Thursday, February 21, 2019

Overheard at Storage East 2018

WASHINGTON — Infocast’s inaugural Storage East summit drew policymakers, grid operators, utilities and companies looking to break into energy storage to the Washington Plaza Hotel last week. Panelists discussed the optimism surrounding the industry, as well as strategies for locating resources and optimizing their services for maximizing returns.

Infocast’s inaugural Storage East summit was held at the Washington Plaza Hotel in D.C. on Oct. 16-17, 2018. | © RTO Insider

Here’s some of what we heard.

Chatterjee Touts FERC Orders

FERC Commissioner Neil Chatterjee delivers the keynote address of the conference. | © RTO Insider

FERC Commissioner Neil Chatterjee kicked things off by recalling actions the commission has taken on storage since he joined in August 2017. The highlight of these was the February issuance of Order 841, which directed RTOs and ISOs to revise their tariffs to allow energy storage resources full access to their markets. (See FERC Rules to Boost Storage Role in Markets.)

When Chatterjee joined FERC as chairman, he restored the commission’s quorum, which it had been without for six months. He said he had expected to be able to vote on a final version of the commission’s November 2016 Notice of Proposed Rulemaking as soon as he walked in, but he found that staff were still working on “a number of complex, legal and technical issues.”

“Understanding the importance of what was at stake, during my tenure as chairman, I worked closely with staff to push that final rule forward,” he said proudly. “I believe in the potential for storage to be a transformative technology for our grid. Storage is a game-changer. I’ll admit it’s a bit cliche, but there’s truth to it.”

He also noted the importance of Order 845, which revised the commission’s pro forma large generator interconnection procedures and interconnection agreement. One of the 11 changes the commission approved was to include storage in the definition of “generating facility.” (See FERC Order Seeks to Reduce Time, Uncertainty on Interconnections.)

Another change allows generators to sell their surplus interconnection capacity to other resources. Storage owners can purchase surplus capacity for their resources so they can interconnect without having to go through the full queue, Chatterjee said.

“While this change in policy sounds very wonky — and it is — I think it’s a subtle but important action we’ve taken to improve opportunities for storage development.”

Chatterjee also noted the challenges storage still faces. RTOs and ISOs face a Dec. 3 deadline for their Order 841 compliance filings. FERC is “likely to take several months” to review them, and any deficiencies it finds will delay implementation further, Chatterjee said.

He also said grid operators have been slow to develop new products to compensate storage resources for their different services.

“With the exception of PJM’s RegD product, there’s been little momentum toward expanding the traditional set of ancillary services in the past few years,” Chatterjee said. “The increasing penetration of renewables might provide additional momentum for such products, but in any event, whether and how these products come to fruition could have a significant effect on the opportunities for storage.”

Siting and Co-location

Multiple panelists discussed the best strategies for deciding where to develop storage resources.

energy storage east neil chatterjee

Michael Harrington, Utility of the Future department manager for Consolidated Edison | © RTO Insider

Storage can receive the federal investment tax credit when added to existing qualifying resources, mainly solar facilities. But Michael Harrington, of Consolidated Edison’s Utility of the Future department, pointed out that the New York State Energy Storage Roadmap, issued in June, predicted that more than half of the 1,500 MW of storage the state aims to procure by 2025 would be downstate, close to New York City’s load.

“We do think there’s opportunity with upstate renewables, but certainly we recognize that storage is going to follow where the economics are the best,” he said.

Ascend Analytics CEO Gary Dorris | © RTO Insider

Ascend Analytics CEO Gary Dorris explained why being near the city is so attractive for storage. The best way to determine where to site storage resources, he said, is finding where prices are most volatile: where congestion on the grid is most persistent.

Price spikes occur very infrequently on a typical New York node — only 1.5% of a 24-hour day — but they represent 22% of the average real-time energy price, according to Dorris. “So storage can be a wonderful physical hedge against price spikes, and that’s a real opportunity to mitigate uncertainty in supply by having that physical hedge in attacking those price spikes.”

“Co-located storage with renewables certainly has benefits, but is co-locating renewables with storage going to become standard practice?” Chatterjee posited. “The answer to that question could have major implications for storage. We have evidence that the cost-benefit ratio of co-located storage is tipping in favor of adding storage.”

energy storage east neil chatterjee

Prices in New York state are highest near the New York City metro area, where there is persistent transmission congestion. This presents the best economic opportunity for storage resources. | Ascend Analytics

He pointed to a 2017 resource solicitation by Xcel Energy’s Public Service Company of Colorado. While individual wind and solar resources received median offers of $18/MWh and $29 MWh, respectively (“amazing numbers in their own right”), wind and solar resources co-located with storage received a $3 and $7 premium.

“When you consider market incentives like … capacity constructs in PJM and ISO-NE, co-location could be extremely beneficial in allowing renewables to avoid performance penalties and take advantage of high prices,” he said.

Wish List from States, RTOs

Several speakers said grid operators and states could be doing more to value storage’s services.

In introducing a panel on innovative business models for storage, Dorris suggested that states should lower their property taxes for storage. Taxes are particularly high in the Northeast, where storage is most in demand. “That’s probably not being talked about as much as perhaps it could be given the nature of these projects,” he said.

The panelists focused on the lack of a “T&D benefit” in RTOs and ISOs, saying storage should be compensated for its congestion-reducing benefits as energy efficiency programs are. Such programs are valued in part for reducing the voltage levels on transmission and distribution lines, allowing transmission owners and utilities to defer costly upgrades.

“Just level the playing field between how you treat conservation and how you treat storage,” Dorris urged.

From left, Thomas Leyden, EDF Renewables; Adam Rousselle, Renewable Energy Aggregators; and Stephen Wemple, Consolidated Edison. | © RTO Insider

“As a developer, we need to have certainty, and we need to have predictability going forward,” said Thomas Leyden of EDF Renewables. “That’s not easy in a market-based system, but there are things that can be done to help our investors become more comfortable.”

Adam Rousselle, CEO of Renewable Energy Aggregators, went further. He noted that transmission owners get paid fixed rates of returns based on the value of their assets. “If we can not align the development of storage with the transmission owner, we won’t be building storage any time soon in PJM,” he said. “And if your solution delays their transmission investment, they’re competing with you, make no mistake about it.”

— Michael Brooks