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FERC Order 841: US about to take ‘most important’ step towards clean energy future

By Andy Colthorpe
Image: Flickr user Ryan McKnight.

What has been described by the head of its federal regulator as the “single most important act” the US could take in smoothly transitioning to a “clean energy future” will become reality, with distributed energy storage set to join wholesale markets and compete to provide services on a “level playing field” with fossil fuel resources.

The United States Court of Appeal in the District of Columbia (DC) ruled last week to deny petitioning from the National Association of Regulatory Utility Commissioners (NARUC) as well as the American Public Power Association and others, to prevent the passing of the Federal Energy Regulatory Commission (FERC) ruling FERC Order 841.

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Representing various state public service commissions that regulate utilities across federal jurisdictions, petitioners had essentially argued that FERC had overstepped its boundaries in making rules regarding “facilities used in local distribution”. Judges said that although the petition called FERC “off-sides” by “prohibiting States from barring electric storage resources on their distribution and retail systems from participating in federal markets”.

“We find no foul here, so we deny the Petitions,” the ruling read.

After the court made its decision on 10 July, FERC chairman Neil Chatterjee said in a statement the net day that he thought “FERC’s Order 841 will be seen as the single most important act we could take to ensure a smooth transition to a new clean energy future”.

“…I’m extremely pleased that the DC Circuit denied the petitions challenging Order 841 on jurisdictional grounds and upheld our orders on the merits. The court found our actions to be well within our statutory authority,” Chatterjee said, adding that Order 841 and removing barriers for energy storage technologies had long been one of his top priorities as FERC chairman.

What is FERC Order 841 and why is it considered so important?

Order 841 states that barriers to distributed and behind-the-meter energy storage participating in wholesale electricity markets should be removed. FERC passed the bipartisan rules in February 2018 after a lengthy process that began with it being tabled in 2016, ordering regional transmission operators (RTOs) and independent system operators (ISOs) to reconfigure wholesale markets to accommodate storage resources to allow them to provide capacity, energy and ancillary services.

While it has been described by commentators to in coverage since early 2018 as a “landmark” ruling that would be transformative for the energy storage industry, but more importantly for the clean energy transition as a whole, the mammoth scale of the task has also been recognised by many.

FERC branch chief Nancy Bowker told this site in March 2018 that the “devil is in the details” and after various transmission operators started submitting their plans, there was some wrangling over definitions and whether plans submitted by some operators including PJM and Southwest Power Pool were fully compliant.

Then in mid-2019, FERC specialist lawyer Jennifer L. Key of law firm Steptoe & Johnson warned this site that the jurisdictional pushback attempt was coming. Key said in an interview that the “uniquely American problem” of dual state and federal regulation had resulted in “somewhat surprising legal challenges”, which appear to have finally been resolved with the ruling of DC Circuit Judges Garland, Rogers and Wilkins.

Clean air, clean jobs and a level-playing field for cost-competitive technology resources

Various clean energy trade associations including the Energy Storage Association (ESA), the Solar Energy Industries Association (SEIA) and the Advanced Energy Economy (AEE) formed a coalition to intervene in support of Order 841, while industry participant companies included Sunrun, Tesla, Vivint Solar Developer and ENGIE Storage Services also filed briefs to support it, as did a coalition of Attorneys General from various states. Energy Storage Association policy expert Jason Burwen said in a LinkedIn post that after “a nearly five year journey to ensure market access for storage,” the judges' ruling “portends a bright future for versatile, multiple-use distributed storage”.   

The non-profit Environmental Defense Fund (EDF) acclaimed the decision, saying in a press release that the Order will help “protect the climate, clean air and public health, and will have a vital impact on clean energy jobs for America’s future”.

“Today’s decision is a big step towards realizing cleaner, healthier air for all Americans and creating opportunities for more clean energy jobs. FERC’s order 841 creates an even playing field for energy storage to compete with traditional fossil fuel generators,” EDF attorney Michael Panfil said.

“It removes market barriers for energy storage and unlocks its enormous public health, environmental and cost-saving potential”.

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