First came the wind turbines, then solar panels. Battery storage followed, and now RTOs and ISOs are faced with integrating hybrid energy resources.

The main barrier to their integration? The RTOs and ISOs themselves.

“All of the markets are having conversations but in different stages and with different scopes,” said Jason Burwen, vice president of policy for the U.S. Energy Storage Association, during a recent online panel discussion facilitated by his organization. “We are starting to see how different markets are going to take this on.”

Grid Strategies President Rob Gramlich, who last year authored a paper for the ESA on the subject, says regulations have not kept up with technology and the markets. He thanked FERC for pursuing “some” reforms but noted the commission’s recent orders on storage (841) and interconnections (845) don’t address hybrid resources.

“It’s been just incredibly fast how much the market has changed,” he said during ESA’s June 11 discussion. “Hybrid doesn’t even appear in those rulemakings. That’s not the fault of FERC. It’s just that nobody raised it. The market has moved faster than policy.”

Hybrid resources are generally considered to be co-located pairings of two different technologies. Most of these resources consist of solar or wind installations paired with batteries, the “core technology driving hybridization,” Gramlich said. Batteries are highly scalable and modular, making them suitable for generation sites, integrating them into the wires’ infrastructure, or locating them with the customer.

Solar PV generation is the most common resource paired with batteries, but other configurations include wind-battery, gas-battery and hydro-battery. These resources’ ability to respond to economic signals differently than traditional generators has driven their recent growth.

According to the U.S. Energy Information Administration, some 4.6 GW of hybrid capacity is currently installed, with another 14.7 GW of capacity in the immediate development pipeline. More than 40 GW of hybrids entered generator interconnection queues last year, pushing the total hybrid capacity in RTO/ISO queues to 69 GW.

Hybrid costs are also coming down, further increasing their attractiveness. Gramlich said power-purchase agreement prices in the U.S. dropped from $40-70/MWh in 2017 to $20-30/MWh in 2018 and 2019, mostly due to falling technology costs and tax credits.

“There are big opportunities for adding storage to existing generation. The main problem is the interconnection queues are very slow,” he said. “Everyone knows the interconnection queues are a constant challenge. If one can make a more efficient use of the interconnection service with an existing service or one that‘s made it through some stages of the queue, that’s an efficient way to go.”

“Order 841 opened the floodgates. Hybrids weren’t previously on the radar,” said Rhonda Peters, a principal with InterTran Energy Consulting. “All of a sudden, you had this ability to take variable generation and make it more dispatchable [with energy storage]. But having that ability didn’t mean it was actually possible because we didn’t have policies that allowed for it.”

The panel members all called for FERC and the RTOs and ISOs to get serious about hybrid resources. In his paper for ESA, Gramlich said some near-term changes can be made to improve integration of the resources by treating them as two separate units and harmonizing their participation models.

“However, for hybrid resources to deliver their full value, they may eventually need to be treated as fully integrated single machines, able to optimize what they provide and when they provide it,” he said, noting RTOs’ and ISOs’ current rules do not allow for this flexibility.

“We’re starting to see how different markets are starting to take this on,” Burwen said, indicating ERCOT and CAISO are taking the lead. “ERCOT plans to use an energy storage model for hybrids. That’s instructive of the direction we’re going. Participating as conventional generation might make more sense than [being paired with] existing resource types. It sets a market for where we think you’re going to make the best use of hybrids.”