FERC examining role of storage, seeking answers from ISOs, RTOs

Because storing electricity is becoming cheaper and has the potential to transform the way the power grid operates, FERC staff is seeking input on whether barriers exist that hinder storage resources from participating in capacity, energy or ancillary service markets in organized markets, FERC staff said April 21 in a presentation at FERC’s open meeting.

FERC staff noted that data requests to the six independent system operators (ISOs) and regional transmission organizations (RTOs) in the United States went out April 11, asking numerous questions about storage operations and the eligibility of electricity storage resources to participate in markets and the treatment of storage resources when they are receiving electricity from the grid for injection to the grid at a later time.

In recent years, there have been numerous storage assets come online in PJM Interconnection (PJM), the number of cases at FERC involving storage resources has climbed, and initiatives in California include an energy storage procurement mandate, FERC staff said. As batteries and other storage technologies have become more cost-effective, there has also been an increasing exploration of the value storage resources provide to the grid when acting as generation and load and providing transmission services, FERC staff said at the meeting.

“In light of these developments, staff is interested in examining whether barriers exist to the participation of electric storage resources in the capacity, energy and ancillary service markets potentially leading to unjust and unreasonable rates,” FERC staff said.

FERC commissioners welcomed the development, commenting that as generation resources change and more intermittent renewable resources are added to the grid, the flexibility that storage resources provide to balance supply and demand will be valuable for grid operators.

Because the generation sector is changing, it is important for wholesale market rules to keep pace with those changes, said FERC Chairman Norman Bay. 

Bay asked whether an upcoming technical conference on grid interconnection issues will address storage resources.

FERC staff noted that on April 13, the commission issued a supplemental notice to the May 13 technical conference that included questions for panelists to address, including several related to the interconnection of storage resources. Treatment of storage resources connected at the distribution level and potential improvements to transmission grid interconnection procedures that may better facilitate both stand-alone storage resources and storage resources combined with generation assets were among the issues in the supplemental notice (Docket No. RM16-12), FERC staff said.

FERC staff told Bay that it is interested in learning more about storage assets located on the distribution grid potentially being able to participate in ISO and RTO markets, and staff has reached out to the industry to address such matters.

Commissioner Cheryl LaFleur said one of her concerns is whether there is uneven deployment of storage resources in organized markets and any steps FERC may take to ensure a more even deployment of those resources.

The data requests to the ISOs and RTOs (Docket No. AD16-20) define electric storage as a facility that can receive electricity from the grid and store it for later injection back to the grid. The definition includes all types of storage technologies, regardless of their size or storage medium, or whether they are connected to the transmission system, distribution system or behind a customer’s meter.

Among the numerous questions in the requests are whether certain types of resources are ineligible, by definition, to participate as sellers in the capacity, energy or ancillary service markets, and if storage is ineligible, the respondents are requested to explain why that is the case. If storage resources are eligible to participate in markets, respondents are requested to state whether there are different rules for different types of storage resources, according to the data requests.

FERC asked the ISOs and RTOs: “For example are there different qualification or performance requirements for batteries versus pumped storage resources? If so, please state these rules and explain the distinctions they draw for the participation of different types of electric storage resources.”

The data requests also ask whether there are circumstances when a storage resource receives electricity but is not considered load and therefore does not pay for its electricity consumption.

The April 11 data requests seek a response by May 2.

In a separate data request asking similar questions and seeking input from the industry and the public, FERC is seeking responses by May 23.

In an April 20 motion for an extension of time, the ISO/RTO Council (IRC), which includes the six ISOs and RTOs that received the data requests, asked to be given until May 23 to file their responses. The data requests sought a response three weeks from when they were issued, yet they sought detailed information on numerous topics involving different markets – capacity, energy and ancillary services –  which will entail close analysis of market data and rules, the IRC said.

“Moreover, given that the commission also requests the rationales and bases for responses, additional time beyond gathering facts and figures will be required to perform the necessary analysis to formulate complete answers,” the IRC said.

The group agrees with FERC that understanding and clarifying how storage resources can participate in ISO and RTO markets is both important and timely, and each member of the IRC is working toward providing full and clear responses to the commission’s questions, the IRC said.

The additional time sought in the motion would allow the ISOs and RTOs to develop accurate responses that would improve the quality of information available to FERC, the IRC added.