Electricity Storage Resource Issues Coming to the Fore at FERC
Electricity storage technologies are playing a big part in the growth of renewable resources and the shape of the grid of the future. For example, batteries are a well-known back-up to renewables when the sun isn’t shining or the wind isn’t blowing. But large-scale batteries, as well as flywheels, are entering the field to provide additional services as clean and fast-response resources for grid operators to help keep the bulk power system in balance.
The introduction of storage resources as grid service providers is raising important issues, such as how their services should be classified (i.e., as transmission or generation) how they should be compensated and whether they raise operational concerns. How these nuts-and-bolts questions are resolved will affect the extent of their penetration in grid services markets.
FERC has jurisdiction over the terms and conditions of services on the U.S. interstate transmission grid, and the Commission is poised to address some of these storage issues in two upcoming proceedings. One of them is a staff technical conference scheduled for November 8, 2016, part of a generic proceeding to address operational and other issues regarding how storage resources are used in the organized wholesale electricity markets (i.e., Regional Transmission Organizations). The second proceeding is a pending complaint by a utility-owner of a large battery resource alleging that the RTO tariff does not properly compensate its resource or provide for appropriate operational practices.
The technical conference
Storage resources may be used to provide what are classified as transmission services and other types of grid-support and standard wholesale electricity services. Theagenda for FERC’s November 8 technical conference focuses on distinguishing between these services and on a number of operational and compensation issues. The agenda provides for panel discussions on three major topics.
Using storage resources for transmission services. Under FERC policy, transmission services are compensated through cost-based rates, which place a ceiling on compensation but also guarantee reasonable cost recovery because the service is provided by the monopoly transmission operator. Thus, defining what storage-provided services may be classified as transmission is important. FERC has recognized two storage-provided services that may be classified as transmission — voltage support and thermal overload protection. FERC is interested in how to define storage-provided transmission services and then identify any additional services consistent with that definition. FERC also wants to discuss the operational implications of using storage resources as both transmission assets and as providers of other wholesale electricity services, such as power sales.
Using storage resources for grid-support services. Unexpected changes in load or generation supply (such as the unexpected retirement of a generator) can cause reliability problems on the grid that require an immediate stop-gap solution until a permanent one can be put in place. For example, the grid operator will sometimes need to enter a cost-of-service based contract with a retiring generator to require it to remain on line a bit longer, even though the unit is uneconomic and the contract price is above market levels. Due to their modularity and mobility, storage resources may be quickly deployable and thus compete to provide a least-cost solution to this short-term problem. FERC wants to discuss this potential and the associated issues that need to be addressed.
