A large proportion of storage installed in the US in 2015 was in the PJM Interconnection service area's frequency regulation market. PJM is one of the RTOs asked to provide data and comments to FERC by 2 May. Image: PJM Interconnection.
Moves by the US’ Federal Energy Regulatory Commission (FERC) to assess electricity storage’s potential role in wholesale markets and in maintaining a low-cost, reliable network have been welcomed by the Washington-headquartered Energy Storage Association.
Jason Burwen, the association’s policy and advocacy director, told Energy Storage News that the rapid recent growth in deployment of the technology had brought various issues to the regulator’s attention regarding its future potential and barriers that currently exist. A recent GTM Research report claimed that deployments of storage in the US increased 243% in 2015, much of it in front of the meter in PJM Interconnection's frequency regulation market.
Earlier this week, FERC requested that Independent System Operators (ISOs) and Regional Transmission Operators (RTOs) offer their views on whether barriers to electricity storage’s participation in capacity, energy and ancillary services markets create “unfair and unreasonable” wholesale rates. The system operators have only until 2 May to do so.
Following that, the matter will be put to public comment, with the energy storage industry expected to put forward its own thoughts during that time, including responses to the ISO and TRO’s own responses. This will have an even shorter window, with comments requested to be in by, or before, 23 May.
“I think…FERC is now convinced that there’s a very good chance that barriers to participation of storage in the wholesale market could be leading to higher than necessary system costs, or the words they have used are ‘unjust and unreasonable wholesale rates’,” Burwen said.
“Basically FERC seems to be suggesting that they think there’s a very good chance that storage will be a part of ensuring least cost solutions for reliability, for making sure markets are efficient...In addition to this being a systematic review, which is good in itself, this indicates that FERC is leaning forward on this one.”
While it deals with the wholesale markets that exist at transmission level, behind-the-meter storage assets, including rooftop PV systems connected together to create ‘virtual power plants’ providing grid services, or to create energy trading platforms, are also included in the scope of the regulator’s enquiries.
FERC said it had noted that while storage could be providing a service on the distribution grid to a utility or its customers, such as solar smoothing or peak shaving, it could also be able to participate in the RTO and ISO markets with other services.
Regulatory definition required
Almost every region of the world deploying or starting to deploy energy storage for the grid and for renewables is starting to have to answer tough questions on regulatory definition. As has been reported numerous times on this site, the UK, EU and US are among those wrestling to accommodate into their electricity markets the definition of a set of technologies that could act as load, generator or transmission system asset, sometimes simultaneously. The process kicked off by FERC this week could finally set in motion the development of that regulatory definition, Burwen said.
“Sometimes it [storage] looks like supply, sometimes it looks like load, sometimes like infrastructure. It’s a very unique set of attributes,” with the grid designed long before energy storage technology or renewable generation was available to it.
The short list of identical questions was directed at each of California ISO, ISO New England, Southwest Power Pool, PJM Interconnection, NYISO, Midcontinent ISO (MISO), all tasked with maintaining the reliability and cost-effectiveness of their electricity supply for hundreds of thousands, if not millions, of Americans.
FERC’s Office of Energy Policy and Innovation filed Docket No. AD16-20-000, which stated it had tracked the use of electricity storage to offer value to the wholesale market “for some time” and in addition had noted “key developments in the technology and cost-effectiveness of electric storage resources”.
It has asked the organisations for information on:
- Whether energy storage resources are eligible for participation in wholesale markets, including whether “rules provide sufficient clarity to a potential new electric storage resource market participant”.
- What performance requirements and qualification criteria are in place, including minimum technical requirements (MTRs).
- Whether parameters in bidding processes for wholesale markets, which are meant to take into account the different operational capabilities of different resources, recognise these capabilities with respect to different energy storage technologies.
- The possibility of distribution level, behind-the-meter storage, included aggregated systems, to play into RTO and ISO wholesale markets, which operate at the transmission level. As Jason Burwen of ESA pointed out, this could include household solar PV systems or commercial energy storage.
- Finally, FERC asked RTOs and ISOs about the pricing of wholesale power bought from and sold into the grid by energy storage providers. In other words, as mentioned above, the versatility of electricity storage to serve different agents of the electricity system, sometimes all at once, is proving for some complex redefinition:
“Electric storage resources can be connected to the transmission system, distribution system, or located behind a customers’ meter, and in some instances are able to provide services to the RTO and ISO markets at all of those locations,” the Request for Comments stated, with regards to the final point.
“Commission staff understands that depending on where an electric storage resource is connected to the grid and what services it is providing, it may not be clear what price an electric storage resource should pay for the electricity that it receives.”
Use cases are beginning to emerge for behind the meter storage that involve batteries "injecting electrons into the transmission network", posing a new set of market-design challenges, ESA's Jason Burwen said. Image: Andreas Heddergott / TUM.
'...Already providing competitive solutions for grid stability'
FERC has already recognised and removed some barriers to energy storage with its FERC Order 755, the so-called pay-for-performance legislation which enabled storage to play into fast-responding frequency regulation markets and FERC Order 784, which preceded it and opened up the ancillary services market to storage projects.
Burwen said that it is not clear what next steps FERC will take once it has finished gathering commentaries, but he expected further actions to follow.
He also said in a separate statement emailed to press by the ESA: “Today cost-effective energy storage is a reality, and storage is already providing competitive solutions for grid reliability and capacity where markets allow it.
"The Energy Storage Association supports efforts that increase access to wholesale markets for storage and establish market structures to realise energy storage’s full value in lowering system costs and increasing system reliability.”
While not necessarily pertaining just to wholesale markets, calls for clearer regulatory definition of storage have also been heard recently from European PV trade association SolarPower Europe and in the UK, the government of which is thought to be seeking comments and information from industry during this year and next to formulate its own position.