More needs to be done to differentiate and encourage energy storage in terms of federal energy policy, said Christopher Cook, President of Solar Grid Storage (SGS) in June 4 testimony in a hearing on energy efficiency at a subcommittee of the House Energy and Commerce Committee.
He was commenting in a hearing called the “Discussion Draft on Accountability and Department Of Energy Perspectives On Title IV: Energy Efficiency.” SGS was formed in 2011 by a group of solar veterans who have developed an innovative financing solution that allows batteries to be added to solar photovoltaic (PV) installations. In January 2015, Solar Grid Storage sold its project pipeline and the four operating projects to SunEdison. Solar Grid Storage is working in conjunction with SunEdison for future project development.
SGS focuses on providing inverter/battery solutions for new commercial solar installations. That is because even though solar energy is a young industry, it is growing fast. In 2014, solar comprised 32% of all of the new electric capacity in the U.S. Solar capacity in the U.S. now exceeds 20 GW, which is enough to power 4 million homes, Cook noted.
Cook wrote in his prepared testimony: “I would like to focus my testimony and comments on Chapters 2 and 3 of the Discussion Draft. Under Chapter 2, the FERC would be tasked with directing each of the ISO’s to review the market rules and practices of the ISO’s to look into the proper value differing types of generators provide. Among those are generators that provide service during emergency and severe weather conditions (Sec 4221(b)(2)(B)) and frequency support (Sec 4221(b)(2)(C)).
“SGS’s storage systems are capable of providing not only backup power for customers with on-site PV systems but also the frequency regulation service for ISO grid functions. SGS fully supports this section of Chapter 2 and we believe it will enhance our ability to offer the types of services we offer to customers in the PJM territory in other areas if other ISOs effectively mirror PJM’s market.
“Under subsection (b)(4) FERC and the ISO’s are directed to promote the equitable integration of advanced grid technologies (SGS’s systems are an advanced grid technology) and under subsection (b)(5) to identify and address regulatory barriers to entry.
“On that last point the regulatory barriers for new technologies like storage are myriad. Most of the operating practices and regulations for utility grid service never envisioned that advanced technologies like storage could play a valuable role for grid support. Moreover, the concept that these service could come from customer sited facilities is both unique and contrary to the historic utility business model of central generation and 100 percent of electric services provided by the utility. We are constantly encountering regulatory barriers because our technology doesn’t fit into any category historically considered a utility service.
“Regulatory rules meant to apply to generators are often applied to storage even though it makes little sense. For example, in the frequency regulation markets if an ISO does not consider that storage will hit a depletion point and must be recharged at that point, its rules can accidentally bar participation by storage units even though they can provide the regulation service with certain accommodations. The PJM ISO “balances” its regulation signal so as not to deplete a battery. It means that for all of the discharges over an hour, the regulation signal will be balanced with charge signals so that a battery providing the regulation service will be neither depleted nor overcharged in any hour. An ISO that does not provide a balanced signal has created a barrier to their market for storage technologies.
“I would suggest that it might add clarity to the Discussion Draft to specifically mention storage as a technology anywhere ‘generation’ is referenced. An overarching theme we promote at SGS is that customer sited storage should be allowed open access to any and all ISO markets where the storage can provide an equivalent or better service as either another resource or storage connected directly to the utility grid. In most cases, the storage locate at a customer’s site can provide the same level of grid service as for example a substation sited storage facility but when the storage is customer located it provides the critical backup power to the customer during grid outages. A substation based storage system does customers little good when the outage is downed lines between the customer and the substation.
“My understanding of the purpose of Chapter 3 is to change the gravamen of FERC order 688 which determined that certain PURPA requirements for qualifying cogeneration facilities and small power production facilities did not apply where those facilities had access to open transmission markets. In Order 688 the FERC created 3 rebuttable presumptions including the following: ‘… the Final Rule establishes a rebuttable presumption that QFs with a net capacity no greater than 20 MW, do not have nondiscriminatory access to wholesale markets. Unless an electric utility seeking the right to terminate its requirement to purchase small QF power specifically rebuts this small QF presumption, and that electric utility’s request is granted by the Commission, a small QF would be eligible to require the electric utility to purchase its electric energy.’
“The language in the discussion draft would take away not only the rebuttable aspect of the presumption – that smaller generators do not have open access – but would in fact change the presumption to one of equal access to the markets. Having worked over the past 12 years to develop small solar projects (all less than 20 MW) and now small storage projects, my experience has been that the FERC was correct in its ruling and that these scale of projects do not have open access to wholesale markets. In many of the ISO’s there are minimum size restrictions that can block smaller systems from any access to ISO markets.
“High costs to become members of the ISO, the need to have personnel to participate in the functions of the markets, sophisticated computer equipment to interact with the ISO markets as well as the arcane nature of the ISO rules and even discussions are all barriers to small systems having open access.
“FERC struck a proper balance in Order 688 making a rebuttable presumption that larger generators had open access to transmission markets but also a rebuttable presumption that smaller systems did not. That balance includes the opportunity for any utility or ISO to rebut the presumption with a showing at FERC. Most utilities are well versed in FERC practice and procedure and have the ability to present such a rebuttal if the facts of the situation support the presumption.
“FERC staff have described the pre-PURPA world in this way: utilities were not generally willing to purchase non-utility output or were not willing to pay an appropriate rate for that output. For SGS and many small generator developers in many jurisdictions, that description of the past sounds very much like the present. I would urge the subcommittee not to upset the balance of FERC Order 688 and to maintain the rebuttable presumptions regarding access to open transmission markets before jettisoning the protections for small generators available in PURPA Section 210.”
Cook concluded: “We look forward to working with the Subcommittee to establish the long‐term, stable policies needed to make the most of storage as an advanced grid technology and to provide the backup power and resiliency to customers that comes with adding storage to their distributed wind or solar systems. We look forward to participating in the delivery of DG benefits to the nation in the form of large quantities of cost-effective, clean and sustainable power, growing numbers of jobs throughout the country, and outstanding economic opportunity.”