Energy markets are more interconnected than ever

The eastern two-thirds of the United States has bought and sold power through big regional markets for decades. The West never did. Instead, it ran as a patchwork of three dozen separate balancing authorities, each responsible for matching its own supply and demand, each trading with its neighbors through slow, one-off bilateral deals. It was a system built for a grid of large, controllable power plants — and a poor fit for one increasingly run on weather-driven solar and wind that varies by the minute and by the region.

That is now changing faster than at any point in the region's history. In 2026 the West crossed a threshold: from sharing power in real time to coordinating it a full day ahead, across state lines, through shared markets. For a clean-energy developer, this is not back-office plumbing. Interconnected markets change where clean energy can flow, how much it's worth, and how reliably a high-renewables grid can keep the lights on.

01From islands to a shared grid

The first crack in the West's fragmentation was the Western Energy Imbalance Market (WEIM), which launched in 2014. It let participating utilities trade power in the real-time market — the last few minutes before electricity is delivered — by automatically dispatching the cheapest available resource across a wide footprint instead of each utility balancing alone. It worked. The WEIM has saved participants billions cumulatively by letting one area's surplus solar instantly serve another area's shortfall, rather than both running expensive local generation.

But real-time trading only captures part of the opportunity. Power systems are planned the day before — that's when operators decide which plants to commit, how to schedule storage, and how much reserve to hold. If that day-ahead planning still happens utility-by-utility, most of the inefficiency is already baked in by the time real-time trading begins. Closing it requires coordinating the day-ahead market too. That's the leap the West is now making.

Sharing power in the last five minutes was the proof of concept. Coordinating the day before is where the real savings — and the real reliability — live.

02The leap to day-ahead

On May 1, 2026, CAISO's Extended Day-Ahead Market (EDAM) went live — the first truly regional day-ahead trading framework in the West. It lets balancing authorities outside California co-optimize their generation, imports, exports, and transmission a day in advance, as one system, rather than each guessing in isolation. PacifiCorp's two balancing areas were the first to join at launch; Portland General Electric follows later in 2026, with additional participants — including the Los Angeles Department of Water and Power and the Balancing Authority of Northern California — committed for 2027.

The modeled benefits are large because the inefficiency being removed is large. A 2022 benefits study estimated that a West-wide EDAM could cut power-production costs by hundreds of millions of dollars a year, with total potential savings approaching $1.2 billion annually if the full footprint participates — and an estimated 2.9 million metric tons of CO₂ avoided each year, simply by letting clean energy displace fossil generation across a wider area instead of being curtailed locally.

The West's march toward shared markets

Stage	What it coordinates	Status
Bilateral trading	One-off deals between neighbors	The decades-old default
WEIM (real-time)	The last few minutes before delivery	Live since 2014; broad participation
EDAM (day-ahead)	The full day-ahead plan, region-wide	Live May 2026; expanding through 2027
Markets+ (SPP)	Day-ahead + real-time, alternative operator	FERC-approved; targeting 2027

03Why it matters most for clean energy

Interconnection helps any grid, but it helps a renewable grid disproportionately — for a simple reason. Fossil generation is dispatchable and roughly the same everywhere; there's limited benefit to trading it across a region. Solar and wind are the opposite: they're free when they're blowing or shining, worthless when curtailed, and they vary enormously from place to place. The wind is howling in Wyoming while it's calm in California; clouds sit over one valley while the next is in full sun. A bigger market lets those differences cancel out.

Geographic diversity smooths the aggregate. When a thousand miles of grid are optimized together, a local solar surplus that would otherwise be curtailed can serve a neighbor's evening peak; one region's wind lull is covered by another's wind surplus. The wider the footprint, the less storage and backup each individual area needs to hold for itself, because the region as a whole is far steadier than any single point in it. Interconnection is, in effect, a way of turning the variability of renewables from a liability into a manageable, poolable risk.

A bigger market is the cheapest form of firming there is: it lets one region's surplus sunshine cover another's shortfall, without building a single new megawatt-hour of storage.

04Two markets, one West

The transition isn't unfolding as one tidy market. Two competing day-ahead designs are taking shape. CAISO's EDAM is one; the Southwest Power Pool's Markets+, conditionally approved by federal regulators and targeting a 2027 start, is the other. Utilities across the West are weighing which to join, and they're splitting — some, including several in the Southwest, have committed to Markets+, while others have chosen EDAM. A few decisions are still pending.

From a developer's standpoint, the competition matters less than the direction. Whichever market a given utility lands in, the era of every balancing authority planning in isolation is ending. The grid is being knit into large, optimized footprints with transparent prices and the ability to move clean power efficiently across long distances. Even two large markets coordinating at their seams beat three dozen islands trading by phone.

05What it means for project value

Deeper interconnection reshapes what makes a project valuable. In a fragmented grid, a project's worth was capped by its local market — if your corner of the grid was oversupplied at noon, your midday solar was curtailed and your revenue evaporated, full stop. In an interconnected market, that same surplus can find a buyer across the seam, so well-placed clean energy reaches demand it could never have served before. Transparent, region-wide prices also reward exactly the attribute we build for: the ability to deliver power when and where it's scarce. A resource that can shape its output to regional price signals — charging on one region's surplus, discharging into another's peak — captures value that a static, must-take resource leaves on the table.

It raises the bar, too. Wider markets mean more competition; the cheapest clean energy anywhere in the footprint sets the price everywhere it can reach. The projects that thrive in that environment are the flexible, dispatchable, well-sited ones — the resources that can answer the market's signal rather than just pushing power onto the grid whenever the weather allows. That's the same conclusion the engineering and the policy keep pointing to, arrived at from the market side.