By RTO Insider Staff
FERC staff last week issued deficiency letters to all six jurisdictional RTOs and ISOs over their proposed energy storage rules, pressing for definitions, tariff citations and details on issues including metering, make-whole payments, and self-scheduling.
The grid operators are facing a December deadline for compliance with Order 841, which requires them to revise their market participation models to allow storage resources 100 kW and larger to provide capacity, energy and ancillary services within their technical ability.
The deficiency letters by the Division of Electric Power Regulation ranged from eight to 11 pages.
Jeff Dennis, general counsel of Advanced Energy Economy, said in a tweet that the detailed questions “demonstrate that FERC is looking for real compliance with the [requirements] to open the markets to storage, and not just paper compliance. Overall, I think this is a positive development.”
“They have some hard questions that go to the particular issues raised by commenters,” agreed Earthjustice attorney Kim Smaczniak.
Below is a summary of the issues raised by staff. The grid operators have 30 days to respond.
FERC Challenges CAISO on Storage Minimum
FERC cited seven major areas of concern regarding CAISO’s proposal (ER19–468).
Staff wanted the ISO to explain, for instance, how it could reconcile the difference between its own minimum size requirement for storage resources of 500 kW, as noted in a Tariff appendix, with Order 841’s minimum size of 100 kW.
The commission also asked the ISO to explain if “it is CAISO’s position that each of the three participation models — the non-generator resources (NGRs) model, pumped storage hydro units model and demand response model — considered on its own, complies with all of the requirements of Order No. 841.”
FERC then asked the ISO to explain its eligibility requirements for storage resources to provide “all other services the CAISO procures on behalf of its market, including CAISO’s backstop capacity procurement mechanism.” And it requested CAISO elaborate on how it allows storage resources to derate their capacity to meet minimum run-time requirements.
Next, FERC asked CAISO to for an explanation of how “NGRs can be dispatched as supply or demand, set marginal price, self-schedule and otherwise participate fully in CAISO’s markets … [and] that pumped storage hydro resources can be dispatched as supply and demand, set wholesale market clearing prices, and submit bids and self-schedules.”
It asked the ISO to further describe its mechanisms for dealing with conflicting dispatch signals and for incorporating bidding parameters.
Then it ordered CAISO to cite Tariff provisions that ensure storage resources are charged the LMP for electricity stored for “later resale back to the market” and that the resources’ “charging is accounted for as negative generation” as required by Order 841.
Metering and accounting practices for charging energy rounded out the commission’s concerns.
“Please explain and provide citations to the relevant proposed Tariff language that demonstrates whether the NGR and pumped-hydro storage participation models prevent electric storage resources from paying both the wholesale and retail rates for the same charging energy,” it wrote.
– Hudson Sangree
Questions to ISO-NE Touch on Reserves
When FERC in February accepted ISO-NE rule changes broadening energy storage resources’ ability to provide capacity, energy and ancillary services, effective April 1, the commission said it would deal with the Energy Storage Association’s complaints regarding how the RTO plans to assign reserves to storage when it responded to the RTO’s Order 841 compliance filing. (See FERC Accepts ISO-NE Storage Tariff Revisions.)
The commission’s deficiency letter (ER19-470) asked the RTO to explain whether a continuous storage facility, if dispatched for reserves rather than energy and as a result experiences lost opportunity costs, would be compensated for its lost opportunity costs.
In addition, FERC asked the RTO to explain its “modified mechanism to permit electric storage resources with one hour or less of energy to provide only energy and not reserves,” and also how the RTO “will implement such mechanism prior to Dec. 3, 2019, the effective date of ISO-NE’s compliance filing.”
Regarding the physical and operational characteristics, the commission questioned the RTO’s use of the term “maximum discharge time,” saying it “is not a characteristic defined by the commission or defined by ISO-NE.” FERC asked the RTO to either define the term or “confirm that ISO-NE intended this to be written as maximum run time, as defined by Order No. 841.”
The commission also asked whether some continuous storage facilities may have start-up or no-load costs, such as costs for cooling a storage facility that is online but not dispatched. “Could such costs be accounted for through non-zero values in the start-up or no-load cost parameters, similar to other resources that participate in ISO-NE markets?”
The RTO was also asked “to provide specific citations to the relevant existing and/or proposed Tariff sections that demonstrate that binary storage facilities and continuous storage facilities will not receive conflicting dispatch signals to charge and discharge simultaneously.”
— Michael Kuser
Staff Seeks Details on MISO Phased Participation
In an April 1 letter requesting more information on the plan, FERC said it could not process MISO’s Order 841 compliance filing until it clarifies several points regarding its phased participation approach, proposed commitment statuses, complexities for storage resources on the distribution system, conflicting offers and bids, and make-whole payments (ER19-465). MISO has 30 days to respond.
