FERC Creates Path for Energy Storage into RTO/ISO Capacity Markets

The approval by Federal Energy Regulatory Commission members could create a level field for energy storage operators wanting to compete on the capacity and ancillary energy markets operated by the RTO/ISOs.  The vote was culmination of proposed rulemaking first announced in November 2016.

Feb 15th, 2018
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The nation’s top regulatory board for energy transaction voted Thursday to allow energy storage resources to participate in the capacity markets offered by Regional Transmission Organizations and Independent System Operators (RTO/ISO).

The approval by Federal Energy Regulatory Commission members could create a level field for energy storage operators wanting to compete on the capacity and ancillary energy markets operated by the RTO/ISOs. The vote was culmination of proposed rulemaking first announced in November 2016.

Traditional market rules may have created barriers to entry for emerging technologies such as battery storage systems, according to the FERC release. Navigant Research has forecast that annual installed energy storage capacity for electric T&D deferral could near 15 GW in only eight years.

“Today’s final rule helps remove these barriers by requiring each regional grid operator to revise its tariff to establish a participation model for electric storage resources that consist of market rules that properly recognize the physical and operational characteristics of electric storage resources,” the FERC release reads. “The participation model must ensure that a resource using the model is eligible to provide all capacity, energy and ancillary services that it is technically capable of providing, can be dispatched, and can set the wholesale market clearing price as both a seller and buyer consistent with existing market rules. “

Energy storage advocates applauded the new rule, of course. The Energy Storage Association has long called for transparent and standardized RTO/ISO policies regarding participation and integration by battery resources.

“Electric storage technologies already fulfill crucial functions in the bulk power system to provide reliable power and a more resilient grid,” Kelly Speakes-Backman, ESA CEO, said in a statement. “ 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.”

The rulemaking also stressed the need for reforms in distributed energy resource aggregations, but decided that more information is needed before making final decisions. FERC called for a technical conference to examine those DER aggregation issues in the near future.

Thursday’s new rule will take effect 90 days after it’s published in the Federal Register. RTO/ISOs must file compliance details within 270 days, and implement the tariff revisions exactly one year later.

FERC on Jan. 19 said that it has issued a policy statement that provides additional guidance for energy storage resources that seek to concurrently recover their costs through cost-based and market-based rates.

The policy statement helps ensure that those resources can operate at maximum efficiency to benefit the electric system and consumers, FERC said, noting that electric storage resources can charge and discharge electricity, as well as provide various grid services in multiple markets or to multiple entities, including regional grid operators and transmission and distribution utilities.

Since they can almost instantaneously provide multiple services and switch from providing one service to another, those resources may fit into one or more of the traditional asset functions of generation, transmission and distribution, FERC said.

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