By Michael Kuser

NYISO has developed a three-phase approach to opening its wholesale electricity market to storage resources, the ISO said Monday upon release of a comprehensive energy storage report describing the plan.

The plan will complement whatever energy storage target New York regulators set later this month for the state’s electricity providers. Gov. Andrew Cuomo on Nov. 29 signed legislation requiring the Public Service Commission to establish targets by the end of the year. (See NY Bill Sets Stage for Storage Targets.)

The ISO report, “State of Storage: Energy Storage Resources in New York’s Wholesale Markets,” lays out three stages to facilitate storage participation — integration, optimization and aggregation with other distributed energy resources, NYISO Senior Vice President of Market Structures Rana Mukerji said Dec. 4.

“The intermittent outputs of renewable solar and wind resources have to be balanced to provide reliable electricity to consumers,” Mukerji said. “Storage resources will be increasingly important in this environment and help balance the intermittency of renewables and provide valuable grid services.”

New York’s electricity grid is in the midst of change driven by the state’s Clean Energy Standard and Reforming the Energy Vision initiatives, designed to transition the state from an aging mix of gas and steam turbines to a greener and more distributed grid.

“We are trying to remove barriers for storage to enter into the market, and actual penetration levels for the various technologies will depend on other factors, such as the price of natural gas, the intermittency in the system — which drives price fluctuations, and also what level of incentives storage is getting from the state public policy initiatives,” Mukerji said.

Grid Flexibility

Michael DeSocio, NYISO senior manager for market design, said the ISO is working on incorporating the latest technological advances in storage, as well as developments in public policy, to allow the grid operator to take better advantage of the capabilities of storage resources.

“Energy storage is not a new concept, but advances in technology have brought energy storage within reach as a viable, competitive energy asset,” DeSocio said. “These new storage technologies can offer the flexibility that quick-start gas turbines provide, while also helping absorb the excess energy that is produced from intermittent resources like solar and wind.”

The ISO’s new report distinguishes between storage in front of the meter and behind the meter (BTM), with the former more likely to participate in wholesale market transactions, although BTM storage could become a wholesale player when aggregated with other distributed resources. Storage developers and utilities in New York have been working with NYISO to establish dual participation of storage in retail and wholesale markets. (See New York Sees Storage in Retail and Wholesale Markets.)

“Today energy storage resources have to choose between providing only one or two ancillary services, and must be at least 1 MW in size,” De Socio said. “NYISO’s future energy storage model will allow storage resources to provide all of the grid services that they’re capable of, while also reducing the minimum participation size from 1 MW to 0.1 MW, thereby increasing the facility for storage to be integrated into the grid.”

Market-Ready by 2020

The ISO has kicked off the integration phase with stakeholders and “plans on having market rules ready for commercial use in 2020,” which will complement the ISO’s DER Roadmap issued in February, DeSocio said.

“A lot of the work that is already being contemplated in the DER program will inform this effort — things like how to aggregate resources — will be reused for integrating storage into the markets as well,” DeSocio said. “So as we think about how to integrate smaller and smaller resources, leveraging a lot of that work has already been done.”

DeSocio also addressed how the new market design will affect capacity bids.

“Today, storage resources that are participating in the wholesale markets must identify their desire to inject or withdraw electricity well in advance of the operating horizon,” De Socio said. “Today, they have to tell us that roughly 75 minutes before that operating horizon.”

The first phase envisions storage resources being able to provide a single offer indicating their willingness to inject or withdraw over the next hour. The markets could then help the resources group their utilization because market operators will have better information than is available 75 minutes before delivery, he said.

“That’s the main improvement: allowing a single offer to be considered and letting the ISO select whether they should be withdrawing or injecting in any particular [interval],” DeSocio said.

As to how quickly storage will come online in 2020, DeSocio said, “We haven’t particularly forecast the future of storage, but we are aware of storage resources today that are looking to participate, and we expect there will be more of them as they become more cost-effective and as policies evolve.”

The ISO’s new storage policies will not eliminate the need for peaking plants but complement them as storage provides a “more environmentally friendly” alternative, Mukerji said.