US Federal Energy Regulatory Commission (FERC) has called for organizations to step up their facilitation of storage in US wholesale markets, as current practice threatens to stunt technological innovation.
Both regional transmission organization PJM Interconnection and independent system operator Southwest Power Pool (SPP) are being told them must change their practice to come in line with FERC Order 841, despite failing to fully comply with rulings designed to promote electricity storage for regional grids. FERC has demanded that both organizations closely review their requirements for storage to be accepted into respective energy markets and allow innovation in storage to be supported.
Order 841, issued by FERC in February 2018, directs grid operators to remove barriers to the participation of electricity storage in wholesale markets. In doing so, the regulator aims to allow competition in the storage industry, promoting innovation and setting out a path to a renewable-based grid. Specific demands detail the revision of tariffs to establish a participation model which recognizes the physical and operational characteristic of electric storage resources.
This shift in approach signals a change in how storage is viewed in the US market. Rather than considering storage as a generation method or a specified load of energy, under Order 841, storage will be considered as a hybrid of the two and compensated accordingly.
PJM is the largest transmission organization in the US, supplying 13 states and the District of Columbia with electricity. While the organizations energy storage plans have been approved, making it the first large market opportunity to facilitate batteries for fast frequency response, FERC has criticized the organization’s 10-hour minimum duration requirements, which prevents certain technologies from entering the market.
This restriction is likely to limit battery owners, operators and investors from using emerging or small-scale technologies that can’t last the 10-hour duration, slowing any grid transformation and limiting competition within the storage industry.
In response, regulators will investigate whether these 10-hour “run-time rules and procedures are unjust, unreasonable, unduly discriminatory or preferential as applied to capacity storage resources.” Analysis from Astrape Consulting, using PJM data, has indicated that storage with as little as 2-hour duration can potentially provide the same capacity value as power plants that run 24 hours a day, questioning why PJM persists with such a high duration requirement.
Both PJM and SPP have been given an additional 60 days to respond to specific concerns raised by industry representative groups such as the Advanced Energy Economy and US Energy Storage Association, which are likely to further include considerations of support for technology such as pumped storage and behind-the-meter assets.
FERC Chairman Neil Chatterjee commented that “Breaking down these market barriers encourages the innovation and technological advancements that are essential to the future of our grid”.
PJM’s adoption of energy storage is seemingly reluctant, with requirements sitting right on the edge of the FERC guidelines. While the company has been quick to adhere to Order 841 and has claimed itself as a driver of emissions reductions, this seems to be through meeting expectations by the minimum possible standard. Transition to decarbonization through switching coal for gas is an ever-so-familiar method in the US at the moment, despite the massive impacts of methane released from upstream gas activity.
The indication that PJM is not determined to rapidly transfer to renewables, signals an uphill battle for FERC promoting innovation and creating a zero-emission grid in the US. However, the increased facilitation of storage provides the opportunity for renewables to be seen as a less risky investment, with avenues opening for solar-storage and large-scale battery projects to play a significant part in the US energy mix in the near future.