By Amanda Durish Cook

FERC on Friday gave MISO the go-ahead on a second type of market definition for energy storage, though the commission warned that the RTO must address several more issues before storage can participate without obstacles.

MISO proposed the creation of a Stored Energy Resource Type II Tariff definition last April following Indianapolis Power & Light’s complaint against the RTO’s restrictive storage participation rules. (See MISO Ordered to Change Storage Rules Following IPL Complaint.)

FERC approved the new definition effective Dec. 1, 2017, but noted it lacked unique bidding parameters for storage resources, a path for storage to receive make-whole payments and an outline detailing how storage could provide voltage support and black start services (EL17-8, et al.).

But the commission said that all those aspects could wait until MISO’s compliance filing on Order 841, which requires RTOs and ISOs to allow energy storage resources full access to their markets. (See States, Utilities, RTOs Push Back on Storage Order.)

“Even though the SER-Type II category will not fully accommodate the unique physical and operational characteristics of such resources, our action allows Indianapolis Power and other electric storage resources to participate in MISO’s markets while MISO develops and files with the commission proposed Tariff revisions that facilitate electric storage resource participation in compliance with Order No. 841,” FERC said.

A MISO compliance filing detailing a storage participation model consistent with Order 841 is due to FERC in December. From there, RTOs will have one year to implement the rules they have proposed.

FERC’s Friday order gave MISO 30 days to establish whether its new storage category is eligible to provide up and down ramp capability and to specify whether storage is subject to day-ahead energy must offer obligations.

An SER-Type II must be able to continuously discharge for four consecutive operating hours across a coincident peak each day; in return, it can function as demand response in the day-ahead market and can participate in the annual capacity auction. It can operate in front of the meter and supply energy, capacity, spinning reserve, supplemental reserve and regulating reserve. When it was created last year, MISO officials acknowledged that there was more to be done to remove barriers to entry. Prior to FERC’s ruling, storage could participate in MISO markets only as behind-the-meter regulating reserves (SER-Type I).

FERC agreed with IPL’s critique that it’s unreasonable for the SER-Type II to rely on “rules that were designed for other types of resources.”

SER-Type II is modeled on MISO’s existing DR resources for offer and dispatch purposes and treated as generation resources for settlements.

“Those participation models do not accommodate the unique features of electric storage technologies … and thus MISO’s proposed interim SER-Type II category has a number of significant technical deficiencies,” FERC said. MISO’s lack of bidding parameters left the commission unsure of how the RTO will use state-of-charge management to economically clear the resource in the day-ahead or real-time market.

“Storage resource-specific bidding parameters are an integral part of accommodating the unique physical and operational characteristics of electric storage resources,” FERC said.

The commission also said it was unreasonable for MISO to settle SER-Type II resources as generation resources without determining whether storage would be eligible for make-whole payments. “MISO has not explained why electric storage resources should not be provided with uplift payments in appropriate circumstances,” the commission said.

FERC’s order wasn’t all criticism; the commission acknowledged that in the interim, the SER-Type II category “improves market access for electric storage resources compared to the existing options under the MISO Tariff.” The commission also said it understands that MISO is limited by its current software and systems and the 60-day deadline it imposed on the RTO to create the new definition.

“Thus, although we find that MISO’s proposed interim SER-Type II category … does not fully accommodate the participation of electric storage resources as required … we find that MISO can address some of these Tariff deficiencies in its Order No. 841 compliance filing,” the commission said. MISO should turn to its stakeholders to solve the issues raised over the resource definition, FERC said. (See MISO Rules Must Bend for Storage, Stakeholders Say.)

No Rehearing for IPL

Last week’s order also contained a denial of a rehearing request from IPL.

Though FERC’s first order on IPL’s complaint directed MISO Tariff revisions that accommodate the participation of all storage resources in markets that they are technically capable of, FERC did not order the RTO to compensate providers of primary frequency response or rule that its current dispatch rules could harm the life of a storage battery, as IPL had requested.

IPL sought rehearing last year, arguing that FERC disregarded 1996’s Order 888 when it refused to unbundle regulation service and primary frequency response. Keeping the two together, IPL argued, is preferential against its battery when compared to other generators. The utility also continued to contend that participation in MISO’s regulation market will degrade the useful life of its battery.

FERC didn’t bite at either argument.

“Beyond that alleged (and unsubstantiated) harm to the battery facility from offering regulation service, a service Indianapolis Power is technically capable of providing, Indianapolis Power does not explain why we should undo the determination in Order No. 888 by unbundling regulation service and primary frequency response service,” FERC said. “Nor does Indianapolis Power argue that the battery facility lacks the equipment necessary to provide regulation service. Moreover, contrary to Indianapolis Power’s assertion, the commission in Order No. 888 did not explicitly bundle regulation and primary frequency response services together because resources providing one of these services could recover its costs by providing the other service.”

FERC also found no merit in IPL’s complaint that MISO’s state-of-charge management protocol would compel market participants to either limit their state of charge or their output capability to 50%.

“We find that MISO’s proposal to allow individual market participants to control their own state of charge is reasonable because it will allow market participants, who are more familiar with the unique technical characteristics of their facilities, to control state of charge while MISO studies the issue,” FERC said.

Order 841

Earlier this month, MISO asked for a six-month extension on Order 841’s deadlines and sought clarification regarding bid parameters and the minimum storage size to be eligible for wholesale market participation.

MISO attorneys have said the RTO is concentrating on whether it’s “operationally feasible” for it to complete FERC’s directive to include all storage resources above 100 kW in a participation model. MISO’s participation model is finite in how many market participants it can accommodate, staff said at a March Market Subcommittee meeting.

Meanwhile, MISO’s Energy Storage Task Force will clarify with the Steering Committee this week as to whether it will help influence the RTO’s December compliance filing. (See MISO Storage Task Force Talks Order 841.) Throughout 2018, the Energy Storage Task Force will discuss ways storage can participate further, including generator-and-storage interconnection combinations and competitive bidding on storage projects that solve transmission issues. (See MISO Staff, Stakeholders Envision Expanded Storage Participation.)