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FERC ruling a ‘significant step’ towards wholesale market participation for energy storage

Aggregated energy storage and DERs, perhaps similar to this behind-the-meter Virtual Power Plant project pictured being switched on in Canada a couple of years ago, could be futher enabled by FERC's ruling. Image: Powerstream.

A unanimous vote taken by the US regulator FERC (Federal Energy Regulatory Commission) which would allow energy storage and other distributed energy resources to play into wholesale markets has been hailed as a “significant step” forward.

FERC voted 5-0 in Item E-1, a draft ‘Final Rule on Electric Storage Resource Participation in Markets Operated by Regional Transmission Organisations, or RTOs, and Independent System Operators, or ISOs’. The rule sets out frameworks through which electricity storage can participate in various capacity, energy and ancillary services markets operated by RTOs and ISOs - the operators of the US’ transmission and distribution (T&D) networks.

While the commissioners accepted this entrance of energy storage to be a desirable and perhaps inevitable outcome, there is still one further hoop for the rule making to pass through - a technical conference will be convened in April by FERC to gather information on all of the proposed and potential reforms to the way distributed energy resources can be aggregated on electricity networks.

RTOs and ISOs are asked to establish participation models for storage in the wholesale markets of  their service areas, including technical parameters, minimum resource size requirements and eligibility. The drafted Final Rule also “requires that the sale of electric energy from the RTO or ISO market to an electric storage resource that the resource then resells back to those markets must be at the wholesale locational marginal price”.

Trade groups Advanced Energy Economy, Energy Storage Association quick to applaud FERC

Advanced Energy Economy, a trade group formed by private companies looking to modernise and decarbonise their energy supply and generation, and counting the likes of Apple, AES, Microsoft, Schneider Electric, Siemens, Sunpower, NEXTracker, Facebook, E.On and many others among its members, had already applauded the initiative when first put forward in late 2016 and early 2017.

The group once again stepped forward to commend the FERC rulemaking.

“Through today’s order, FERC has taken a significant step toward removing barriers that keep advanced energy technologies from competing in wholesale electricity markets on the basis of their ability to improve the reliability, resilience, and affordability of our energy system. Energy storage can help reduce costs to consumers and ensure that the lights stay on,” Malcom Woolf, AEE senior vice president for policy, said.

“We firmly believe that aggregated DERs deserve the same opportunity to compete on the basis of price and performance, and   look forward to engaging in a formal process to ensure barriers are removed for these critical energy resources as well.”

Meanwhile, the US Energy Storage Association’s CEO, Kelly Speakes-Backman, called FERC’s latest action, “the culmination of a concentrated and holistic review of the framework needed to support participation of vital electric storage technologies in the wholesale markets”.

“Since the rulemaking was initiated in November 2016, the Energy Storage Association – driven by the tireless efforts of its Vice President of Policy, Jason Burwen – has advocated for establishing transparent, standardised RTO and ISO policies regarding the participation and integration of electric storage,” Speakes-Backman said.

“Electric storage technologies already fulfill crucial functions in the bulk power system to provide reliable power and a more resilient grid.  With this morning’s unequivocal action, the FERC signaled both a recognition of the value provided by storage today, and more importantly, a clear vision of the role electric storage can play, given a clear pathway to wholesale market participation.”  

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