What are energy storage projects under federal law? Are they eligible for certain favorable long-term contracts with utilities? Or are they subject to less attractive rules and regulations that apply to solar energy?
That’s the question that Franklin Energy, which develops distributed energy resources, is asking in Idaho, where it has proposed four energy storage facilities, each 25 MW.
In doing so, Franklin Energy is raising fundamental questions about how energy storage, a relative newcomer on the energy scene, fits in with a 40-year-old law known as the Public Utility Regulatory Policies Act, or PURPA.
PURPA requires electric utilities to buy power from other producers, if the cost is less than or equal to the utility’s avoided cost rate to the consumer. Right now, most energy storage projects are developed by utilities, businesses and for pilot projects. However, as prices for energy storage drop, more and more energy companies like Franklin Energy are expected to propose projects and seek contracts with utilities. That’s most likely to happen in areas where energy storage is less expensive than the utility’s avoided costs, or the marginal costs of producing power.
Now before the Federal Energy Regulatory Commission (FERC), the issue involves four energy storage facilities, each owned by a different entity. They meet the standards for being qualifying facilities (QF) that, under PURPA, are eligible to seek contracts with utilities. The question is: Should they receive Idaho Power’s more attractive long-term contracts and rates?
The precedent-setting case raises interesting questions about the definition of energy storage projects as qualifying facilities, said Richardson.
“This is the only PURPA battery storage project in the country that I could find,” he said. All the other battery projects he could identify are utility-owned, developed for companies’ own use, or pilot projects.
Franklin Energy knew it was taking a risk when it proposed the projects as qualifying facilities and waded into unknown territory, he said.
“We’re making this a shotgun wedding under PURPA. We knew what we were getting into,” Richardson said.
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