Hybrid resources: FERC looking at America’s ‘next wave of opportunity’ for storage

Hybrid resources: FERC looking at America’s ‘next wave of opportunity’ for storage

The transition to clean energy is exactly that: a transition. While we must bear in mind that electricity is only one (large) portion of energy demand, the transformation to a renewables-based future is happening extremely quickly, but there are still steps that need to be taken for the grid to fully take onboard their value and replace fossil fuels.

One major step in the US is the ongoing implementation of the Federal Energy Regulatory Commission (FERC) Order 841, allowing energy storage resources to participate in wholesale markets operated in the main regional transmission operator (RTO) and independent system operator (ISO) grid services areas.

At a technical conference hosted online by FERC, chairman Neil Chatterjee reiterated that “breaking down barriers to energy storage resources” has been a huge focus of his team’s work, calling FERC Order 841 a “landmark effort for energy storage technology to participate and compete”.

“Order 841 will be seen as the most important step this commission could take to ensure a clean energy future,” Chatterjee said, with all six RTOs engaged in the process to make Order 841 “reality”.

However, the focus of the technical conference, held on 23 July, was to look at another major step forward, enabling the pairing of energy storage with generation facilities - described as ‘hybrid resources’.

“The time is right to discuss the next wave of opportunities for storage resources,” Chatterjee said.

FERC Commissioner Glick added that “we need to take a look at market rules - are they acting as barriers? And what can we do?”

Hybrid growth is 'pretty dramatic' but value is not fully recognised yet

Throughout a five hour event, stakeholders from across the value chain, including renewable energy companies like First Solar, wholesale electricity suppliers like NextEra Energy Resources, developers like 8minute Solar Energy as well as assorted RTOs, ISOs and load serving entities from California to North Carolina had their input, alongside trade associations like the Energy Storage Association and American Wind Energy Association.

NextEra’s VP of renewable energy policy, Mark Ahlstrom, said that he had once been a vocal critic of coupling storage and generation, but has changed his mind. Not only are costs coming down much faster than many anticipated, but Ahlstrom, who has a background in software, said he had “originally missed the full implications of advances in power electronics, learning and analytics”.

In other words, solar-plus-storage - and other hybrid configurations - can do much more than simply generate and then store energy, especially when paired with smart software and analytics. Software is not just used to “manage data and optimise system dispatch problems,” it can also be used to emulate other machines.

Hybrid systems can emulate “many different behaviours” offering up the example that solar-plus-storage can act like a natural gas plant, but one that is much more flexible, that can ramp instantly. Hybrid resources can offer the same services as conventional resources fairly and competitively.

“Why should they not be allowed to do so?” Ahlstrom said.

There are, in the US interconnection queues, 102GW of solar PV projects being proposed with energy storage attached, and some 11GW of wind, Will Gorman, electricity markets and policy researcher at Lawrence Berkeley National Laboratory pointed out - a “ pretty dramatic turn of events,” precipitated in large part by a correspondingly dramatic decline in costs. About a third of all proposed solar projects in the US are planned with energy storage attached.

Partly driven by the ITC, which stipulates energy storage can receive the tax credit incentive if charging at least 75% from the solar generator it is attached to (rather than from the grid), levelised power purchase agreements (PPAs) prices have fallen from US$40 to US$70 per MWh in 2017 to US$20 to US$30 per MWh in 2018-2019.

Representatives from MISO, ISO New England and California’s CAISO highlighted just how rapidly the addition of storage to generators: either co-located, where two resources share a single point of interconnection to the grid, or genuine hybrid, where the two assets are considered a single integrated resource at the point of connection, through being co-controlled.

While CAISO only has one large-scale mixed fuel resource online, there are already 214 projects totalling 53GW in the interconnection queue. Around 162MW of energy storage is expected to be connected this year across two projects. In 2021, there are 12 projects totalling more than 2,000MW expected to be connected and 19 projects adding up to more than 3,600MW in 2022.

ISO New England’s director of transmission services and resource qualification Alan McBride said his organisation has already made improvements to its interconnection procedure by modifying database requirements, and is committed to “ensure processes continue to support hybrid and other proposals”.

Emphasis on working together to achieve best outcomes

Nonetheless, as the day went through different topics in each of its four sessions, it became clear that big questions still remain.

“Hybrid and colocated resources are expected to provide considerable benefits to regional grids,” the American Wind Energy Association’s research and analytics director Adam Stern said.

“[Their] full potential will not be realised if market rules and practises do not allow hybrid and colocated resources to offer their full value in ISO markets.”

For example, not all RTOs as yet allow hybrid resources to hold a single interconnection agreement even if the project will act as a single resource. Patrick Tan at 8minute Solar Energy said that developers like his company “want things to move quickly, so customers can benefit from rapid innovation,” but had to accept that this is “at odds with how things generally work,” adding that it is important for all stakeholders to work together for the best outcomes.

Laura Hatfield, contract manager for transmission policy and contracts at Washington state energy utility and transmission asset owner and operator Puget Sound Energy added that there are 6,500MW of active projects in Puget’s interconnection queue, and a third are hybrid resources. There still remain complexities in the interconnection process and for wholesale charging from the grid.

Other issues include data requirements that may be “unclear or inconsistent” for interconnection procedures when submitting applications under FERC large and small generator interconnection procedures. Hatfield recommended that FERC “revisit” its framework and rules, and offer more clarity.

FERC is opening up for stakeholder and public comments on the topics raised as well as general input on hybrid resources and colocation. The issue will certainly grow and grow. While California is still the leading state on solar-plus-storage for instance, Jason Burwen, the Energy Storage Association’s policy director, pointed out that in Texas’ ERCOT market, around 20% of storage in interconnection queues as of the end of 2019 would be paired with generation as hybrids.

Those projects would be planned to come online this year. Then, for projects planned to come online in 2021, some 2/3 are hybrids. But for projects with planned online dates in 2022, nearly 80% of new storage would be hybrid resources paired with generation.

“Obviously not all would come online but it’s a good indication of interest,” Jason Burwen of ESA said.

“Organised markets are working to keep up and we are glad to see there are proactive efforts for policy to catch up with technology.”

Cover Image: 8minute Solar Energy's Eland Solar and Storage Centre project in California - 400MW of solar PV and 300MW / 1,200MWh of battery storage. Image: 8minute Solar Energy. 

This article has been amended to correct Jason Burwen's ERCOT interconnection statistics quote and to reflect that interconnection queued projects are 'planned' rather than 'expected' to come online by a certain date and may still not go ahead. 

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