FERC Issues Proposed Rule on Electric Storage Resources and DER Aggregations

At the open meeting held on November 17, 2016, FERC announced a Notice of Proposed Rulemaking on Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators. The proposed rule aims to address concerns about barriers that electric storage resources and distributed energy resource (DER) aggregations may face to their participation in organized wholesale electric markets.

As the proposed rule explains, electric storage resources (such as batteries, flywheels, and pumped-hydro) that operate in organized markets often must use participation models that were designed for traditional resources. These participation models do not account for the unique characteristics of electric storage resources. While some organized markets have created participation models for electric storage resources, these models allow storage resources to provide only limited services.

The proposed rule would require each regional transmission organization (RTO) and independent system operator (ISO) to create a participation model for electric storage resources that recognizes and accommodates the unique physical and operational characteristics of these resources. In particular, these models must, among other things, (1) make electric storage resources eligible to provide all capacity, energy, and ancillary services that they are capable of providing; (2) include bidding parameters that reflect the physical and operational characteristics of electric storage resources; and (3) set a minimum size requirement for electric storage resources no greater than 100 kW.

The proposed rule explains that organized markets also currently limit the participation of DER aggregations (entities that combine DERs in order to jointly participate in organized markets). DER aggregations often can participate only as demand response, which limits the services they can provide. DER aggregations are also often prevented from injecting power back into the grid or increasing consumption if there is an operational requirement to do so.

The proposed rule would require each RTO and ISO to allow DER aggregations to offer to sell capacity, energy, and ancillary services in the organized wholesale electric market. The proposed rule would also require RTOs and ISOs to remove any unnecessary restrictions on how the DERs that participate in aggregations must be operated.

Commissioner LaFleur issued a separate statement on the proposed rule. While she “strongly support[s] the development of a market participation model for storage resources,” Commissioner LaFleur’s statement specifically requests comments on the part of the proposed rule addressing DER aggregations. She notes that because DER aggregations connect to the grid at the distribution level, they raise unique issues beyond those facing energy storage resources.

Comments are due 60 days from the proposed rule’s publication in the Federal Register.

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