The Federal Energy Regulatory Commission just took its strongest step yet to initiate markets for energy storage across the nation.
The commission, which governs interstate power transmission and wholesale markets, proposed a rule Thursday that would require each regional transmission organization and independent system operator to create rules for energy storage to participate in wholesale markets. The new regulations would have to recognize “the physical and operational characteristics of electric storage resources,” which differ from traditional grid infrastructure in that they can act as both a load and a generator, and perform a multitude of functions if given the chance.
If approved, the proposed rule could greatly expand the role of energy storage in wholesale markets — and the size of the industry itself. So far, storage has been relegated to the few areas that passed enabling policies.
The PJM grid operator created a frequency regulation market and became the largest U.S. market for energy storage. It has seen 250.5 megawatts of cumulative deployments since 2013, according to GTM Research. The California ISO established a “non-generator” resource type that allowed storage to compete in the markets, and California became the second most prolific U.S. market for energy storage, with 73.2 megawatts deployed.
ISOs and RTOs serve about 70 percent of the country, so if FERC requires all ISOs and RTOs to adopt similar policies, the geographically cloistered storage industry could quickly go nationwide.
“This isn’t just clarifying existing rules; it’s redefining the rules to acknowledge the fact that energy storage cannot adequately participate right now and changing the rules to accommodate it,” said Daniel Finn-Foley, senior analyst for energy storage at GTM Research. “It’s a really big deal.”
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