February 26, 2018 Read More →

U.S. Regulatory Opening Signals the Coming of a Bigger Grid-Connected Battery Industry

Microgrid Knowledge:

Issued February 15 by the Federal Energy Regulatory Commission, the rule aims to eliminate barriers that prevent energy storage from taking part in wholesale capacity, energy and ancillary services markets.

This is a critical issue for the storage and microgrid industries, whose members have said that storage should be able to participate on a level playing field with generation and other resources.

Grid-connected microgrids benefit from the new rule because they increasingly use energy storage as a tool to enhance project economics.

In the final decision, FERC required regional transmission organizations (RTO) and independent system operators (ISO) to revise their tariffs and create models that allow energy storage into the market.

“We’re really excited about this,” said Kelly Speakes-Backman, CEO of the Energy Storage Association (ESA).” By asking the RTOs and ISOs to look at integrating electric storage into the grid, they are saying, ‘Take a look at the different products storage can offer, and make sure they are incorporated into different opportunities.’”

Speakes-Backman added that the FERC ruling will have the biggest impact she’s seen on storage in many years. “It opens the market for so much more storage to come online.”

An ESA vision statement said that if regulatory barriers were removed, allowing storage to participate in wholesale and retail markets, the industry could aim for a goal of 35 GW of storage online by 2025, she said. As of 2017, the U.S. had only 0.5 GW of energy storage.

“This decision had to happen in order to reach that goal,” Speakes-Backman said.

FERC also ruled that energy storage can provide primary frequency response while simultaneously offering other services. That means energy storage can get compensated for multiple value streams, she said.

Charlie Palmer, managing director at Opportune’s Process and Technology energy consultant practice based in Houston, described the new rule as “a great start to push the ISO/RTO’s to figure out how to effectively incorporate (storage) into the wholesale markets. It forces recognition of all potential benefits for storage – broader access to ancillary and energy markets.

However, he said, the ISOs and RTOs still need to address many “sticky issues” with solid implementation plans.

“We’re building a building here,” added David Schlissel, director of resource planning analysis for the Institute for Energy Economics and Financial Analysis. “The FERC rule is another big block in the foundation of that building, and the decline in wind and solar installation costs is another step in that direction. This is a big deal.”

More: Energy Storage Gets Biggest Boost in Years. Thank you FERC

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