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FERC directs MISO to accommodate all energy storage resources

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FERC directs MISO to accommodate all energy storage resources

FERC told the Midcontinent ISO to revise its market tariff so all electric storage resources could participate, but the commission dismissed two other related complaints from Indianapolis Power & Light Co. over the treatment of its Harding Street energy storage system.

In a Feb. 1 order, FERC directed MISO to submit a compliance filing within 60 days proposing changes to accommodate all storage resources, regardless of the technology, in all the grid operator's markets. But FERC denied IPL's request to find MISO's open access transmission, energy and operating reserve markets tariff to be unduly discriminatory or preferential because it does not compensate suppliers of primary frequency response. The commission also did not find MISO's tariff unjust and unreasonable with respect to dispatch protocols for regulation service.

The order stemmed from a complaint that IPL filed on Oct. 21, 2016, alleging the Midwestern grid operator needed to better compensate the utility's IPL Advancion Energy Battery Storage (Harding Street). IPL, an AES Corp. subsidiary, has called the facility the first grid-scale, battery-based energy storage system in the MISO region.

Despite achieving commercial operation in May 2016, IPL told FERC it had to place the device behind the meter because MISO had no means of dispatching the facility without harming the battery. The Harding Street facility is providing primary frequency response and contributing to MISO's compliance with federal reliability standards, but IPL said MISO lacks a provision to compensate it for the reliability service. The complaint was supported by the Energy Storage Association, Advanced Energy Economy and public interest groups, including Sierra Club and the Union of Concerned Scientists.

But FERC said IPL had not shown that MISO's tariff is unjust, unreasonable or preferential for failing to compensate primary frequency response providers. The order said MISO's frequency response is adequate and noted that, after IPL filed its complaints, FERC proposed to require all new generating facilities to install and operate primary frequency response equipment as a condition for interconnection.

"In light of these factors, Indianapolis Power has not persuaded us that MISO's tariff is unjust and unreasonable because it would not provide for reliable operation of the transmission system," FERC said. The commission went on to say that nothing in MISO's tariff requires the Harding Street facility to provide primary frequency response, meaning MISO's decision not to provide compensation was not unjust or unreasonable.

FERC also rejected IPL's argument that failing to establish a primary frequency response market is unduly discriminatory to Harding Street in favor of generators. The commission said IPL has not shown that participation in MISO's regulation market will degrade the useful life of the battery facility. In addition, FERC said its requirement for MISO to reform its market tariff will mean Harding Street can provide products other than primary frequency response in MISO.

The commission next dismissed IPL's criticisms of MISO's dispatch protocols and compensation methodology for Harding Street and all fast-responding resources. The utility had claimed MISO's stored energy research dispatch protocol would decrease Harding Street's battery cell life from 10 years down to three years because the protocol was designed mainly for flywheels, which are better suited to providing regulating service in one-hour increments.

But FERC said IPL did not cite any tariff provisions or manuals to support that claim. The commission said MISO does require a regulation resource to be available for 60 minutes, but that does not mean the market clearing and deployment will cause the resources to be charged for an hour and then discharged, which would cause Harding Street's lithium ion technology to go through a full cycle, shortening its life expectancy.

The order also rejected IPL's request to change the compensation mechanism for regulation service by requiring MISO to pay Harding Street the locational marginal price for each megawatt of energy it withdraws to mitigate over-frequency conditions. FERC said IPL did not show why it should be paid the same price as resources providing energy and failed to acknowledge that the frequency regulation market already compensates resources for providing regulation "down," or moving megawatts to a needed location.

The commission did agree with IPL that MISO's tariff unnecessarily restricts competition by preventing electric storage resources from providing all their services, which FERC said could lead to "unjust and unreasonable rates." An electric storage resource such as Harding Street can only participate in MISO as a stored energy resource in the grid operator's regulation market and cannot qualify as capacity, energy, ramp capability or contingency reserves. FERC also said MISO's organized market rules were designed for other types of resources, such as generation and demand response, and fail to accommodate the "unique physical and operational characteristics of electric storage resources."

"We find that the failure to recognize the unique physical and operational characteristics of electric storage resources could unnecessarily restrict competition by preventing electric storage resources from providing all the services that they are technically capable of providing, which could lead to unjust and unreasonable rates," the Feb. 1 order said. (FERC Docket EL17-8)