FERC Order Increases Opportunity for Energy Storage

FERC Order 784 revises regulations governing sales of frequency regulation services, thereby increasing the opportunities for energy storage projects in the ancillary services market.

On July 18, 2013, the Federal Energy Regulatory Commission (FERC) issued FERC Order 784, which revises its Avista policy regulating ancillary-service sales at market-based rates to public utility transmission providers.  The rule aims to increase competition and transparency in ancillary service markets.

The rule expands the pay-for-performance requirements established by FERC Order 755 issued in October 2011.  Order 755, “Frequency Regulation Compensation in the Organized Wholesale Power Market,” requires regional transmission organizations and independent system operators to adopt a two-part market-based compensation method for frequency regulation services – a capacity payment reflecting opportunity costs and a market-based performance payment – rewarding faster-ramping resources, such as batteries and flywheels.  Frequency regulation, an ancillary service, facilitates grid stabilization by enabling supply-demand balance.  It has been provided by slow-responding, fossil-fuel centered gas turbines and coal-powered generators until the emergence of energy storage technologies.

Specifically, Order 784 requires public utility transmission providers to consider two additional parameters – speed and accuracy – while assessing regulation resources.  Energy storage systems are inherently fast-responding resources that excel in speed, accuracy, and ramping ability.  The rule also revises accounting and reporting requirements for transactions pertinent to usage of energy storage devices in public utility operations, creating potential opportunities for energy storage projects in the ancillary services market.  Additionally, it would increase competitiveness in the market and improve efficiency of the transmission system, resulting in cost reductions for consumers in wholesale electric markets.

July 19, 2013 via Energy Solutions Forum

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