FERC order opens ‘floodgates’ for energy storage in wholesale markets

on February 23, 2018

Utility-DiveThe Federal Energy Regulatory Commission last week unanimously approved an order that could prove to be a landmark in the development of energy storage.

FERC’s order “opens the floodgates for storage participation” in wholesale power markets, Ravi Manghani, director of energy storage at GTM Research, said.

Order 841 directs operators of wholesale markets — Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) — to come up with market rules for energy storage to participate in the wholesale energy, capacity and ancillary services markets that recognize the physical and operational characteristics of the resource.

A level playing field

“The rules will codify mechanisms that will establish a level playing field that, ideally, is relatively comparable across regions,” Daniel Finn-Foley, senior energy storage analyst at GTM Research, told Utility Dive.

FERC specifies that those rules must:

  • Ensure that a storage resource can provide all the services it is technically capable of providing,
  • Ensure that an energy storage resource can be dispatched and can set market clearing prices as both a buyer and a seller,
  • Account for the physical and operational characteristics of storage resources through bidding parameters or other means,
  • Establish a minimum size for participation in RTO/ISO markets that does not exceed 100 kW, and
  • Specify that the sale of electricity from the RTO/ISO markets to a storage resource that the resource resells must be at the wholesale locational marginal price.

FERC gave RTOs and ISOs nine months to file tariffs that comply with the order and another year to implement those tariff provisions.

Finn-Foley called the FERC rules “a starting point” for the development of energy storage projects in wholesale markets. “It is as if the industry has had one hand tied behind its back,” Finn-Foley said.

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Fractal Energy Storage ConsultantsFERC order opens ‘floodgates’ for energy storage in wholesale markets