Trade Group Complains that PJM’s Frequency Regulation System Unduly Discriminates Against Energy Storage Resources
The Energy Storage Association (ESA) filed a complaint with the Federal Energy Regulatory Commission (FERC or Commission) alleging that PJM Interconnection, L.L.C. (PJM) has adjusted its system operations to unduly discriminate against certain market participants. ESA argues that PJM changed the rules of its frequency regulation market, without prior FERC approval, and that those rule changes unduly discriminate against limited energy resource participants, such as energy storage providers.
FERC has set May 15, 2017, as the deadline for parties to comment, intervene, or protest ESA’s complaint. Commenting and/or intervention are important procedural tools that allow interested parties to protect and advocate for their interests. Given the potentially broad impact of this complaint on PJM’s energy and frequency regulation market design, numerous entities may seek to participate in this proceeding.
Following FERC’s Order 755,1 PJM revised its tariff to differentiate between two types of participants in its frequency regulation market: (1) Regulation A resources that are generally traditional generators with limited ramp rates; and (2) Regulation D resources, including batteries, that have faster ramp rates but are energy limited (i.e., resources that do not have the ability to sustain output for a long period of time). PJM established different automatic generator control (AGC) signals to deploy each type of resource. ESA explains that the signal for Regulation D resources was designed to be energy neutral. In other words, when averaged over time, the amount of increased output provided by a resource in response to the Regulation D AGC signal was intended to match the amount of energy the resource withdrew from the system in response to the Regulation D AGC signal. Until adjusting the frequency regulation market rules in January 2017, ESA states that the Regulation D market signal converged to energy neutral within 15 minutes approximately 95 percent of the time.
PJM established a benefits factor to compare offers of both Regulation A and Regulation D resources within the same regulation market. The benefits factor was intended to account for the additional value of fast-responding Regulation D resources and to lower the effective offer price for Regulation D resources, making them more likely to clear the regulation market. ESA explains that the methodology for calculating this benefits factor is not part of PJM’s tariff and, therefore, PJM has not submitted it to FERC for review.