FERC finalizes energy storage rule

Source: Sam Mintz, E&E News reporter • Posted: Thursday, February 15, 2018

The Federal Energy Regulatory Commission yesterday finalized a long-awaited rule meant to remove barriers for energy storage technology in electricity markets.

The rule requires grid operators to change market rules to recognize the characteristics of storage resources and facilitate their participation.

Five FERC commissioners approved the rule unanimously and called it a significant achievement. Environmental groups and the storage industry also lauded it.

Companies had in recent months been “holding their breath” waiting for regulatory certainty through action on the rule, which was first proposed in November 2016 (Greenwire, Dec. 21, 2017).

“Electric storage technologies already fulfill crucial functions in the bulk power system to provide reliable power and a more resilient grid,” said Kelly Speakes-Backman, CEO of the Energy Storage Association, in a statement.

“With this morning’s unequivocal action, the FERC signaled both a recognition of the value provided by storage today, and more importantly, a clear vision of the role electric storage can play, given a clear pathway to wholesale market participation.”

The Environmental Defense Fund said that “giving energy storage the same opportunity to compete in the marketplace as other resources like gas and coal will help make electricity more affordable, clean, and reliable for Americans.”

Under the new rule, grid operators’ participation models for storage would have to ensure providers are eligible to render all of the services they are technically capable of, including energy and capacity.

Grid operators must also ensure that providers can set prices as both sellers and buyers. The new models must establish a minimum size requirement for participation of at most 100 kilowatts.

Regional transmission organizations and independent system operators have 270 days to implement the changes.

FERC Chairman Kevin McIntyre said his agency’s job is “not to pick winners and losers” among different types of resources but to let the market decide.

“With our order today, we recognize and incorporate into official Commission policy the proposition that storage resources should be allowed to participate in our organized markets alongside all other types of resources, and that the market can then decide which resources are to be called upon,” he said.

Democratic Commissioner Cheryl LaFleur called electric storage a “Swiss army knife” that can serve customers multiple ways, including providing energy, frequency regulation and other ancillary services and deferring distribution and transmission needs.

“Given the ongoing changes in our nation’s resources mix, and the changing capabilities needed to serve customers, electric storage is poised to provide a critically important role,” she said.

The commission also announced it will hold a technical conference on reforms related to distributed energy resource aggregations, which were part of the original notice of proposed rulemaking along with energy storage but were not ready to be finalized. The conference will be held April 10 and 11.