SPP seeks FERC approval for new energy storage 'as-transmission-only' framework

The Southwest Power Pool is seeking approval from the Federal Energy Regulatory Commission to establish a new framework that treats energy storage resources as transmission-only assets.

The proposed changes (ER22-2344), filed July 12 with FERC, resemble tariff revisions the agency approved in August 2020 for the Midcontinent ISO. Similar to MISO, SPP's proposal would allow "storage-as-transmission-only-assets," or SATOAs, to be eligible for cost-of-service rate treatment when they are selected through the grid operator's regional planning process.

Under SPP's proposal, SATOAs "will not be considered multi-use assets" and will participate in the SPP's wholesale markets "solely for the purpose of accounting for their market impact," SPP said.

The proposed framework would effectively allow energy storage assets to charge and discharge to perform a transmission-only function without affecting SPP's wholesale market rates. The proposal would enable SATOAs to compete with traditional transmission solutions on projects such as network upgrades, interconnection-related upgrades, reliability upgrades and other upgrades triggered by interregional transmission projects.

SATOAs would need to demonstrate that they possess "some relevant quality that a traditional transmission solution does not have, such as solving the transmission issue more flexibly, having a smaller installation footprint, or lower cost," SPP said.

In April, SPP reported that developers submitted nearly $3 billion in responses to requests for competitive upgrades as part of the 14-state grid operator's latest regional transmission expansion plan covering a 20-year planning horizon.

Costs for SATOAs, which would be calculated using zonal revenue requirements, would be allocated based on voltage levels and limited to the maximum capacity needed to address a transmission issue.

All revenues associated with a SATOA's dispatch into SPP's market would be credited against the storage asset's revenue requirement, SPP said. That would mean "the SATOA owner is indifferent to pressures to profit from market interactions," SPP said.

The grid operator's proposal included additional tariff revisions to ensure that a SATOA's injections and withdrawals of energy through the SPP market are for transmission-only purposes.

The proposal also accounts for an order FERC issued in December 2020 that rejected a bid by American Electric Power Co. Inc. to receive cost-based transmission rates for an energy storage project in Kentucky. In that order, FERC found that the facility would act more like a backup generator than a transmission solution.

SPP said it does not expect its proposal to have a "meaningful impact" on its generation queue, which included roughly 13.5 GW of proposed energy storage projects as of July 13. "SPP's limited definition of a SATOA should prevent new generation from jumping the queue by appearing to qualify as SATOAs," the grid operator said.

SPP asked FERC to approve its proposal by Oct. 11, explaining that it expects to implement the proposed changes in the third quarter of 2025.

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