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FERC looks to remove remaining barriers to electric storage participation in RTO/ISO markets

Notingthat FERC staff has been "examining the use of electric storage resourcesto help meet wholesale electricity needs for some time," the head of theagency's Office of Energy Policy and Innovation asked the sixcommission-approved RTOs/ISOs to answer a series of questions aimed atidentifying and eventually eliminating barriers to those resources'participation in organized capacity, energy and ancillary markets.

Inaddition to the substantially identical data requests tendered to the , PJMInterconnection LLC, ISO New England Inc., Southwest Power Pool Inc., and , Office of EnergyPolicy and Innovation Director J. Arnold Quinn also put out a more general callfor comments seeking input on the issue from other interested stakeholders.

Incorporatingenergy storage devices into the grid can be tricky because they can act liketraditional generation, transmission or distribution assets, as well as load,under certain circumstances. In light of those challenges, FERC staff in 2010sought comments(AD10-13) on how innovative new energy storage devices could be used moreeffectively and extensively by the electric utility industry.

Upuntil then, pumped storage hydropower was the only type of energy storagetechnology that had been used extensively — generally by vertically integratedutilities that have the ability to pass their costs on to their retailratepayers — but newer technologies like flywheels and chemical batteries hadrecently achieved technological maturity and were on the verge of becomingviable on a commercial scale.

Consistentwith the wide-ranging nature of that request, stakeholders' regarding rate recovery,accounting and financial reporting for services provided by electric storagetechnologies varied greatly. Still, FERC in July 2013 Order 784 — a final rule that,among other things, established new accounting and reporting requirements forelectric storage.

Energystorage already is providing valuable services to utilities; as of Oct. 12,2015, 552 MW of battery, flywheel and compressed-air energy storage facilitieswere operating on theU.S. grid. A panel discussion hosted by FERC in November 2015 focused on somerecent key developments in the technology and cost-effectiveness of electricstorage resources and their potential for greater participation in RTO/ISOmarkets.

Inlight of those developments, staff once again is interested in examiningwhether barriers exist to the participation of electric storage resources inthe markets operated by the RTOs/ISOs that could potentially lead to unjust andunreasonable rates, according to Quinn's April 11 letters to the RTOs/ISOs andcall for comments.

Tothat end, the RTOs/ISOs were asked to provide details regarding electricstorage resources' eligibility to participate in their markets as capacity,energy or ancillary service sellers, including any special criteria that suchresources must meet to qualify as market sellers. To the extent that storageresources are ineligible to qualify as sellers in a specific market, RTOs/ISOswere directed to explain the reasons underlying that ineligibility. As forstorage resources that are eligible to participate as sellers in their markets,the RTOs/ISOs were asked if they apply different rules, such as qualificationand performance requirements, to the different types of storage resources and,if so, justify why such distinctions are necessary.

Thegrid operators also were asked whether offers from electric storage resourcesare eligible to set the price under all circumstances in the various marketsthey operate and explain why if they are not. Other questions addressed issuessuch as bid parameters and market-participation opportunities fordistribution-connected and aggregated storage resources. The ISOs/RTOs alsowere asked a series of questions addressing situations where electric storageresources submit bids to buy energy from the grid operators' markets. (AD16-20)