On June 4, 2018, the Federal Energy Regulatory Commission’s (FERC) new rule regarding energy storage went into effect.
The rule, published at 83 FR 9580, removes a critical barrier to the participation of electric storage resources in the markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs), paving the way for further development of renewable energy sources.
The new FERC rule requires each RTO and ISO to revise its tariff to include electric storage resources. The revised tariff must ensure that storage resources are eligible to provide all capacity, energy and ancillary services that they are capable of providing, can be dispatched, and can set the wholesale market clearing price as both a seller and buyer. The minimum size requirement for storage resource participation must not exceed 100 kw and the sale of electric energy from the wholesale market to a storage resource that is resold back to the market must be at the local wholesale marginal price.
The new FERC rule is a boon for renewables. Electric storage resources, including batteries, are frequently used to store electricity that is produced by inexpensive renewable wind and solar sources and which is later transmitted to the grid when, for example, those sources are not available. The new rule encourages adding more renewable energy onto the grid by requiring that storage solutions be paid when providing energy. As a result, experts anticipate more renewables projects with attached storage will be developed and that those projects will be better able to compete with conventional power plants to fulfill power needs on demand.
Tim Olson, of the American Council on Renewable Energy (ACORE), noted that 2017 saw record low prices in power purchase agreements featuring renewables combined with energy storage. Olson believes the new FERC rule will help drive further industry progress. He wrote on ACORE’s website, “The new rule is a welcome forward-thinking policy that embraces the value and role of renewables and energy storage in the 21st Century grid.”
RTOs and ISOs must make compliance filings in accordance with the rule by March 2019 and must implement tariff revisions by June 2019.