EPSA says FERC energy storage policy must not distort market

The Electric Power Supply Association (EPSA), which represents competitive power producers, said June 6 that energy storage policy should not “distort” or hurt electricity markets.

EPSA made its comments in regard to the ongoing Federal Energy Regulatory Commission (FERC) review of potential barriers to development of commercial energy storage.

“It is the Commission’s responsibility to ensure non-discriminatory and fair treatment of all system resources, as markets evolve to address the operational and technological changes necessary to meet ambitious national and state energy and environmental policy goals,” EPSA said in its comments.

“To the extent storage resources are treated preferentially, the existing resources may be harmed,” EPSA goes on to say.

“For instance, in some markets, storage resources that participate in the wholesale markets are not required to go through the interconnection queue,” EPSA said in its comment. “While such exceptions may not harm reliability or result in additional costs to consumers when on a small scale, as more storage interconnects, there will be increasing harm to the market. Therefore, the rules should be established to ensure non-discriminatory and non-preferential market access.”

The FERC staff has defined storage resources as facilities that can receive electric energy from the grid and store it for later injection of electricity back to the grid,” which includes technologies “regardless of their size and storage medium, or whether they are interconnected to the transmission system, distribution system, or behind a customer meter.”

The staff definition will provide a “common framework” for independent system operator (ISO) and regional transmission operator (RTO) responses and evaluation of any proposed rule changes, EPSA said.

While several ISOs/RTOs have utilized pumped storage for decades, and many made changes to accommodate flywheel technologies in the 2008-2010 time frame, more recently several ISOs/RTOs have recognized that resource rules require additional adjustment to accommodate newer technologies, EPSA said.

FERC should not allow for “narrowly targeted tariff changes for storage resource that will skew the level playing field necessary for all resources,” EPSA said.

EPSA pointed to potential worrisome issues arising with the California ISO. Certain actions to “accommodate the retail jurisdictional authority should not be allowed if they create discriminatory pricing in the wholesale market,” EPSA said.

“Any market rule or change contemplated to facilitate storage participation must consider and be consistent with the rules for and price formation of energy, capacity and ancillary services markets for all other supply resources which serve as the backbone of the Bulk Power System, and will do so for years to come,” EPSA said.

FERC has been looking at new electric technology for years

FERC staff started seeking comments on “new electric technologies” in June 2010. Demand response and “frequency regulation” orders have also touched upon new technologies in recent years, EPSA said.

“At this time in particular, the power sector is in the early stages of what will likely be a multi-year, even multi-decade, series of profound changes to how electricity is supplied and consumed as the resource mix includes greater deployment of many new resources, including storage,” EPSA said.

“On implication of this change is addressing resources with different or new cost and revenue requirements, as certain resources will have low to zero marginal costs while conventional resources with significant marginal costs will continue to be needed to meet future needs,” EPSA said.

EPSA wants “well-designed,” transparent competitive wholesale markets that result in price signals that reflect actual system conditions and support investment to maintain system reliability, the trade group said.

The comments were filed in connection with Docket No. AD16-20-000.

 

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.