FERC issues decision for energy storage regarding pay for performance tariffs

Under pay-for-performance tariffs, grid operators would implement a pricing structure that pays faster-ramping resources a higher price for their service

Boston, March 9, 2011 — The Federal Energy Regulatory Commission proposed new rules that would compensate regulation energy storage technologies based on the benefits they provide to the electric grid.

Andrew O. Kaplan, a partner in Brown Rudnick's Energy & Utilities Group, who pursued the FERC decision in his ongoing representation of energy storage company Beacon Power Corp. stated that "FERC's decision to propose new pay-for-performance market rules indicates the commission's continuing support of the energy storage marketplace and will encourage additional investment in technologies that can be used to regulate the grid quickly and accurately."

F. William Capp, Beacon Power President and CEO, views the decision as "a major step in recognizing the superior value that faster-responding regulation resources bring to the grid."

On February 17, 2011, FERC issued the Notice of Proposed Rulemaking that will require each of the grid operators under its jurisdiction to structure their regulation market tariffs to provide pay-for-performance.

Under pay-for-performance tariffs, grid operators would implement a pricing structure that pays faster-ramping resources a higher price for their service.

Because Beacon's flywheel systems react in seconds to a grid operator's control signal — a response that is exponentially faster than conventional fossil fuel-based regulation resources, pay-for-performance tariffs would enable the company to earn increased revenue from any regulation services it provides in those markets.

Such markets include the New York ISO, where Beacon is already operating a regulation facility that is expected to reach its full 20 MW of capacity in the second quarter of 2011.

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