In a victory for the energy storage industry, a federal appeals court has upheld the Federal Energy Regulatory Commission’s Order 841, clearing the way for transmission grid operators across the country to open their markets to energy storage, including aggregated batteries connected at the distribution grid or behind customers’ meters.
Friday’s court opinion (PDF) declared that FERC has jurisdiction over how energy storage interacts with the interstate transmission markets it regulates, even if those systems are interconnected to the grid under regulations set by the states.
The court also rejected arguments by utility groups and state utility regulators seeking to opt out of allowing energy storage resources (ESRs) to participate under Order 841, which allows for units as small as 100 kilowatts to access wholesale markets.
Instead, the three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit agreed with FERC’s contention that “[k]eeping the gates open to all types of ESRs — regardless of their interconnection points in the electric energy systems — ensures that technological advances in energy storage are fully realized in the marketplace, and efficient energy storage leads to greater competition, thereby reducing wholesale rates.”
Beyond helping to make wholesale markets more efficient, Order 841 has started to open new energy storage opportunities in grid markets in New England and New York. The rest of the country’s transmission grid operators, which manage wholesale markets serving roughly two-thirds of the country’s electricity customers, are creating their own Order 841 implementation plans.
Wood Mackenzie predicts that Order 841 will open up new opportunities for energy storage developers and aggregators that have primarily relied on state-by-state energy storage mandates and market opportunities to date. While energy storage industry groups have fought against some grid operators’ interpretation of Order 841, they’ve also hailed its broader potential benefits.
“This is an enormous step for energy storage, with the affirmation that energy storage connected at the distribution level must have the option to access wholesale markets, allowing homes and businesses to contribute to the resiliency, efficiency, sustainability, and affordability of the grid,” Kelly Speakes-Backman, chief executive of the Energy Storage Association, said in an email.
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