FERC to remove market barriers to energy storage systems

The Federal Energy Regulatory Commission is taking a thorough and judicious approach to expanding the types of markets storage can participate in.
Published: Tue 14 Jun 2016

US energy storage developments have experienced exponential growth recently [US Energy Storage Market Forges Ahead] and it looks as if there is no intention of slowing down either.

State and federal regulatory policies that encourage renewable sources of electric power to supply the grid are playing a large part in this growth. [Engerati-Energy Storage-Regulatory framework and market design needs]. Storage plays a major role in facilitating the incorporation of renewable energy into the US power grid.

As a result of this growth, an increasing number of vendors of energy storage capacity, and batteries in particular, are wanting to earn money through various market mechanisms. So it makes sense that the Federal Energy Regulatory Commission (FERC) asked for comments in April regarding any changes that should be considered for energy storage participation in wholesale energy markets.

Among the numerous  stakeholders that filed comments is the Energy Storage Association (ESA), which submitted its suggestions. 

Jason Burwen, policy director for the ESA, says that FERC has to ensure that policy catches up with technology. He adds that there is a great deal of catching up to do as technology has advanced significantly in the last five years, rendering rules that were written for storage in the beginning of this decade, useless.

While both California ISO and PJM have put into place some rules to clarify how today’s storage assets can play in wholesale markets, most markets are behind. ESA has suggested that the FERC take action on at least some of these issues so that some slow-moving market operators don’t drag their feet in the future.

There are almost 300MW of advanced electric storage currently operating in PJM but there is zero operating in ISO-NE, MISO, and SPP-the power markets in New England, the Midwest and the Southwest.

Putting storage on an equal footing

ESA made the following suggestions to FERC:

Adjust tariff language: To allow  storage to participate in all market services, something that is lacking or ambiguous in most territories today. Storage providers cannot rely on language in a FERC report or a statement made by an ISO staff member at a stakeholder meeting to determine whether the provider is eligible to participate in a market.

Non-discriminatory bid parameters: ESA is looking for the markets to set bid parameters and have resource modeling that is appropriate for electric storage, since these assets can both inject and withdraw electricity from the grid. ESA calls for the state of charge being an important parameter to have for storage, as that determines the services the battery is capable of providing at any given time.

Open up qualification criteria: Many of the qualification rules were built around generators and need to be updated. Because storage doesn’t have the ramp-rate issues of traditional generation, the requirement that a battery should also provide energy in ancillary service markets is not needed. “This requires a shift of market design from one based on entrance criteria to one based on performance requirements.”

Overhauling capacity markets: ESA asks FERC to consider new markets for flexibility that would more easily overcome the barriers built into existing capacity markets. If it has to happen within existing capacity requirements, ESA asks for incentives rather than penalties when it comes to performance.

Pairing up: One way to ensure storage can participate more widely in capacity markets is to allow it to pair with other generation, such as intermittent renewable resources like solar and wind. ESA would like to see explicit rules for how storage and generators can bid in as single capacity resources.

Aggregation: Separate from rules about how multiple assets could bid in as single capacity resources, there is also the issue of aggregating behind-the-meter resources. At the very least, participation should be defined by the aggregated set of resources, and not each individual site. Minimum size rules are also variable and outdated, argues the ESA. Some markets define the smallest assets as 0.1MW, while in others they must be at least 1MW to participate.

The great beyond: Many of ESA’s suggestions shouldn’t be impossible to implement, since in most cases at least one market is doing what the association is calling for (or in some cases, at least California is trying to). But beyond the major issues listed here, there are also calls for storage to provide not only generation services but also transmission services. ESA would also like to see resources, including storage, compensated for some services that currently are done through an out-of-market settlement.

ESA’s filing is intended to make “comprehensive and commonsense requests” needed to actualize key storage attributes of fast and accurate response and flexibility in all three markets: energy, capacity and ancillary services.

ESA applauds FERC

The ESA has given the FERC the thumbs up for advancing their formal inquiry into market participation and barriers to entry for safe and reliable energy storage systems.

By improving grid flexibility, reliability and efficiency, energy storage has already proven how valuable it is in the regional electricity markets under FERC jurisdiction. The Commission is taking a thorough and judicious approach to expanding the types of markets storage can participate in and the valuable services it can provide.

“Energy storage is lowering costs, increasing reliability and enabling a more flexible electric grid everywhere that it is eligible to participate,” said Jason Burwen, Policy and Advocacy Director. “We applaud FERC for undertaking this endeavour. The Energy Storage Association will continue to work closely with FERC on advancing the Commission’s goal of ensuring least cost solutions for reliable energy and for making sure markets operate efficiently.”

The review by FERC, according to ESA, is a signal that the Commission is working to ensure that market rules stay up-to-date with rapidly advancing storage technology. With market barriers removed, ratepayers will ultimately benefit from lower costs and more reliable and responsive electricity. 

“The energy storage industry looks forward to working closely with the Commission to address these systemic barriers and enable storage to compete side-by-side with traditional resources in all the wholesale markets,” said Burwen.


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