MISO and its stakeholders spent the better part of last year negotiating rules that culminated in a 1,300-page filing. (See MISO Offers Storage Proposal, Promises to Exceed Order 841.) The RTO said it “anticipates significant uncertainty and risks related to the ability of MISO’s system and software to handle the participation of large numbers of very small” energy storage resources. It asked for a “phased approach in the accommodation of very small” storage resources that would limit participation of small storage resources to 50 in the first year of compliance and 150 in the second year.
MISO said that approach would give it time to “further develop and fine-tune its system and software to be able to handle potentially increasing numbers of very small” storage resources.
But FERC directed MISO to specify what year it expects to provide market access to all storage resources that meet the 100-kW minimum threshold.
MISO must also explain how its must-offer requirement is affected when storage resources elect to use the RTO’s proposed dispatch status of “not participating” or other commitment statuses, the commission said. MISO’s filing proposed that owners of storage resources could choose between several commitment modes, including charge, discharge, continuous, available, not participating, emergency charge, emergency discharge and outage. MISO has said its discharging, charging and continuous modes will carry must-run designations.
FERC said MISO must clarify whether it proposes to levy transmission charges on storage resources when they are charging to resell energy later. MISO must also explain how it will help storage on the distribution system from making double payments — at both retail and wholesale — for charging energy.
The commission also asked if MISO would propose metering practices to manage the “complexities” of selling energy to a storage resource that will then resell the energy at the wholesale LMP.
MISO’s proposal requires storage owners to secure agreements with distribution companies that can deliver stored energy to the transmission system. FERC asked if MISO would require the same agreements when energy is moved from the transmission system to distribution-level storage, and it asked the RTO to explain a provision that prohibits distribution-level storage resources from pseudo-tying into a different balancing authority.
The commission also told MISO to cite Tariff provisions that will allow owners of storage resources to self-manage their state of charge.
FERC additionally said if MISO were to rely on existing Tariff provisions for a storage participation model, it should provide the commission with citations to the applicable market rules and pseudo-tie requirements for transmission-level resources. MISO must also describe how its filing will give storage resources access to all capacity, energy and ancillary service markets, as well as non-market services such as black start, primary frequency response and reactive power.
The commission told MISO to explain how its filing will prevent the same resource from submitting conflicting supply offers and demand bids for the same market interval. It also seeks to know if the participation model allows for make-whole payments when a resource is dispatched as load and the wholesale price is higher than the bid price and when a resource is dispatched as supply and the wholesale price is lower than the offer price. It also asked if resources available for manual dispatch will be eligible for make-whole payments.
Finally, FERC asked MISO to cite how it will allow storage dispatched as supply and demand to set the wholesale market clearing price as both a wholesale seller and buyer, as Order 841 dictates. The commission also asked for citations to support that storage resources can set the price in the capacity market, that MISO will accept wholesale bids from storage owners and that self-scheduled storage resources can participate in the market as price-takers.
– Amanda Durish Cook
NYISO Asked to Explain Dispatch-only Model
New York regulators in December doubled the state’s existing 2025 storage goal to 3,000 MW by 2030, with the Public Service Commission’s Dec. 13 storage order (Case 18-E-0130) accepting with modifications the state’s six major utilities’ proposed “hybrid tariff” for storage systems paired with eligible electric generating equipment. (See NYPSC Expands Storage, Energy Efficiency Programs.)
The commission’s letter asked NYISO to explain how its dispatch-only model will allow energy storage resources to reflect commitment costs in their bids consistent with other generators, and whether there are any circumstances that could preclude such a resource from effectively managing its capability to meet obligations through bidding (ER19-467).
NYISO said that energy storage resources will not be eligible for dual participation until the ISO develops and implements additional Tariff changes at an unspecified date.
Commission staff also asked whether resources with “limited commercial obligations” such as seasonal retail commitments or other contracts for a portion of the resource’s capacity would be prohibited from participating in the ISO’s markets. Staff also questioned whether a resource could register only a portion of its capacity as storage with the ISO and reserve the remaining capacity for other customers.
FERC’s questions ranged from basic — whether energy storage resources that have start-up costs will have an opportunity to recover these costs — to extremely technical.
For example: “Recognizing that the dispatch-only model alleviates some of the time it takes security-constrained unit commitment (SCUC) to develop a solution, what proportion of the additional time required to solve the SCUC is a result of using a dispatch-only model versus managing these parameters? In other words, could the amount of time saved by foregoing management of these parameters allow for the SCUC to make commitment decisions with an acceptable solve time?”
