Everyone agrees that Federal Energy Regulatory Commission Order 841, and its commandment to create participation models for energy storage across the country, is going to be a big deal.
Brattle Group estimates there are about 7,000 megawatts, or more than 20,000 megawatt-hours, of cost-competitive energy storage potential to be unlocked by Order 841’s implementation across the capacity, energy and ancillary services markets run by the country’s independent system operators (ISOs) and regional transmission organizations (RTOs).
But behind these grand-scale projections, there are dozens of key details being worked out that will affect how much of that energy storage potential is unlocked, at what pace, and at what cost. Order 841 implementation is now in the hands of the ISOs and RTOs. And while many of its key provisions are set in stone, many more are left up to the grid operators and various stakeholders to work out in ways that best suit their particular needs.
These are the details that are keeping the energy storage industry, as well as state regulators and public and private utilities, finely tuned for each new Order 841 implementation plan, known as a “straw proposal,” to come from the nation's ISOs and RTOs. This month so far has seen a final straw proposal from Midcontinent Independent System Operator (MISO) put before stakeholders, as well as the latest iteration of straw proposal from PJM Interconnection. As the country’s biggest grid operator and as host to hundreds of megawatts of batteries playing into its frequency regulation market, PJM is a focus point for the industry.
These proposals are coming at a relatively rapid pace for a process that took nearly two years to move from a proposal to a final rule. ISOs and RTOs have a deadline of December 3 to file the tariff changes needed to “establish a participation model for electric storage resources that ensures eligibility to participate in its market in a way that recognizes the unique physical and operational characteristics of such resources.” By December of 2019, those rules are set to go into effect.
Order 841 lays out some core concepts that each ISO or RTO must adhere to, as this February briefing (PDF) from the Energy Storage Association, Customized Energy Solutions and Brattle Group lays out. They include:
- Storage is eligible to provide all capacity, energy, and ancillary services that the resource is technically capable of providing
- RTOs/ISOs must account for the physical and operational characteristics of electric storage resources through bidding parameters or other means
- RTO/ISO minimum size requirements do not exceed 100 kilowatts (an opening for distributed storage, a topic for another day)
- Storage can be dispatched and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer
- Storage will pay wholesale locational marginal price (LMP) for charging energy
But for Jason Burwen, vice president of policy for the Energy Storage Association, each of these bullet points is just the start of a series of conversations, or debates, about how best to implement FERC’s broader vision. “Remember, there are 76 directives in Order 841,” he said in an interview last week. And while ISOs and RTOs are engaged in a diligent effort to make progress on each of these fronts,“from month to month, what’s in these presentations has changed,” he said.