By Michael Brooks

FERC is seeking comment on energy storage’s participation in the wholesale energy markets, questioning whether RTOs’ rules are creating barriers for the resource (AD16-20).

The commission’s Office of Energy Policy and Innovation last week sent identical letters to each of the grid operators under its jurisdiction, requesting data on “the eligibility of electric storage resources to participate in the RTO and ISO markets; the technical qualification and performance requirements for market participants; required bid parameters; and the treatment of electric storage resources when they are receiving electricity for later injection to the grid.”

FERC staff simultaneously issued a request for comments on the same issues. Staff said it expects comments to take into account the RTOs’ responses to their data requests, which are due May 2. Comments are due May 23.

There have “been some key developments in the technology and cost-effectiveness of electric storage resources,” FERC staff said. “In light of these developments, staff is interested in examining whether barriers exist to the participation of electric storage resources in the capacity, energy and ancillary service markets.” The commission also expects to examine whether tariff changes are needed if barriers to participation exist, staff added.

“Many energy storage project developers have experienced difficulty in accessing wholesale markets. Grid operations and markets were not originally designed with energy storage in mind,” Jason Burwen, Energy Storage Association policy and advocacy director, said in a statement. “The Energy Storage Association supports efforts that increase access to wholesale markets for storage and establish market structures to realize energy storage’s full value in lowering system costs and increasing system reliability.”

5 Categories

The commission divided its questions to the RTOs into five categories:

• Eligibility: Which types of storage resources are qualified to participate in the markets and which are not? Are there different rules for different types? If so, why?
• Requirements: What are the minimum and technical requirements for storage to participate in the markets? What are the bases for these requirements (NERC reliability standards, for example)?
• Parameters: What are the required bid parameters for storage resources? Are there any parameters unique to storage?
• Distribution: Are there opportunities for aggregate storage resources or those connected at the distribution level to participate at the wholesale level? If so, what are they?
• Load: When would storage be considered a buyer of energy in the wholesale markets? What are the requirements when storage resources purchase electricity? Are they required to pay LMPs? Are there circumstances when storage can receive electricity but not be considered load?

Current RTO Discussions

FERC also asked the RTOs if there are any ongoing discussions or pending rule changes concerning energy storage.

Here is a snapshot of where they stand:

• CAISO last month asked FERC to approve a new Tariff provision that would allow storage and other distributed energy resources to participate in California’s energy and ancillary services markets. An ongoing stakeholder initiative is focused on refining the ISO’s market model to lower barriers for grid–connected DER. (See CAISO Tariff Change Would Extend Market to DER.)
• ERCOT last year created a Distributed Resource Energy and Ancillaries Market (DREAM) Task Force, providing a forum for stakeholders and staff to develop market rules related to DER. The DREAM team has submitted a final report for the Technical Advisory Committee’s consideration at its April 28 meeting. (See “DREAM Task Force Submits Final Report,” ERCOT Technical Advisory Committee Briefs.)
• ISO-NE has two large-scale pumped hydro storage facilities that can provide nearly 2,000 MW. The RTO developed a paper in January explaining how storage resources of at least 1 MW can participate in the energy and capacity markets. An updated white paper incorporating stakeholder feedback was released on March 31.
• NYISO says it was the first grid operator, in 2009, to establish FERC-approved market rules for limited energy storage resources. Its energy limited resources classification allows a capacity provider to sell a minimum of 1 MW for at least four hours. Several other products participate in the ancillary market. The ISO’s Market Issues Working Group has begun a process to expand storage’s presence. In November, FERC accepted NYISO’s method for compensating Beacon Power’s 20-MW flywheel storage facility for frequency regulation (ER12-1653).
• MISO is engaged in stakeholder discussions on incorporating storage into its markets. (See MISO Stakeholders Provide Ideas on Incorporating Storage.)
• PJM is studying a way to remove barriers that distributed battery storage systems face when entering the markets. Currently, such resources have two options: interconnect as a generation source through the queue process or register as demand response. The review, prompted by a problem statement approved by stakeholders in February, will be limited to behind-the-meter generation of 20 MW or less. (See “Faster Path to Market for Distributed Resources to be Studied,” PJM MRC & Members Committee Briefs.)
• SPP members are considering a staff proposal to create a technology steering committee as a forum for discussions on incorporating storage and other technologies. (See “More Detail Requested on Technology Committee,” Strategic Planning Committee Briefs.)

At the Gulf Coast Power Association’s spring meeting last week, Allan Stewart, executive director of North American power for PIRA Energy Group, predicted innovations in battery technology will start changing electric market fundamentals as soon as 2020 in California and Hawaii. (See “Energy Storage Ready to Disrupt Industry?”, Overheard at GCPA Annual Meeting.)

Robert Mullin, Suzanne Herel, Tom Kleckner and William Opalka contributed to this article.