A Federal Energy Regulatory Commission rule (FERC Order No. 792) released last week allowing energy storage projects to connect with the electric grid will boost the energy storage industry’s presence as a backup power source easing concerns over the intermittent nature of renewable energy, experts say. FERC Order No. 792 expands the scope of the Commission’s Small Generation Interconnection Agreements and Procedures to include energy storage projects, so the projects can receive rates, terms and conditions for interconnection with public utilities that are just and reasonable and not unduly discriminatory. “It’s like a stamp of approval that energy storage has an important grid function,” said John Moore, a senior attorney for the Sustainable FERC Project at the Natural Resources Defense Council. “I think what it says is that consumers and energy storage developers will find it easier to connect to the grid and face fewer questions from utilities about how it would do so.” By establishing interconnection rules for energy storage projects and enabling project operators to receive reasonable rates for their services, Order No. 792 will make energy storage more attractive to potential investors. “It’s strategically important if your goal is to interconnect significant amounts of renewable energy and to encourage distributed generation,” said Julia E. Sullivan, who heads Akin Gump Strauss Hauer & Feld LLP’s energy regulatory practice.
Order No. 792 comes a month after California became the first U.S. state to mandate that utilities procure a targeted amount of energy storage capacity. In October, the California Public Utilities Commission finalized the framework of an energy storage procurement policy that requires the state’s major investor-owned utilities — Pacific Gas & Electric Co., Southern California Edison and San Diego Gas & Electric — to collectively procure 1,325 megawatts of energy storage capacity by 2020, with installations no later than the end of 2024. The decision also sets a target for community choice aggregators and electric service providers to procure energy storage equal to 1 percent of their yearly 2020 peak load by 2020. Order No. 792, experts say, is essentially endorsing California’s procurement requirement and providing confidence to other states to develop their own energy storage mandates.