Xcel Energy Services, on behalf of utility affiliates Northern States Power and Southwestern Public Service, filed June 6 comments with the Federal Energy Regulatory Commission’s Office of Energy Policy and Innovation on the need to bring down barriers to electric storage participation in organized markets of the Regional Transmission Organizations/Independent System Operators (RTO/ISO).
Xcel Energy Services, a unit of Xcel Energy (NYSE: XEL), noted that NSP-Minnesota has a 1 MW battery (Laverne Battery) registered as Stored Energy Resource with regulation service offered into the Midcontinent ISO market.
Said Xcel: “In large measure, the RTO Responses suggest that their market rules create no barriers to market participation for energy storage facilities such as battery installations. XES questions the accuracy of those responses. For example, MISO restricts resources registered as Stored Energy Resources from providing anything but regulation services.
“In [the Southwest Power Pool], a battery operator would have to register in a resource category that was designed to optimize other technology types, like demand response or traditional generators.
“XES believes that the Commission should require RTOs and ISOs to undertake a more thoughtful and thorough analysis of the constraints their market rules may impose on storage resources, in a setting that includes stakeholder input, in order to identify simple and low-cost rule changes that would facilitate greater participation in markets by storage resources.
“While we support low-cost market rule changes that may remove barriers to market participation by storage resources, we are sensitive to the potential for costly changes in market software to accommodate participation of storage resources, at least at this time, and would prefer this issue be addressed through the RTO/ISO stakeholder processes, instead of a Commission mandate.
“First, there is relatively low market penetration of storage resources such as batteries, due at least in part to the significantly higher cost of such resources. While we anticipate that costs of these resources will decline over time, we do not believe it makes sense to require costly software updates for resources that are currently unable to compete economically with more conventional resources. Over time, as costs of storage resources come down and technological advances occur, the issue of requiring the implementation of software changes should be reevaluated by the Commission, but only if those changes do not occur organically.”
Rural cooperatives offer their input
The National Rural Electric Cooperative Association (NRECA) said in June 6 comments that it generally supports the efforts of the commission to assess the barriers that sponsors of electric storage resources may face in gaining entry into organized wholesale markets. The tariff provisions administered in those organized wholesale markets were not necessarily designed with electric storage in mind and there are opportunities to improve upon existing service through the use of electric storage resources. NRECA recommends, however, that the commission consider the limits of electric storage resources within these markets as well as the benefits and focus on the primary mission of the organized wholesale markets: to lower prices and improve service to consumers.
“Further, while NRECA recognizes the importance and value of electric storage, it does not support a one-size-fits-all solution,” the association added. “The Commission should recognize that electric storage resources deployed by NRECA’s members will vary, depending on the particular electric cooperative and the market in which it participates. The Commission should not adopt mandates that may interfere with such deployment.
“Market rules are integral to the efficient and cost-effective operation of multi-party regional transmission systems. As evident from the responses filed on May 16th, RTOs and ISOs largely recognize that electric storage resources have characteristics that enable them to perform a wide range of functions and are able to serve intermittently as generation resources, demand response resources, and load modifying resources. As reflected in the RTO and ISO comments, electric storage resources are valuable in that they can mimic the functions traditionally performed in organized wholesale markets by other resources, but current market rules were not designed with these resources in mind. Many of these rules are not readily applicable to certain electric storage technologies and systems and thus may be too restrictive as applied to electric storage resources currently deployed or planned by electric cooperatives.”
NRECA said that it and several of its cooperative members have deployed electric storage systems, using a wide variety of technologies and applications. Many cooperative members are in the process of identifying ways that electric storage resources can provide tailored solutions for their service needs. Some examples are:
- Great River Energy – Program to control more than 110,000 residential water heaters that can store over 1 GW of electricity;
- Kauai Island Utility Cooperative – Development of a battery energy storage project integrated with a 13-MW solar array; and
- The Community Storage Initiative – A collaborative information sharing and coordinated market development effort for energy storage located in communities, in which NRECA is an active participant.
“These existing projects and plans for future deployment of electric storage resources rely more upon the practical and cost efficient uses for such technologies and less upon revision of existing market rules within organized wholesale markets,” NRECA added.
