FERC proposal requires utilities to accommodate DERs, storage

The federal energy regulatory body wants to compel current wholesale electricity suppliers to let DER providers, including storage, to compete in the markets. This follows regulatory action on DER in New York and California.

November 19, 2016 Frank Andorka

A law journal article urges FERC to revive its independent governance agenda.

Image: Wikimedia Commons

The Federal Energy Regulatory Commission (FERC) has begun the process of opening wholesale electricity markets to distributed-energy resources (DERs) and energy-storage.

FERC staff has put forth a proposal, which if enacted, would expand the the commission’s regulations under the Federal Power Act to eliminate current restrictions on the participation of energy storage and DER aggregators in markets served by regional transmission organizations (RTOs) and independent system operators (ISOs).

Item E-1 would advance the commission’s oft-stated desire to promote competition in wholesale electricity markets and would discard restrictions that prevent new, more-advanced technologies from participating in the market.

The move was applauded by the business coalition Advanced Energy Economy (AEE), a group that strives to make the global energy system more secure, clean and affordable.

“Through today’s proposed rulemaking, FERC has recognized that electricity markets can be improved through competition from advanced technologies that provide energy and reliability at lower costs,” said Arvin Ganesan, vice president of federal policy at AEE. “We continue to be supportive of FERC’s effort to open up markets to competition from energy storage.”

The proposed rule would require transmission providers to take energy storage into account when designing rates, giving storage providers an opportunity to compete on a level playing field in the wholesale market. It would also designate energy storage as wholesale market participants under models that accommodate their particular physical and operational characteristics.

Specifically, transmission providers couldn’t restrict what energy-storage devices can offer the wholesale market, which means devices must be allowed to offer any service their technology allows. In addition, bidding structures must account for the physical and operational characteristics of the resources.

Electricity transmitters must allow electric storage resources to be used on their systems, and requires grid operators to set wholesale market clearing prices as both a wholesale seller and wholesale buyer consistent with existing market rules.

The proposed rule says distributors can set a minimum size requirement for energy-storage devices that want to compete in the wholesale markets, although the minimum can’t exceed 100 kw. Lastly, distributors explicitly that the electricity sold from wholesale markets to storage resources can be resold to consumers.

Item E-1 also addresses what transmission operators must do to accommodate DER aggregators. If it becomes a rule, distributors would have to create criteria on what determines a DER’s ability to participate in the wholesale electricity markets, including locational requirements, distribution factors and bidding parameters, as well as what information and data the DERs must provide from its plant.

Transmission operators would be required to modify the list of allowable resources in DER aggregation, define the metering and telemetry system requirements, establish guidelines for coordinating between the grid operator, the DER aggregator and the utility, and provide market participation agreements for DER aggregators.

Comments on the proposed rule are due 60 days after it is published in the Federal Register.

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