Industry Seeks Regulatory Clarity on Energy Storage Paired with Renewables in Capacity Markets

U.S. electricity markets in the U.S. need explicit rules about the benefits that are delivered to the grid when energy storage and renewable generators are combined to offer a single capacity resource, Jason Burwen, policy and advocacy director for the Energy Storage Association (ESA), said on June 8.

“Currently there is no way to understand or capture the value of increasing capacity utilization for renewables paired with storage [in electricity markets], and I think that’s something that will be of particular interest [to the clean energy community,]” Burwen said during a media conference call about barriers to energy storage in electricity markets.

Burwen’s comments reflected the ESA’s recent informational filing to the Federal Energy Regulatory Commission (FERC), which opened a docket [AD16-20] to examine market barriers that prevent deployment of energy storage solutions. ESA said in its filing that, while new and more economic storage technologies are available for grid deployment, market rules and designs have not caught up with technology.

According to the filing, PJM Interconnection, for example, instituted rules that would allow certain resource types to combine and offer as a single capacity resource, to increase the capacity value and to reduce chances of facing non-performance penalties. ESA told FERC that the ability of storage resources to combine with other resources, especially intermittent renewable resources, should be defined and clarified in all system operator capacity markets to improve system efficiency and maximize the value of resources to the grid.

PJM’s capacity performance requires that generators to meet their commitments to deliver electricity whenever PJM determines they are needed to meet system emergencies. As a pay-for-performance requirement, generators may receive higher capacity payments and are expected in return to invest in modernizing equipment, firming up fuel supplies and adapting to use different fuels.

“For variable renewable generation, class average capacity factors are often used to calculate capacity market credit during the first several years of operation until resources have sufficient operating history,” ESA said. “If electric storage is integrated into a renewable generation facility to a sufficient degree, average capacity factors could increase by a significant level. However, as of now there is no means by which renewable generators can capture this improved performance in capacity market crediting.”

ESA Executive Director Matt Roberts said during the conference call that FERC’s request for input on energy storage in markets represents a “concrete step” in developing “fair and competitive markets for storage, where energy storage systems are able to get appropriate remuneration for value they provide to the grid.”

According to Roberts, there have been various efforts to bring energy storage into U.S. energy markets, but system operators “move at different speeds.”

“It has been great to see FERC take this concerted and judicious effort to help move this [issue] forward,” he said.

The comment period for the docket closed this week. In its original order instituting the docket, FERC did not specify what timeline or follow-on actions it might take after receiving input from industry members.

However, Burwen said, “[FERC] doesn’t solicit all this information … for no reason at all. We hope and expect to see that this forward-leaning commission takes up some aspect of what we and others in the industry are discussing in their follow-on actions.”

Lead image credit: Chris Hunkeler | Flickr


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Jennifer Delony, analyst for TransmissionHub, started her career as a B2B news editor in the local and long-distance telecommunications industries in the '90s. Jennifer began covering renewable energy issues at the local level in 2005 and covered U.S. and Canadian utility-scale wind energy as editor of North American Windpower magazine from 2006-2009. She also provides analysis for the oil and natural gas sectors as editor of Oilman Magazine.

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