By Rory D. Sweeney, Amanda Durish Cook and Robert Mullin

WASHINGTON — FERC’s technical conference on energy storage Wednesday featured debates over the breadth of its potential uses and discussions on ways to avoid over-compensating resources performing multiple functions simultaneously.

More than 20 witnesses spoke during the daylong conference, including representatives of PJM, CAISO, NYISO and several utilities, storage operators and technology companies (AD16-25).

Storage, all agreed, is unique in its ability to perform both load- and supply-type functions and to provide services to distribution and transmission operators as well as end-use customers.

“It’s incumbent upon us to … not treat storage like other things because it simply isn’t. It’s the one thing that’s not like any other thing,” said Commissioner Colette Honorable at the opening of the conference.

While the commissioners didn’t run the conference, they found it important enough to attend part of the morning session. “We all know that storage is a group of technologies that is evolving and has abilities to contribute to the provision of electric service to customers that I’m not sure we can fully understand,” Commissioner Cheryl LaFleur said.

“I think it’s very important that FERC continue to work on removing barriers to entry” for energy resources, Chairman Norman Bay said.

‘Old Duality’

Lorenzo Kristov, principal of market and infrastructure policy at CAISO, said the versatility of storage upends the “old duality” of resources and load because loads can become resources by installing devices behind the meter that enable “storage-like behavior.”

“Storage-like resources on the grid, we think, really have the potential to really multiply in their volume and variations and scope,” Kristov said. “There are lots of opportunities for multiple-use applications,” he said.

Heidi Nielsen, an attorney in FERC’s Office of the General Counsel, started the discussion with a reference to FERC’s 2010 rulemaking on storage, which designated Western Grid Group’s storage batteries as transmission facilities, reflecting their function of providing thermal overload protection (EL10-19).

The commission barred Western Grid from making sales into wholesale organized markets to address cross-subsidization concerns — fears that markets could be distorted if some participants can recover cost-based rates, allowing them to potentially underbid those that have no cost-based assets.

The commission also expressed concerns that RTO independence could be compromised if the grid operator is responsible for the profitability of the electric storage project’s charging and discharging, “rather than simply carrying out a market participant’s instructions.”

The grid operators said storage is not an option for providing black start service.

“We have had experiences where we had to look at how much volt current the battery can produce when you’re starting up systems because the rest of the transmission system is counting on adequate volt current to be able to tell the difference between running load versus if there has been a fault on the system,” said Neil Millar, CAISO’s executive director of infrastructure development. “Without enough volt current, the protection challenges really climb.”

Having a dispatchable negative load, on the other hand, is “very helpful to a grid operator,” said Michael DeSocio, senior manager of market design for NYISO. Pumped storage in particular is “a tool that grid operators love to have,” he said.

Kiran Kumaraswamy, market development director at AES Energy Storage, said that when storage is deployed to respond to overloads, it tends to be “severely underutilized.”

“We do think there are definitely opportunities for us to pursue both [ancillary and transmission service] in a manner that doesn’t invade market operations,” he said.

Clarifying Concepts

Sarah Van Cleve, energy policy advisor at Tesla Motors, asked panel participants to consider what the industry means by the term “multiple-use.” She defined it as a device that can provide services across at least two of the four “traditional buckets” of services, which she described as transmission, distribution, wholesale market and customer-located services — such as backup power or energy price arbitrage.

“There is really a spectrum of what’s meant by dual-use or multiple-use” with respect to energy storage devices, said Jeff Nelson, director of FERC rates and market integration at Southern California Edison, which has already signed contracts for about 500 MW of storage. Nelson said storage can simultaneously serve such functions as voltage support, reactive power and capacity. At the same time, on the retail side, a storage resource can provide end-users the ability to shave peak demand, helping to reduce retail demand charges and shift consumption patterns under time-of-use rates.

And storage can further furnish reliability services at the distribution grid level — by reducing voltage constraints, preventing voltage overheating and improving voltage quality.

“So, done properly, they can provide all these services, to a certain degree, at once,” Nelson said.

Old School, New Technology Storage

Aparna Narang, director of short-term electric supply at Pacific Gas and Electric, provided examples of how two very different storage resources fulfill multiple, simultaneous functions.

The first is old-school technology: PG&E’s 1,200-MW Helms pumped storage facility east of Fresno, Calif., which bids energy and ancillary services into CAISO’s wholesale market and is capable of simultaneously providing regulation and spinning reserve services.

The facility is also equipped to absorb volt-ampere reactive (VAR) power while generating electricity, which makes the pump side of the plant available for emergency out-of-market dispatch for voltage support.

PG&E’s more modern example is a 4-MW battery located in Yerba Buena that mostly provides frequency regulation services but can also function concurrently as spinning reserve.

It also has an additional use: The seven-hour battery offers one of the utility’s large customers the ability to “island” — or temporarily separate from the grid — in the case of grid instability.

Narang acknowledged that managing storage for multiple uses can be complicated. “The level of complication really varies based on numerous dimensions associated with each of the storage devices, including the duration of the resource and the services it provides, whether there are multiple users, whether it’s on the transmission or distribution system [and] whether it’s predictable,” she said.

“The simultaneous nature is really just a physics question,” said Ted Ko, director of policy at battery system designer Stem. But there’s a fundamental limitation to any battery system that restricts the type of electricity market services that can be provided simultaneously.

“You can’t do one service that causes you to discharge and one service that causes you to charge [simultaneously]. That doesn’t make any sense,” Ko said.

Michael Kintner-Meyer, a researcher with the Pacific Northwest National Laboratory, said the “pitfall” of simultaneity is “that we’re just adding up too many services at the same time,” creating the risk of overcompensating for a resource’s contribution to the energy market when that resource is technically incapable of delivering if called upon.”

“We still have to obey the laws of physics there and not go over the rate of capacity in terms of power, as well as in terms of electric energy,” Kintner-Meyer said.

Primary Obligation

The panelists generally agreed that while storage may be able to perform multiple functions, it should be managed with an eye to fulfilling its primary obligation. “If you’re going to do other things, you need to have enough capacity for your priority,” said Troy Miller, director of grid solutions at S&C Electric, a Chicago-based company that provides energy management and grid-scale storage to transmission and distribution network operators.

PG&E’s Narang pointed out that the key function of the Yerba Buena battery is to provide islanding services for the utility’s customer. For that reason, the system always maintains a 50% state of charge, with the balance of the capacity offered into the CAISO market. “And when you island, you take [the battery] out of the market,” Narang said.

Who is in Control?

For SoCalEd’s Nelson, grid safety and reliability should be foremost.

Nelson offered a hypothetical example of a distribution-located resource that at times provides ancillary services to an ISO. In that situation, the distribution service operator (DSO) puts the storage resource through an interconnection process designed to allow safe operation, Nelson said. But as the resource begins to provide multiple services, the DSO — in an attempt to maintain reliability — might impose restrictions that prevent the resource from participating in the wholesale market.

The control of the storage should depend on whether the device is interconnected into the transmission or distribution network, Nelson said. “The direct connector needs to have the ultimate say on what’s safe or not safe to operate.”

Nonperformance Penalties

CAISO’s Kristov said that ensuring a storage device acts as promised will require specifying its obligations and setting penalties for not performing.

Kristov said the industry might need to define nonperformance penalties and incentives in ways that “capture” the priorities for a particular storage device, which could change over time. And penalties should be commensurate with the overall effect on the grid.

“How serious is the impact of nonperformance and how strong are the incentives we need to have?” Kristov asked.