Electric storage and wholesale markets

As electric energy storage technology improves in capability and cost-effectiveness, what barriers exist to electric storage resources' participation in organized electricity markets in the U.S.?  Staff of the Federal Energy Regulatory Commission have issued a series of data requests and a request for public comment in an effort to identify barriers that could lead to unjust and unreasonable wholesale electricity rates.

For purposes of this inquiry, Commission staff defines an electric storage resource as a facility that can receive electric energy from the grid and store it for later injection of electricity back to the grid. This includes all types of electric storage technologies, regardless of their size and storage medium, or whether they are interconnected to the transmission system, distribution system, or behind a customer meter.

Historically, electricity had to be consumed as soon as it was generated, and storing electricity was challenging and expensive.  But a new industry has grown up around electric storage.  Federal regulators have acted to support energy storage, such as in FERC Order No. 784 which lets cost-effective storage be paid fairly for the ancillary services it provides to the grid.

According to a series of April 11, 2016 letters from Commission staff to various regulated Regional Transmission Organization (RTO) and Independent System Operator (ISO) entities, "Commission staff has been examining the use of electric storage resources to help meet wholesale electricity needs for some time."  In light of "key developments in the technology and cost-effectiveness of electric storage resources," the letters express staff's interest in "examining whether barriers exist to the participation of electric storage resources in the capacity, energy, and ancillary service markets in the RTOs and ISOs potentially leading to unjust and unreasonable wholesale rates."  The letters also describe staff's expectation that if potential barriers exist, staff will examine whether any tariff changes are warranted.

A data request is attached to each letter.  In those data requests, staff seeks information on rules that affect the participation of electric storage resources in the markets.  These rules include those governing electric storage resources' eligibility to participate in the markets, the qualification and performance requirements for market participants, required bid parameters, and the treatment of electric storage resources when they are receiving electricity for later injection to the grid.

FERC staff's data requests are organized into 6 categories:

• The Eligibility of Electric Storage Resources to be Market Participants
• Qualification Criteria and Performance Requirements
• Bid Parameters for Electric Storage Resources
• Distribution-Connected and Aggregated Electric Storage Resources
• When Electric Storage Resources are Receiving Electricity
• Potential Changes to the Rules Affecting Electric Storage Resources

The letter requests a response to the data requests on or before May 2, 2016.  Concurrently, staff solicited public comment on the issues raised in the proceeding.

As noted in the data request letters, this is not the first time Commission staff has considered energy storage.  Will this round of regulatory process identify barriers to electric storage resources' participation in wholesale markets?  Will any barriers identified give rise to changes to grid operators' tariffs?  The case has been docketed as Docket No. AD16-20-000, Electric Storage Participation in Regions with Organized Wholesale Electric Markets.