Monday, February 18, 2019

FERC Rules to Boost Storage Role in Markets

By Michael Brooks

WASHINGTON — FERC on Thursday ordered RTOs and ISOs to revise their tariffs to allow energy storage resources full access to their markets, a move the commission said will enhance grid resilience (RM16-23).

The rulemaking, Order 841, requires each RTO/ISO to establish a “participation model” for storage resources to ensure they are eligible to provide all energy, capacity or ancillary services of which they are capable, while also enabling them to set clearing prices as both a buyer and seller. Grid operators will also need to establish a minimum threshold for participation that doesn’t exceed 100 kW.

FERC also required that storage resources be able to resell electricity into the markets at the wholesale LMP.

The order “will enhance competition in these markets and help ensure that they produce just and reasonable rates,” staff told commissioners at FERC’s open meeting.

The commission issued its Notice of Proposed Rulemaking on energy storage market participation in November 2016. It could be about two years until the new rules take full effect. (See FERC Rule Would Boost Energy Storage, DER.) FERC’s directives will become official 90 days after their publication in the Federal Register. RTOs will then have nine months to file their tariff revisions, up from the six months proposed in the NOPR in response to requests for additional time, staff said. The grid operators would then have a year to implement the revisions.

FERC PJM energy storage

LaFleur wearing an Eagles (Quarterback Nick Foles) jersey. Had the Patriots won the Super Bowl, Commissioner Powelson would be wearing a Patriots jersey | © RTO Insider

The commissioners said the order demonstrated their commitment to ensuring they were not “picking winners and losers” in the markets. Commissioner Cheryl LaFleur noted that the markets “were largely designed around the resources that prevailed when they were launched” but have evolved to accommodate new technologies.

“I think the storage participation model required by today’s order will facilitate storage being able to provide all the services it is technically capable of providing, for the benefit of consumers,” she said.

The order is “the kind of positive regulatory action that removes barriers to competition, allowing emerging technologies to compete in the marketplace,” Commissioner Neil Chatterjee said. “Put simply, it’s good regulatory policy that people from all political backgrounds can support.”

FERC PJM energy storage

Powelson speaking at the Energy Storage Association Policy Summit on Feb. 14, 2018 | © RTO Insider

“In my view, today’s final rule also strikes the appropriate balance between prescriptive requirements and high-level directives,” Commissioner Robert Powelson said. FERC ordered RTOs/ISOs to take into account the unique physical and operational characteristics of storage, he said. “In doing so, we have given the RTOs and ISOs significant latitude to develop market rules that work best with existing market constructs and are respectful of regional differences,” he said.

The Energy Storage Association applauded the order.

“With this morning’s unequivocal action, the FERC signaled both a recognition of the value provided by storage today and, more importantly, a clear vision of the role electric storage can play, given a clear pathway to wholesale market participation,” CEO Kelly Speakes-Backman said in a statement.

Powelson at ESA Policy Forum

In an appearance at ESA’s Energy Storage Policy Forum at the National Press Club the day before FERC issued the rules, Powelson told attendees the order would demonstrate the commission’s commitment to fair and open markets.

He also spoke about the larger trends in electricity, and how storage will have a bigger role to play under the new rules. Increased use of renewables has led to “market-based decarbonization,” he said.

“Whether you’re a fan of the Clean Power Plan or not, we are not building coal plants right now, and we are not building … 1,200-MW cathedral nuclear plants,” Powelson said.

He pointed to the 2014 “polar vortex” and last month’s cold snap. “No one [in D.C.] wants to talk about … the benefits of demand-side resources,” Powelson said. “They want to talk about baseload, baseload, baseload.”

Tech Conferences for DER

The commission had also proposed directing RTOs to give aggregated distributed energy resources the same treatment as storage, but on Thursday it said it needed more information before it could take action, ordering a technical conference to be held April 10-11 and opening new dockets for the issue (RM18-9, AD18-10).

Among the changes under FERC’s proposal, a DER aggregator could register as a generation asset “if that is the participation model that best reflects its physical characteristics.” The commission hopes to remove the commercial and transactional barriers to DER participation in wholesale markets.

Previewing the technical conference, LaFleur and Powelson said they were particularly interested in how DER operates and is compensated in both the wholesale and retail markets. “There needs to be a crisp understanding of who pays what to whom for what,” LaFleur said.

FERC PJM energy storage

Chatterjee (left) and LaFleur speak before the FERC meeting on Feb. 15, 2018. | © RTO Insider

“Distributed energy resources are becoming increasingly more integral to our resource mix, and we at the commission should make every effort to advance this issue without delay,” Chatterjee said.

Speaking to reporters after the meeting, Chairman Kevin McIntyre acknowledged “the quasi-disappointment that I heard between the lines from some of my colleagues, which I share. It would have been great if we could have addressed both storage resources and distributed energy resources today. …

“But really, after looking at the state of the record on those two side-by-side issues, we determined that we needed to bolster our record on the distributed energy resource side of things. So I think our conference will be very useful.”