Image: PJM Interconnection.
An energy trade association which includes Apple, energy storage maker AES and solar giants SunPower and First Solar in its leadership has welcomed the proposal by US energy regulator, FERC, to remove barriers to participation in wholesale markets for energy storage and distributed energy resources (DERs).
Advanced Energy Economy (AEE), which seeks to have an impact on policy matters shaping future energy concerns, was among the groups submitting lengthy documents to FERC, which was soliciting views until 13 February on its Notice of Proposed Rulemaking (NOPR).
The NOPR was issued in November last year and proposed to integrate electricity storage into organised markets, specifically the wholesale markets operated by the US’ Regional Transmission Organisations (RTOs) and Independent System Operators (ISOs), which between them ensure the reliability of the majority of the country’s electricity supplies.
In order to remove barriers to participation in these markets, RTOs and ISOs would be required to alter tariff structures in order to recognise specific characteristics of energy storage resources and give energy storage operators a new classification for their assets.
Critical first step
Acting chairwoman of FERC, Cheryl LaFleur, was widely quoted as saying the regulator had received “a lot of comments” in her appearance at the National Association of Regulatory Utility Commissioners (NARUC) earlier this week.
Advanced Energy Economy, which also includes Johnson Controls, Schneider Electric and GE in its leadership council, along with general members that include Amaresco, Alevo, Tesla, Sunverge and Younicos, from the world of energy storage along with diverse mainstream names such as Amazon and Facebook, was “strongly supportive” of the FERC NOPR, its comments said.
“The NOPR is a valuable and critical first step in what must be a comprehensive effort to eliminate unjust, unreasonable, and unduly discriminatory barriers to participation for advanced energy technologies in FERC-jurisdictional wholesale markets,” AEE said.
Currently, FERC, which should have a five-person executive board, is led by former utility executive LaFleur and just one other board member, Collette D Honorable, who is set to step down in summer as her five-year term ends. The NOPR cannot be acted upon definitively until the full board is completed, which requires nominations from the White House, followed by a vetting process and confirmation vote, which some sources said could take at least two months.
Battery-friendly PJM's 'supportive' response
PJM Interconnection, which is noted in energy storage for being the first of the US RTOs to allow batteries to provide frequency response grid services in a competitive market, said it was “supportive” of the NOPR. PJM coordinates wholesale markets in 13 US states and the District of Columbia.
“…Electric storage resources (“ESRs”) have already flourished in a number of PJM markets, and through its stakeholder process, PJM is working to expand its market rules to allow for additional opportunities for ESRs and distributed energy resources,” PJM’s comment said.
Nonetheless there were two areas where PJM said it wanted to see changes in the NOPR before it passed into a new set of rules. The first was on “key threshold issues such as potential jurisdictional issues” which relate to charging and discharging of behind the meter resources, the second was that rules should be flexible enough to accommodate the sometimes subtle differences between each RTO/ISO.
PJM admitted that rules governing DERs were more complex than for energy storage, since they refer to a range of generation and demand response assets with differing values and means for injecting power into the grid or reducing demand.
PJM said over 300MW of flywheel and batteries are on its networks, generally “distinguished by their fast response time, limited quantity of energy storage, and small megawatt output relative to pumped storage resources”. The organisation said integrating these resources posed unique advantages and challenges and noted that although present in its ancillary services market, electricity storage is currently not participating in its energy or capacity markets.
“ESRs should be allowed to participate in all markets and provide all services which they are capable of providing in a manner comparable to generation resources of similar size and with similar operational characteristics, or if applicable, comparable demand response resources,” the comment said.
California's ISO makes minimum size requirement recommendation
California’s CaISO (California Independent System Operator), meanwhile also appeared to have welcomed the NOPR process, but offered some specific tweaks and changes that it would like to see. It also agreed with PJM’s estimation that flexibility should be built into the rules. CaISO also referred to likely upcoming changes to RTO and ISO roles in the electricity market and said these would inform how those participation models would develop.
“While the CaISO supports adoption of a final rule that will permit participation by the electric storage resource and distributed energy resource aggregations these resources in organized markets, the CaISO recommends the Commission not adopt rigid rules for the design of these participation models,” CaISO said.
CaISO agreed that RTOs and ISOs should adopt bidding parameters and other modelling rules to recognise the physical and operational characteristics of electricity storage systems. This would include parameters such as state of charge, upper and lower charge limits, and energy charge and discharge rate.
It also recommended that electricity storage resources should be able to set the wholesale locational marginal prices as both seller and buyer of power. CaISO said that it disagreed with the minimum size requirement for electricity storage to participate in wholesale markets, and therefore did not support FERC’s proposal to have a minimum size of 100kW. CaISO markets currently stipulate 500kW as a minimum size, although it allows resources smaller than that to participate if they are aggregated together. The ISO recommended 500kW as the minimum size FERC should accept too.
Utilities, industry welcome NOPR
The NOPR was also welcomed in comments by the American Public Power Association, a non-profit group representing community-owned utilities and the National Rural Electric Cooperative Association, which performs a similar function.
Commercial intelligent storage manufacturer Stem also offered a comment on the NOPR, in a statement emailed to Energy-Storage.News by director of policy Ted Ko. He called the undertaking “a key milestone in what may be the most significant FERC decision in history for the energy storage industry,” particularly where it involved aggregating many systems to act in concert.
“[The rules] will certainly be critical for the future growth of virtual power plants made up of distributed energy storage,” Ko said.
“FERC is taking the right approach by proposing to require market operators to remove barriers to energy storage participation in wholesale energy markets. A final FERC rule that requires the markets to recognize the many benefits of energy storage will accelerate progress toward a more stable and cost-efficient grid”.