FERC issues proposed rule to aid energy storage development

FERC on Nov. 17 went out for 60 days of comment on its proposal to amend its regulations under the Federal Power Act (FPA) to remove barriers to the participation of electric storage resources and distributed energy resource aggregations in the capacity, energy, and ancillary service markets operated by regional transmission organizations (RTO) and independent system operators (ISO).

Specifically, the commission proposes to require each RTO and ISO to revise its tariff to: establish a participation model consisting of market rules that, recognizing the physical and operational characteristics of electric storage resources, accommodates their participation in the organized wholesale electric markets; and define distributed energy resource aggregators as a type of market participant that can participate in the organized wholesale electric markets under the participation model that best accommodates the physical and operational characteristics of its distributed energy resource aggregation.

FERC plans to take this action under its legal authority under section 206 of the FPA to ensure that the RTO/ISO tariffs are just and reasonable and not unduly discriminatory or preferential.

In this Notice of Proposed Rulemaking (NOPR), FERC is proposing reforms to remove barriers to the participation of electric storage resources and distributed energy resource2 aggregations in the organized wholesale electric markets. Resource participation in the organized wholesale electric markets is currently governed by: participation models consisting of market rules designed for different types of resources; and the technical requirements for market services that those resources are eligible to provide.

Each RTO/ISO establishes the participation models for different types of resources and the technical requirements for providing services in a slightly different way. Sometimes RTO/ISO participation models place limitations on the services that certain types of resources are eligible to provide. For example, Stored Energy Resources are only allowed to provide regulation service in the Midcontinent Independent System Operator (MISO) region. In addition, sometimes the technical requirements for providing a service may limit the types of resources that are able to provide it, such as the requirement for a resource to be running and synchronized to the grid to provide spinning reserves.

FERC noted that many tariffs were originally developed in an era when traditional generation resources were the only resources participating in the organized wholesale electric markets. As new and innovative resources have reached commercial maturity, RTOs/ISOs have updated their tariffs to establish participation models for these resources and, to some degree, reviewed the technical requirements for each service or determined which service the new resource could provide. If an RTO/ISO is not able to update its market rules before a new resource becomes commercially able to sell into the organized wholesale electric markets, the new resource may need to participate under one of the existing participation models developed for some other type of resource. Doing so may limit the market opportunities for new resources and correspondingly limit the potential supply of some services.

For instance, some electric storage resources have chosen to participate as demand response resources simply because, absent other participation models, that is the participation model that more closely resembles the manner in which electric storage resources might participate in the organized wholesale electric markets. Further, new resources may have difficulty creating momentum for the market rule changes necessary to facilitate their participation and may thus need to spend considerable time and effort to gain entry to the organized wholesale electric markets. Where rules designed for traditional generation resources are applied to new technologies, where new technologies are required to fit into existing participation models, and where participation models focus on the eligibility of resources to provide services more so than the technical ability of resources to provide services, barriers can emerge to the participation of new technologies in the organized wholesale electric markets.

FERC said in the notice: "We are therefore issuing this NOPR to address these barriers to the participation of electric storage resources and distributed energy resource aggregations in the organized wholesale electric markets."

  • First, the commission proposes to require each RTO/ISO to revise its tariff to establish a participation model consisting of market rules that, recognizing the physical and operational characteristics of electric storage resources, accommodates their participation in the organized wholesale electric markets.
  • Second, it proposes to require each RTO/ISO to revise its tariff to allow distributed energy resource aggregators, including electric storage resources, to participate directly in the organized wholesale electric markets.

FERC defines an electric storage resource as a resource capable of receiving electric energy from the grid and storing it for later injection of electricity back to the grid regardless of where the resource is located on the electrical system. These resources include all types of technologies, regardless of their size, storage medium (e.g., batteries, flywheels, compressed air, pumped-hydro, etc.), or whether located on the interstate grid or on a distribution system.

The commission defines distributed energy resources as a source or sink of power that is located on the distribution system, any subsystem thereof, or behind a customer meter. These resources may include, but are not limited to, electric storage resources, distributed generation, thermal storage, and electric vehicles and their supply equipment.

LaFleur says these changes are much needed

Commissioner Cheryl A. LaFleur said in a Nov. 17 statement about this effort: “I am pleased that the Commission is proposing today to eliminate barriers to full participation of storage technologies in wholesale markets for any capability they can provide. I strongly support the development of a market participation model for storage resources, which is a logical next step in our ongoing work to remove barriers to wholesale market participation for new technologies. Storage resources have the potential to contribute to the grid in many different ways, furthering reliability, affordability, and the integration of renewables. I believe the proposed rule does a good job of recognizing storage resources’ unique attributes and will better enable storage resources to provide those capabilities to the system.

“In recognition of the potential for distributed storage resources, today’s order also proposes reforms regarding the aggregation of distributed energy resources in wholesale markets, including but not limited to storage resources. I am especially interested in comments on that aspect of the Commission’s proposal.

“Distributed resources are an increasingly important part of the nation’s resource mix and will play a critical role in the future of the grid. However, their participation in wholesale markets presents unique issues since they are connected to the grid at the distribution level. I believe that successfully deploying distributed resources on a large scale while ensuring the safety and reliability of both the transmission and distribution systems will require close coordination among the RTO/ISOs, the distribution control centers that operate the systems to which they are connected, and the distributed energy resource aggregators. This coordination could include, for example, real-time operating procedures and software-enabled communications among the control centers. Today’s order requests comment on these issues.

“Finally, I note that the California ISO has recently begun implementing rules for distributed energy resource aggregations, and we are awaiting an informational report on those efforts. I invite comment on what we are learning from California and how it may inform the substance and timing of implementation of proposed reforms related to distributed energy resource aggregations in other RTO/ISOs.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.