By Amanda Durish Cook

As MISO contemplates expanding its definition of demand response resources to include medium-term energy storage, some stakeholders are asking the RTO to think more broadly about how storage technologies can participate in its markets.

MISO defines medium-term as any storage technology that can sustain output to the grid for four hours.

The RTO is challenged by how to accommodate four-hour capacity offers in its markets, as well as how to create a system of capacity credits and performance and must-offer obligations, Yonghong Chen, MISO principal advisor of market development and analysis, told the Market Subcommittee last week.

“These issues need to be thought through carefully,” Chen said.

MISO staff are discussing including medium-term storage in the DR resource-type II dispatch model, which facilitates offers into the markets for energy, regulation, spinning and supplemental reserves. Staff say they need more clarification on whether storage can be integrated under current market rules.

‘Formidable Task’

The Minnesota Energy Storage Alliance (MESA) says removing market barriers to energy storage is a “formidable task.”

“Our generation mix in MISO is evolving and energy storage technologies are becoming cost-effective in many applications,” MESA wrote in comments to the RTO. “MISO needs to keep pace with market changes in order to meet its obligation to provide unbiased regional grid management and open access to transmission facilities for [storage] projects.”

MESA contends that storage can cut consumer costs by storing “otherwise curtailed generation.” Storage should not be relegated to ancillary services, the group says, but could be dispatched — then redispatched — to supply grid services for more efficient generation. MESA thinks storage could be classified as both a generation and transmission service, and it encouraged MISO to develop new compensation mechanisms, such as CAISO’s flexible ramping product.

John Fernandes, director of policy and market development for Renewable Energy Systems Americas, also cautioned against strictly classifying storage as either generation, transmission or load.

“Such a practice could risk restricting a single storage plant from providing services across these operational buckets, thereby reducing the benefit realized by the system and limiting the ability to make a sound business case for storage development,” Fernandes said. He said that recognizing the fluidity of storage should not require significant Tariff changes.

Revenue Incentives

Manitoba Hydro said emerging storage technologies will require revenue incentives.

“If wind and solar dominate new resource development, storage will be increasingly needed, but, in the absence of an adequate revenue stream for storage resources, there may well be a market failure to supply them,” the company said.

The Energy Storage Association also sought more detail on how energy storage can participate in the MISO markets.

MISO said it would consider implementing a cost of new entry for storage, “similar to what is done for capacity resources.”

The New Orleans City Council said MISO’s January storage presentation posed several questions. (See MISO: Energy Storage Could Work into Existing Market Structure Next Year.)

“It may be difficult to prioritize actions needed to provide truly technology-agnostic products and operations when stakeholders cannot clearly identify barriers that storage developers and market participants face,” the council noted. Council members asked MISO to draft a storage issues statement.

Invenergy — which operates 68 MW of battery storage in PJM’s frequency regulation market but none in MISO — said the RTO has yet to clearly define the market need for storage. “Energy storage, and more specifically battery storage, is not the same as traditional generation and it should not be modeled or studied in the same way,” wrote Nicole Luckey, Invenergy manager of Midwest regulatory affairs.

Valy Goepfrich, WPPI Energy’s vice president of operations and analytics, said MISO’s suggested timeline on storage policy seemed reasonable and agreed that storage issues should be considered on a cost-benefit analysis.

Broader Discussion Sought

Chen said MISO is debating setting up an energy storage task force.

“Some of these issues are beyond the [Market Subcommittee],” he said. “I think we need a broader policy discussion.”

MISO must also determine whether storage will be used behind-the-meter to offset load, which wouldn’t require the RTO to manage the state of charge — a measure of a battery’s capability, akin to a fuel gauge — or if storage is placed in-front-of-the-meter, injecting into the system and requiring MISO to manage the state of charge.

Beyond incorporating medium-term storage, MISO also needs to decide if storage requires its own resource definition.

Chen said further market enhancements needed to incorporate storage might be recommended for MISO’s Market Roadmap process.

“Nothing’s off the table from my understanding,” said Jeff Bladen, MISO’s executive director of market design. “We just want to understand the implications.”

MISO staff this month will seek MSC advice on near-term clarification and present near-term proposals to the subcommittee. Next month, staff will begin drafting a white paper, which could propose Tariff or Business Practices Manual revisions. MISO hopes to present a final near-term storage proposal to stakeholders in late summer or fall.