Independent power producer offers its perspective
Enel Green Power North America (EGPNA), a subsidiary of the Enel Group, is a leading owner and operator of renewable energy plants, with over 100 projects operating and under development in 22 states.
It wrote in June 6 comments: “The modernization of the electric grid into a flexible and interactive system is occurring throughout various RTOs/ISOs. Energy storage is a critical and essential technological innovation that is enabling this modernization.
“FERC’s role in assessing and addressing the value that energy storage offers in the operation of RTOs and ISOs is critical. FERC has already begun to address this emerging paradigm through FERC Order 755 and FERC Order 784. But, the true economic value of energy storage remains uncalculated and unquantified under many existing market rules and structures at the RTO/ISO level. The value that energy storage provides, either as a standalone solution or in the aggregate, can result in lower power costs for consumers and ratepayers and, enhanced reliability and resiliency across the power grid. Additionally, modularity benefits from energy storage provide additional flexibility for system operators.
“Throughout the United States, energy storage is already playing a key role through ancillary services. For instance, as the Midcontinent Independent System Operator, Inc. (“MISO”) points out in their response, Stored Energy Resources (“SER”) are capable of providing regulating reserve. However, MISO also articulates that there is still more to be done to understand how energy storage can function as Behind the Metering Generation or Controllable Load. In fact, all of the RTOs/ISOs have demonstrated ways that energy storage can function generally, but also forecast that more work is needed. Thus, in all of this, it is still unclear how a modern energy storage system in the United States can provide both ancillary or regulatory services, and also function as a demand resource under existing market rules and structures.”
EGPNA offered these policy recommendations to FERC:
- FERC should encourage RTOs/ISOs to design methods for addressing anticipated intermittent generation. In establishing Order 755, this commission aimed to undo unnecessary discrimination in the procurement of frequency regulation within RTOs/ISOs (or “Balancing Authorities”). Accordingly, several RTOs/ISOs have or are in the process of establishing schemes to pay for performance. However, pursuant to, and in addition to this process, more clarity is needed regarding how RTOs/ISOs plan to specifically quantify the amount of better performing services that will be procured, and how customers will be charged for those services. For example, the Western Area Power Administration (WAPA) WALC region has initiated substantial efforts to this end, and EGPNA would ask for further refinement. Additionally, the California Independent System Operator (CAISO) has a commission-approved pay-for-performance program. But, its minimum performance criterion of 25 percent accuracy effectively signals next to no performance expectations. Without clearer instructions, regulatory uncertainty exists, and market participants may be unsure how to approach capacity development. Such ambiguity may hinder entry of more potential economic solutions.
- RSOs and ITOs procedures should be designed or amended to allow energy storage to interconnect with specified functionality. In general, RTOs/ISOs have interconnection procedures that are prohibitive to energy storage. For instance, many energy storage projects are studied as both persistent sources of generation and load. By definition, this doubles the regulatory burden on energy storage assets to interconnect to the power grid. Moreover, this framework effectively ignores the value that energy storage is capable of providing the electric grid. Thus, in order to develop an appropriate interconnection framework and fair treatment, EGPNA would generally propose that RTOs/ISOs: specify their own duration limitations and create comparable market products; allow interconnecting customers to specify maximum durations of charge and maximum durations of discharge to allow for appropriate impact studies; or adopt both practices.
- RTOs/ISOs need to conduct studies on the economic value of energy storage electricity, particularly downstream capacity. Specifically, the commission’s Office of Energy Policy and Innovation requested information from the general public with regards to Distribution-Connected and Aggregated Electric Storage Resources. In general, RTOs/ISOs have provided information to this commission that demonstrates in broad terms how distributed or behind-the-meter resources can access the wholesale marketplace within the RTOs/ISOs. In some cases, the RTOs/ISOs have even provided the commission with information regarding the applicability of bilateral sales for distribution-connected and aggregated electric storage resources. Overall, the RTOs/ISOs have demonstrated that there are both significant opportunities and barriers to distributed storage, on both sides of the meter.