— Michael Kuser
PJM Queried on Pump Storage, 10-Hour Minimum
The commission cited 10 deficiencies within PJM’s proposal, mostly surrounding how existing Tariff language supports its proposed model for energy storage resources (ER19-469).
The RTO must first clarify how pumped storage hydro resources comply with Order 841, as well as whether a “capacity storage resource” is included in the definition of a “generation capacity resource” and whether one unit can serve as both.
Earthjustice’s Smaczniak said the question indicates FERC is “pushing back” on PJM requirement that storage offering capacity would have to continuously supply energy for 10 hours, which critics have called onerous. ISO-NE sought a two-hour supply, while NYISO proposed a four-hour minimum.
“So I read this as a very positive development for Order 841 implementation!” Smaczniak said.
The commission also wants existing Tariff citations that detail how the RTO will manage electric storage resources, including eligibility for nonsynchronous reserves; exemption from the day-ahead scheduling reserve process; participation in Tier I synchronized reserves; and eligibility for reactive service.
The RTO must also clarify whether a capacity storage resource is included in the definition of generation capacity resource as detailed in Schedule 9 of the Reliability Assurance Agreement. The commission wants more information on the “rules and procedures [that] specifically recognize the unique characteristics and capabilities of capacity storage resources and their relative ability to ‘maintain output at stated capability over a specified period of time.’”
PJM must also explain why storage resources deemed “out of charge” wouldn’t be considered an outage.
FERC wants to see the specific Tariff language detailing the process for dispatching and self-scheduling energy storage, as well as how the resources can participate as price-takers. Definitions for charge, discharge and continuous mode must also be submitted.
PJM must also detail the annual process energy storage resources must undergo when selecting a participation model and the corresponding Tariff revisions. FERC staff requested more detail regarding how the RTO will avoid conflicting dispatch and how resources in “continuous mode” will serve as demand and supply simultaneously.
FERC also seeks insight into how PJM determines which energy storage resources are eligible to receive make-whole payments, as well as how the RTO’s proposed model accounts for minimum state of charge, maximum state of charge, minimum charge time, maximum charge time, minimum run time and maximum run time in existing bidding procedures.
PJM must also explain how operators will use telemetered state of charge in day-ahead and real-time markets and why the RTO believes market sellers don’t have to submit minimum charge time, maximum charge time, minimum run time and maximum run time for situational awareness. FERC wants to know if resources can self-manage their state of charge and the penalties for deviating from their dispatch schedules.
The commission also appears skeptical over PJM’s position that metering requirements found in Manual 14D apply to energy storage resources because the cited language focuses specifically on telemetry for generators.
— Christen Smith
SPP Queried on LSE Rules
SPP’s initial response to Order 841 noted that it does not have a capacity market, but that load-serving entities are subject to a resource adequacy requirement. It said LSEs may designate capacity resources, including storage resources, to satisfy that requirement if the resource meets “the continuous run time requirement applicable to all resource types.”
The commission asked SPP to define the “continuous run time requirement” and to identify and describe any additional technical, operational or performance requirements resources must meet in order to qualify as a capacity resource “satisfying an LSE’s resource adequacy requirement” (ER19-460).
SPP also told FERC that it does not “directly meter” facilities as the order requires to ensure a storage resource resells energy back to the market at the wholesale LMP. Instead, the RTO said, meter agents submit settlement meter values directly to SPP, and it proposed that, “consistent with the handling of pseudo-tied resources, the actual meter values of distribution-sited market storage resources may be split among the retail and wholesale use by the meter agent in both real time and for settlement.”
The commission requested SPP explain how its “metering and accounting practices” would comply with Order 841 by ensuring the energy would be resold back to the market at the wholesale LMP and that storage resources would be prevented from paying twice for the same charging energy. FERC also asked how the handling of metering and accounting for distribution-sited storage resources would be “consistent with the handling of pseudo-tie resources.”
The commission asked SPP to address deficiencies in three other areas, including storage resources’ participation in the markets as simultaneous supply and demand. SPP’s proposed tariff revisions would have storage resources “not continuously dispatchable across 0 MW” choose between offering supply or bidding in demand for a given market interval.
FERC requested SPP define a market storage resource that is “not continuously dispatchable across 0 MW,” and to explain why including the resources’ start-up time constraints in their offer parameters does not allow the RTO to accommodate resources’ simultaneous supply offers and demand bids in a given market interval.
The commission asked SPP to clarify how a storage resource will “self-charge” in the Integrated Marketplace, given that the RTO said it does not have a mechanism to explicitly manage their state of charge and “that it does not propose to add any such mechanism.” FERC also asked for clarification on whether proposed provisions to “decommit self-committed charging resources” to address insufficient capacity in the day-ahead and intraday reliability unit commitment processes apply to all storage resources or only to “market storage” resources.
– Tom Kleckner