally built larger facilities are not it's now getting into the same market as well. So we are definitely looking at changes but ideally we're catching up with the rest of the world when it comes to nuclear, but as far as technology goes right there's at least 12 different types of technologies that involves nuclear that the rest of the world is working with and we haven't done a whole lot in the last 20 years so plant vocal I think and in the Southeast US is finally come online and it's it's it's it's commercial at this point, but that is the only nuclear plant we have built in several decades. So, I think those large projects are probably going to be less and less common and then you'll see a lot more these smaller SMRs being deployed all throughout the country in this case. But again it's good to have a different variety right of these resources and even better when it's like either low carbon emissions or or emissions free in this case. So, very enthusiastic and and this whole energy and balance market this I am played a huge role in making all as possible. Now, how will that work in a place say like Hawaii, right, especially right now my, my heart goes out to the people of Hawaiians, especially in Maui where they're experiencing these fires right. So, very tragic was going on right now. And the loss of life loss of property and definitely very frightening so our, my thoughts are with them and and hopefully this. The island people make it through rather well quickly and hopefully on a way to recovery. Along with that right as noticing that that Hawaiian electric was having issues with course with with the infrastructure right a lot of the poles or damage a lot of the lines are damaged and now they're, they were have to source for example new utility infrastructure as poles is transformers of substations right, and then all the conductors and everything else has to be your strong. And a lot of these cases where these communities have been damaged right to the point that you have to rebuild everything from scratch, but what happens when you have for example a wildfire that only impacts part of the part of the the islands and that area is has a lot of wind generation or a lot of solar generation or a regular conventional plant or or those wildfires destroy some of your transmission lines so in this case right now you're looking at having your resource which is away from your load center right now, either offline or out of reach. So, being in an island that energy and bounce market, it's a little bit more challenging to be able to implement because of the fact that you know you're in an island had the had these islands had for example, the submarine power power transmission is connecting all the islands together, then you have a lot more resiliency, a lot more liability. And then of course you are able to survive disturbances are far better and of course the ultimate the ultimate benefit really to the customers is besides always having or having minimizing outages, you also reduce the cost of energy, and all of at least two or three different geothermal sites and the islands are that are only operating at 30% capacity because there's not enough load to justify them running a full load. So, that's the other challenge had had the cables been a bit late in commission constructed, you would see a lot more cost effective energy being sold to to the consumers in Hawaii. And of course it would have been emission free as well. So you would probably measure carbon goals a lot sooner than 2045. It's not launching a undersea cable, a submarine cable project is not easy, both politically culturally, and even economically in some cases, right, it all depends on somebody comes in with a lot of capital and go ahead and finance those projects. But ultimately, I think it will be a really, really more positive than negative for Hawaii and in that case, and then that will of course would allow a very robust EIM market to happen in Hawaii. Because of the fact that they're able to leverage all these different resources and different islands. And then in an example what you're going through right now, and always for example you'd be able to go ahead and take advantage of these resources and whether you're able to back feed an area that's been cut off from from their source from, you know, to do these fires you're able to back feed from other places being fed from other islands. So that will be a huge advantage in this case but that's a discussion from another day. So anyway, I think that is all I have for today. Thank you all for listening and once again, my, my thoughts and best wishes are for all the victims of these fires, and definitely hope you're all do well and understand it serious Thank you again. And if you have any questions, please go ahead and leave comments below I'll try and get to them as soon as I can, and also for additional instruction go to hsi.com industrial skills. So hsi.com slash industrial skills. This should be in the, in the show information, as far as how we can help you further with understanding EIM energy and balance markets and how for example these like you, you leverage this to be able to manage it's just more alive. Again, thank you and have a wonderful day and best of luck for everyone.