The Federal Energy Regulatory Commission has passed a rule that will open U.S. wholesale energy markets to energy storage on an equal footing with generators and other grid resources. But it hasn’t yet figured out how to address the same challenge for distributed energy resources.
On Thursday, FERC commissioners unanimously approved the final version of a rule, first proposed in November 2016, designed to “remove barriers to the participation of electric storage resources” in the wholesale energy markets that make up about three-quarters of the country’s electricity supply.
Within the next nine months, each of these regional transmission organizations (RTOs) and independent system operators (ISOs) will be required to come back with a plan for revising its tariffs to establish a participation mode for energy storage, “consisting of market rules that, recognizing the physical and operational characteristics of electric storage resources, facilitates their participation” across the range of markets that make up a regional transmission grid.
That’s a much broader set of opportunities than those currently available to large-scale batteries, pumped hydro systems, thermal energy storage and other types of energy storage now participating in ISO and RTO markets. To date, those have been limited in geography and in type, with the vast majority of storage playing in fast-responding frequency regulation markets, and with viable markets in only a handful of jurisdictions.
This biggest, mid-Atlantic grid operator PJM’s frequency regulation market, has also became the largest U.S. market for energy storage, with about 250 megawatts of cumulative deployments since 2013 — although it’s largely tapped out at present and suffering from some of the side effects of its own success.
FERC’s new rule will expand the scope of energy storage’s participation beyond frequency regulation and into larger ancillary services and wholesale energy and capacity markets, and for all ISOs, not just the handful like PJM and California grid operator CAISO that have taken the lead on the matter.
ISOs and RTOs still have a year to implement these future energy storage market participation rules. But when they do, they will likely become one of the largest opportunities for energy storage in the country, noted GTM Research’s Ravi Manghani. “This opens the floodgates for storage participation,” he said.
Energy storage and clean energy groups also praised the decision, noting the benefits that grid-scale batteries are already providing in the limited applications where they’re cost-effective, and hold promise for much broader applications as battery prices continue to fall in years to come.
FERC’s commissioners concurred in their written statements. Commissioner Cheryl LaFleur, a Democrat, called storage a “Swiss army knife” in its ability to provide energy alongside variable renewable generation, provide frequency regulation and other ancillary services, and help defer distribution and transmission needs.
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