Market Intel
CAISO
CAISO
Market Overview
California’s energy storage sector has rapidly evolved to become the largest, and one of the most attractive markets in the U.S. With ambitious clean energy goals – targeting 100% clean electricity by 2045, and a wealth of renewable generation assets, CAISO relies on energy storage for grid reliability.
CAISO is proof-positive that batteries are critical to grid reliability – they have already been providing a majority of capacity in peak load hours.

-
100%
Renewable energy target by 2045 -
~11GW
Capacity online as of late 2024 -
~52GW
Storage expected by 2045
CAISO offers a complex but profitable landscape for storage operators, where batteries can generate revenue through multiple channels, including energy arbitrage, capacity markets, and ancillary services. These revenue streams, coupled with ambitious clean energy targets, position CAISO as one of the most promising markets for energy storage – especially for operators able to optimize across all markets, accounting for the real-time price fluctuations, and within project or regulatory constraints.
Market structure
CAISO plays a central role in managing the California power grid, integrating diverse energy resources, and facilitating energy transactions across California and states in the western U.S.
The ISO also operates a Western Energy Imbalance Market (WEIM), an energy-only wholesale market that allows participants to buy and sell power close to the time electricity is consumed, and gives system operators real-time visibility across neighboring grids (WEIM). This helps improve reliability, and allows CAISO to source the least-cost energy to meet real-time demand.
Key Players
-
Maintains reliability and manages the market to balance energy demand with supply.
-
Intermediary between electricity generators and CAISO; submit bids on behalf of generators and handle financial settlements.
-
Privately-owned utilities regulated by the state that provide electricity to customers in specific service areas.
-
Publicly-owned, non-profit utilities operated by local governments to serve their communities with electricity.
-
Local government-run programs that purchase electricity on behalf of residents to meet community needs, while relying on utilities for transmission and distribution.
-
Your market navigator; a platform leveraging real-time data and predictive insights to help maximize revenue, ensure optimal performance and grid stability.
Market Products
CAISO’s market structure is designed to reward the flexibility of energy storage assets, and their ability to support grid stability.
-
Energy
Bidding into energy products can see high returns from energy arbitrage, and provides flexibility to lock in returns, or capture sudden price spikes.
-
Ancillary Service (AS)
This almost acts as offering insurance to the grid. You will get a payment for holding capacity, or offering to scale down generation, in moments where there is a mismatch between supply and demand. Bidding into AS can yield consistent returns, and can deliver outsized revenue during scarcity events.
CAISO does not operate a formal capacity market; instead it has a mandatory Resource Adequacy (RA) requirement, which requires Load Serving Entities (LSEs) to procure capacity equal to its peak load forecast plus a reserve margin (usually ~15-20%).
- LSEs enter into contracts with energy generators and storage operators, paying them for their commitment to deliver capacity when it is needed. This often looks like committing a specific number of MWs in specific time periods.
- Each asset is only able to offer a specific number of MWs – their “net qualifying capacity” (NQC), which is determined based on a test of the resource’s sustained output over the course of four hours.
- Resources with RA capacity are required to economically bid or self-schedule both Energy and AS for each hour for which it is obligated under its Must Offer Obligation (MOO).
Market Opportunities
While CAISO has the largest storage capacity online today, total active battery capacity only accounts for ~12% of CAISO’s nameplate capacity.
-
~11GW
Active storage in CAISO -
12%
CAISO’s nameplate capacity -
43GW+
Gap between generation asset capacity
If operated effectively, storage assets can generate revenue from:
-
Load Shifting
With high renewable generation contribution, CAISO has a fairly pronounced duck curve. When solar production drops off in the evening, prices go up. Batteries are uniquely positioned to discharge in these hours and capture the higher prices.
-
Resource Adequacy
Storage assets can enter into RA agreements to get revenue from the LSE for the period they are committed to have their capacity available. Savvy operators can supplement this with merchant revenue for uncommitted capacity or time periods.
-
Price Volatility
Though it varies by node, there are clusters of high volatility nodes across CAISO, providing an opportunity for batteries with accurate forecasting tools and proactive state of charge management.
-
Supplementing Generation
Capturing curtailed energy from renewable generation assets, and shifting the energy into higher priced hours.
-
Policy-Driven Incentives
California’s ambitious clean energy targets and policies like SB 100, which mandates 100% carbon-free electricity by 2045, further bolster the role of energy storage as a grid resource.
Path to go-live
Getting a storage asset operational within CAISO requires several key steps:
Day-in-the-Life
Overview of a sample operating day:
Case Studies
Explore our case studies
Evaluating performance
Review asset performance across operating days, hours,
and products.
Savvy operators consistently assess asset performance to ensure they are maximizing the value.
Check for:
- Forecasts vs. actual prices by product
- Understand where revenue was generated
- Ensure prior commitments are met (outside contracts, etc.) and understanding their impacts