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MISO leads the way with energy storage as a transmission only asset (SATOA)

Transmission
Credit: Thanks to American Public Power Association for sharing their work on Unsplash.

Energy storage provides multiple services, hence the term “value stacking.” As we continue to understand the role of energy storage in a Non-Wires Alternatives (NWA) context, an opportunity that storage developers should not lose sight of is to position storage as a transmission-only asset. In this transmission asset function, a storage device operates like any transmission facility for the system’s reliability need. MISO’s SATOA filing and FERC acceptance can set precedence for other ISOs, opening the door for storage developers to capitalize on this revenue stream.

Key points of MISO’s SATOA

There are a few salient features in MISO’s SATOA filing that storage developers should familiarize themselves with:

1) The criteria to evaluate and select SATOA – When evaluating a storage project as a transmission-only asset, the storage project must follow transmission planning protocols. The storage developer must respond when the transmission provider, as per FERC order 890, sends out a notification soliciting project ideas. The SATOA will be evaluated like any other project suggested for a system need.

The criteria to choose a SATOA over a wire’s alternative is focused on the effectiveness of SATOA – whether the battery will discharge when needed, and charge only when the system conditions are normal. Additional criteria include whether or not the SATOA has a 40-year asset life like a transmission alternative and if the cost is lower than the other alternatives.

2) Impacts on wholesale energy markets – There are none. Since storage is not a market resource and storage operating as a transmission-only asset is like a transmission switching station, the SATOA owner’s responsibility is to charge the battery under normal conditions and discharge the battery under emergency system conditions. The SATOA operator coordinates with the MISO control room operator for charging and discharging.

3) SATOA cost recovery – Since SATOA is a transmission facility operated strictly for reliability need on the system, and MISO has authority over the asset in their role as a Reliability Coordinator (RC) – recovery of SATOA costs from the rest of the transmission system operators is similar to other transmission facilities costs.

4) Impacts to generator interconnection queue – There are none. SATOA does not go through the interconnection queue because it is not a network resource.

5) SATOA operating guides – MISO and other transmission system operators have standard operating guides that provide step-by-step instructions to follow a path under certain emergency system conditions. This action is what operators do in the control room. The need for familiarity with current operating guides is another reason why system operators undergo training to keep their NERC certification. The operating guide documents each SATOA operation.

Background on SATOA

MISO started discussions on Storage As a Transmission Asset (SATA) first, while FERC Order 841 discussions were underway. There was an Energy Storage Task Force (ESTF) formed at MISO. This ESTF started to discuss SATA and bifurcate reliability and economic aspects of storage as a transmission asset. “The ESTF noted that MISO did not have a process to evaluate storage resources as transmission assets in the annual regional planning process leading to MTEP and that all storage resources were required to be evaluated through the Generator Interconnection Procedures as market participating assets.” This ESTF note led to year-long discussions at the Planning Advisory Committee (PAC), which resulted in MISO filing a Section 205 filing on SATOA in Dec 2019.

FERC had a technical conference on May 4, 2020. On June 1, 2020, MISO responded with Q&A after the tech conference. MISO received the FERC acceptance order on Aug 10, 2020, and MISO replied to FERC on Sep 23, 2020. Docket # ER20-588.

Implications of MISO’s SATOA

If other ISOs like MISO take upon MISO’s SATOA as a blueprint for storage projects, FERC must approve individual ISO tariff filings. This piecemeal approach takes time that storage developers may not necessarily have for their projects’ financial viability. Hence, FERC should proactively convene a technical conference and release a Notice of Proposed Rulemaking (NOPR) and get ahead of the ISOs and provide regulatory certainty to the storage developers.

Energy Storage Association (ESA) is concerned about MISO’s SATOA impact on energy storage as a transmission asset function. ESA is in favor of a more holistic approach towards storage’s function as a transmission asset. PJM’s Planning Committee is having special sessions on SATA. California ISO (CAISO) started their SATA discussions in 2018 but put them on hold due to distributed energy resources.

Meanwhile, on FERC Order 841

MISO worked on FERC Order 841 Compliance in fall 2018, like any other ISO, and filed compliance plans at FERC, indicating MISO needs time to comply with FERC Order 841 due to Market Systems Enhancement Project. So, MISO asked for June 2022 effective date for Electric Storage Resource (ESR) market resource category. In the meantime, Stored Energy Resource Type II is available for any resource participating in the market. SER Type I cannot participate in all the capacity and energy markets and could only participate in the regulating reserves.

This SER Type II came out of FERC order on Indianapolis Power & Light (IPL) complaint on primary frequency response (PFR) compensation. FERC didn’t agree with IPL that MISO should compensate IPL for PFR but agreed that MISO should have a market resource category for storage that is technically able to provide for all services.

Conclusion

MISO’s SATOA filing highlights the market reality of energy storage technologies. Markets cannot keep up with regulations and policies that account for the compensation mechanism. Both state and federal regulators are unable to get ahead of technology. But this SATOA offers FERC an opportunity to pro-actively issue a FERC NOPR and an order for storage developers to have regulatory certainty for their business models.