Energy Storage

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Federal Energy Regulatory Commission’s much-anticipated new rule will enhance the participation of electric storage resources in the organized wholesale electricity markets.

By Michael Gergen, David E. Pettit, and Peter Viola

Nearly a year and a half after issuing its original proposal, the Federal Energy Regulatory Commission (FERC or Commission) has unanimously adopted its final rule—Order No. 841—on Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators (Storage Rule). The Storage Rule is the culmination of FERC’s proceedings following the notice of proposed rulemaking issued in November 2016 (Storage NOPR) whereby FERC originally proposed enhancing the participation of electric storage resources in the organized capacity, energy, and ancillary service auction markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).

The Storage Rule recognizes the improving capabilities and cost-competitiveness of electric storage resources (such as batteries, flywheels, pumped-hydro, etc.) and is designed to further pave the way for such resources to participate in the organized wholesale electricity markets alongside conventional energy sources. At the same time, the Commission determined that further information is needed about proposed reforms related to market participation of aggregations of distributed energy resources (DERs) in the RTO/ISO markets. The Commission therefore directed FERC staff to convene a technical conference on April 10-11, 2018 to gather additional information before deciding what action to take on those proposals.

By Michael Gergen, David Pettit and Christopher Randall

The CPUC’s market-shaping decision provides guidance regarding the “stacking” of multiple electricity system services.

A new decision from the Public Utilities Commission of the State of California (CPUC) has set the stage for improved economic viability for California’s energy storage industry. The January 17 decision — Decision 18-01-003 in Rulemaking 15-03-011 (the Decision) — establishes a set of rules to guide utilities on how to “promote the ability of storage resources to realize their full economic value when they are capable of providing multiple [or ‘stacked’] benefits and services to the electricity system.”

To advance this objective, the CPUC has adopted 11 stacking rules to govern the evaluation of multiple-use energy storage applications, as well as associated definitions of services and service “domains.” The agency also established a working group to develop certain issues further and directed the CPUC’s Energy Division to prepare a report in 2018 on the state of the energy storage industry.

By Joshua T. Bledsoe and Douglas K. Porter

On June 10, 2015, the California Independent System Operator (“CAISO”) released a draft final proposal (the “Expanded Metering and Telemetry Options Phase 2, Distributed Energy Resource Provider”) that, if finalized, would represent an initial  step towards a regulatory structure that would result in distributed energy resources (“DERs”) competing in California wholesale energy markets.  DERs are resources that are physically connected to the distribution grid of an electric utility (e.g., rooftop solar, energy storage, plug-in electric vehicles, and demand response).  In order for DERs to sell into the CAISO wholesale markets, they would use the distribution grid of the electric utility to deliver power to or to take power from the transmission grid.  Currently, the vast majority of existing renewable resources sell their power to California’s electric utilities.  Those distributed resources are compensated by electric utilities for the electricity they generate at a rate far in excess of current CAISO market prices.  In addition, those resources do not have the right or the ability to sell power directly into the wholesale market.  Absent the California Public Utilities Commission (“CPUC”) adopting a substantially revised regulatory structure that sorts out the thorny jurisdictional, economic and technical issues (e.g., metering and compensation for resources located behind the retail meter), the immediate impact of CAISO’s proposal may be modest at best.

By Michael J. Gergen and Marc T. Campopiano

On October 16, 2014, the Federal Energy Regulatory Commission (“FERC”) issued an Order on Tariff Revisions, FERC Docket No. ER14-2574, conditionally accepting, with two substantive modifications, tariff changes proposed by the California Independent System Operator (“CAISO”) to establish new flexible resource adequacy capacity (“FRAC”) and must-offer obligation (“MOO”) requirements intended to ensure that adequate flexible capacity is available to address the added variability and net load volatility associated with ongoing and expected future changes on the CAISO-controlled grid.  The FRAC-MOO requirements will be effective, subject to a compliance filing by the CAISO (due within 30 days of the date of the order), effective November 1, 2014, to allow load serving entities (“LSEs”) subject to the requirements time to make their first FRAC showings to the CAISO by November 15, 2014.

By Michael J. Gergen, Marc T. Campopiano and Andrew H. Meyer

On September 5, 2014, San Diego Gas & Electric (“SDG&E”) issued a 2014 Energy Storage System (“ESS”) Request for Offers (“RFO”) soliciting at least 25 MW—and up to 800 MW—of energy storage (the “2014 ES RFO”).  SDG&E’s 2014 ES RFO is among the largest solicitations to date in the U.S. for grid-scale energy storage resources.

By Michael J. Gergen, Marc T. Campopiano, and Andrew H. Meyer

On August 14, 2014, the California Public Utilities Commission (“CPUC”) issued an Order Instituting Rulemaking (“Order”) to establish policies, procedures, and rules to guide California investor-owned electric utilities (“IOUs”) in developing their Distribution Resources Plan Proposals (“DRPs”) in accordance with the requirements of Public Utilities Code Section 769.  In particular, the rulemaking will evaluate the IOUs’ existing and future electric distribution infrastructure and planning procedures with respect to incorporating Distributed Energy Resources (“DERs”) into the planning and operation of their electric distribution systems.  DERs include distributed renewable generation resources, energy efficiency, energy storage, electric vehicles, and demand response technologies. 

On June 16, 2011, the Federal Energy Regulatory Commission (FERC) issued a notice of inquiry (NOI) in Docket Nos. RM11-24-000 and AD10-13-000 seeking comment on ways to facilitate the increased market-based provision of ancillary services traditionally supplied by transmission providers that help the bulk power grid to operate more smoothly and reliably from all resource types, especially from new electric storage technologies.   FERC has taken a number of actions in recent years to foster the development of wholesale energy markets…