Our Platinum Plus clients have received a couple different reports recently relate to last week’s heat in CAISO, including A supporting Role for the CAISO Fleet and Batteries’ Market of Choice. This article contains a couple of the summary conclusions from the later. For access to the full reports, please contact [email protected].

As market observers will be aware, last week the SP15 DAM energy prices for the evening peak came in high several days in a row, but then RTM prices proceeded to fall far short of the expectations set by the DAM:

Figure 2 | DAM and RTM prices in SP15

Batteries in CAISO can clear or not clear volumes in the DAM, then they can clear a different amount in the RTM and get compensated or charged based on the difference between DAM and RTM awards and the relevant prices. For example, if a battery sells 100 MW in the DAM for a given hour, but then only clears 70 MW in the RTM, then they need to effectively buy 30 MW from the RTM market to fulfill their 100 MW DAM obligations. They would earn 100 * DAM for the portion of their DAM energy that they cleared, and then they would pay (100-70) * (RTM) for the amount that they cleared in DAM and had to buy back in the RTM.

This is exactly what we saw last week, when RTM prices came in much lower than DAM. In the RTM, batteries bidding strategy reflects what we’ve come to call the evening “fire sale”