FINLEY NEWSLETTERS

THE GRID

COMMUNIQUE

Social Links

FERC issues proposed rule on energy storage in RTO, ISO markets

November 18, 2016 By Molly White in

The Federal Energy Regulatory Commission on Nov. 17 issued a notice of proposed rulemaking, or NOPR, that would require regional transmission organizations and independent system operators to revise their wholesale power tariffs to better remove barriers to RTO-run wholesale market participation by energy storage resources such as large battery systems. The draft NOPR would also require RTOs and ISOs to allow aggregators of distributed energy resources “to participate directly in the organized wholesale electric markets,” and similarly remove barriers to DER aggregator participation, according to a presentation by FERC staff at the commission’s regular November open meeting.

Under the draft rule, tariffs in the regional bulk power markets overseen by RTOs and ISOs would have to be revised to make sure that storage can in fact provide the services that it is capable of providing, said Michael Herbert of FERC’s Office of Energy Policy and Innovation, in the staff presentation.

“I strongly support today’s NOPR, and believe it will help ensure just and reasonable rates for consumers,” said FERC Chairman Norman Bay.

“This topic is an important and timely one,” Bay said, emphasizing that FERC wants to remove barriers to new technologies, such as storage, that offer benefits to consumers.

“Storage resources have the ability to both charge and discharge electricity,” and can provide a variety of services, he said.

“Today’s proposal stems from concerns that electric storage resources may face barriers that limit them from participating in organized wholesale electric markets,” FERC said in a Nov. 17 news release. The commission noted that in April 2016, FERC staff issued data requests to the six RTOs and ISOs, and a request for comments from the public, seeking information on the rules that affect the participation of electric storage resources in the organized wholesale electric markets and potential barriers to the participation of electric storage resources in those markets.

The responses that FERC received to those requests for comments “provided the basis for the reforms proposed today,” the commission said in its news release.

APPA was among commenters

The American Public Power Association was among those who submitted comments to FERC. In June, the public power group said the commission should keep in mind several guiding principles, including the need to protect against double-recovery of storage costs and cross-subsidies.

During the Nov. 17 FERC meeting, Commissioner Colette Honorable noted that public power utilities and rural electric cooperatives, as well as investor-owned utilities, have been very busy in the storage domain.

“It is a new day,” she said. “We aren’t on the cusp of change — we’re in the midst of it.”

In its news release, FERC said the notice of proposed rulemaking would 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.”

LaFleur: Distributed resources ‘present unique issues’

Storage resources offer the potential to boost reliability, as well as to help keep electricity rates affordable and to integrate renewable resources, Commissioner Cheryl LaFleur said at the Nov. 17 meeting. However, she said that distributed resources “present unique issues because they are on the customer side of the meter.”

In a statement published on the FERC website, LaFleur said she believes that successfully deploying distributed resources on a large scale, while also ensuring the safety and reliability of 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,” LaFleur said.

LaFleur pointed out that the California ISO has started to implement rules for distributed energy resource aggregations. “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,” she said in the statement.

Proposal is summarized by FERC staff

The FERC staff presentation on the NOPR said that under the proposed rule, “the proposed participation model for electric storage resources must (1) ensure that electric storage resources are eligible to provide all capacity, energy and ancillary services that they are technically capable of providing in the organized wholesale electric markets; (2) incorporate bidding parameters that reflect and account for the physical and operational characteristics of electric storage resources; (3) ensure that electric storage resources can be dispatched and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer consistent with existing market rules that govern when a resource can set the wholesale price; (4) establish a minimum size requirement for participation in the organized wholesale electric markets that does not exceed 100 kW; and (5) specify that the sale of energy from the organized wholesale electric markets to an electric storage resource that the resource then resells back to those markets must be at the wholesale locational marginal price.”

In addition, the draft NOPR “proposes to require each RTO and ISO to revise its tariff to allow distributed energy resource aggregators to participate directly in the organized wholesale electric markets,” according to the staff’s summary.

“Specifically, the draft NOPR proposes to require each RTO and ISO to establish market rules concerning: (1) eligibility to participate in the organized wholesale electric markets through a distributed energy resource aggregator; (2) locational requirements for distributed energy resource aggregations; (3) distribution factors and bidding parameters for distributed energy resource aggregations; (4) information and data requirements for distributed energy resource aggregations; (5) modifications to the list of resources in a distributed energy resource aggregation; (6) metering and telemetry system requirements for distributed energy resource aggregations; (7) coordination between the RTO/ISO, distributed energy resource aggregator, and the distribution utility; and (8) market participation agreements for distributed energy resource aggregators.”

At the Nov. 17 meeting, Commissioner Honorable encouraged stakeholders in the electricity industry to submit comments on the FERC proposal, observing, “You are on the front lines.”

“I do believe storage is the next big game changer,” she added. “We need to get it right.”

FERC proposed the NOPR in Docket Nos. RM16-23-000 and AD16-20-000, and will take public comments on the draft rule for 60 days after it is published in the Federal Register.

Written By Jeannine Anderson
News Editor, Public Power Daily