Revisions aim to build on framework designed originally for pumped-storage hydro facilities and bring region closer to Order No. 841 compliance.
Earlier this year, the Federal Energy Regulatory Commission (FERC or Commission) issued Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators (Order No. 841), a final rule amending FERC’s regulations to facilitate participation of electric storage resources in the capacity, energy, and ancillary service markets operated by regional transmission organizations (RTOs) and independent system operators (ISOs). As we reported previously, Order No. 841 requires RTOs and ISOs to devise an electric storage resource participation model that meets certain general criteria. The RTOs/ISOs must file the tariff revisions directed by Order No. 841 by December 3, 2018, and implement those changes, if approved, by December 3, 2019.
Although the Order No. 841 filing deadline is about a month away, several RTOs/ISOs have already released previews of the market reforms they intend to propose to FERC. For example, Midcontinent Independent System Operator, Inc. (MISO) presented iterations of its planned participation model to stakeholders between June and October. PJM Interconnection, L.L.C. (PJM) also presented an Order No. 841 compliance straw proposal to its Market Implementation Committee in early October. Around that same time, ISO New England, Inc. (ISO-NE) went one step further and submitted the first part of its two-part plan to comply with Order No. 841 in a set of proposed tariff revisions that were filed with FERC (October 10 Filing). ISO-NE’s proposal is discussed in more detail below.
ISO-NE is among the grid operators that has been steadily introducing reforms over the years to improve market access for energy storage. For example, ISO-NE introduced a new dispatch signal in 2015 that permitted storage resources to participate in the Regulation Market. In 2017, the ISO offered new bidding parameters to improve economic dispatch opportunities for pumped-storage resources. Now, building on existing rules that were designed with pumped-storage in mind, the October 10 Filing proposes tariff revisions to implement market changes to accommodate newer categories of storage technologies with different operating characteristics. Already well under development by the time FERC issued Order No. 841, the proposed revisions would allow those storage resources to participate simultaneously in the energy, reserves, and regulation markets. While it conceded that additional changes will need to be submitted by the December 3 filing deadline, ISO-NE believes the proposal in the October 10 Filing will “bring the region a long way toward compliance with Order No. 841.”
As explained in the October 10 Filing, pumped-storage units in ISO-NE are modeled as two distinct asset types: a dispatchable Generator Asset, which submits offers to supply energy, and a Dispatchable Asset Related Demand (DARD), which submits bids to consume energy. Those two designations can apply to the same physical generating unit, and are used by the unit to register for and participate in ISO-NE markets. Unlike pumped-storage units that must fully stop their turbines and reverse direction to switch from charging (i.e., as a DARD) to discharging (i.e., as a Generator Asset), the storage resources on the ISO-NE interconnection queue are capable of moving “continuously and nearly instantaneously” between charging and discharging states. Thus, ISO-NE explained that the reforms proposed in the October 10 Filing are intended to build on the existing framework for pumped-storage resources to accommodate the physical differences of the newer storage technologies represented on the queue. In this regard, the October 10 Filing differentiates between pumped-storage and other electric storage resources with the introduction of the terms “Binary Storage Facility” and “Continuous Storage Facility”; the physical characteristics of Binary Storage Facilities (i.e., pumped-storage facilities) allow them to be either on line to charge or on line to discharge, but not both simultaneously, whereas Continuous Storage Facilities can continuously transition between charging and discharging.
Continuous Storage Facility Rules
The bulk of the proposed changes are centered around the following concepts:
- Commitment: Recognizing the physical characteristics of newer storage technologies to quickly toggle between charging and discharging states, the October 10 Filing proposes to allow Continuous Storage Facilities to bypass the energy market commitment process. This would allow ISO-NE to dispatch a Continuous Storage Facility from a discharging state to a charging state more rapidly, within a single dispatch interval
- Offering and Clearing: While ISO-NE is not proposing to change its rules for energy market offers or energy market clearing, it explained in the October 10 Filing that Generator Assets and DARDs may submit day-ahead offer parameters that allow the facility to manage risk of clearing more MWhs day-ahead than its storage capacity would allow it to deliver in real time
- Regulation: By modeling Continuous Storage Facilities as Alternative Technology Regulation Resources, the October 10 Filing proposes to permit batteries to provide regulation through their negative and positive MW ranges while simultaneously consuming or supplying energy and providing reserves as a Generator Asset or DARD
- Telemetry: The revisions would allow ISO-NE to telemeter Continuous Storage Facilities to the ISO their available energy and available storage so that ISO-NE can maintain awareness of the supply and consumption capabilities at a Continuous Storage Facility. ISO-NE explained that this mechanism is similar to the way in which pumped-storage facilities currently telemeter to the ISO their pond elevation, available generation, and available pumping capacity
- Reserves, Sustainability, and Operating Limit Adjustment: In order to accommodate storage facility limitations and comply with regional reliability requirements, ISO-NE proposes to: (i) adjust the maximum available output that is offered by the Continuous Storage Facility’s Generator Asset into the energy market when the facility has less than one hour of available energy remaining; and (ii) adjust the operating limits of a Continuous Storage Facility’s DARD if it could not sustain a dispatch to consume at its maximum offered consumption for 15 minutes
- Self-Dispatch: Under the ISO-NE Tariff, a market participant has time-limited opportunities to request a self-dispatch if it is not satisfied with the offer or bid it submitted for the following hour, or it is not satisfied with the offer or bid it submitted for the current hour, and it does not wish to wait for the offer or bid to take effect. ISO-NE did not introduce substantive changes to this scheme, but explained that a Continuous Storage Facility’s Generator Asset or DARD will be able to take advantage of the Tariff’s self-dispatch provisions
- Settlement: The October 10 Filing proposes to extend the existing market settlement framework to Continuous Storage Facilities. This will allow a Continuous Storage Facility’s Generator Asset and DARD to be eligible for Net Commitment Period Compensation (NCPC) credits, which compensate resources that are dispatched out-of-rate so they are “no worse off” financially
ISO-NE requested that FERC approve the changes by December 10, with an effective date of April 1, 2019. That means, if approved, the changes introduced by the October 10 Filing could bring ISO-NE into partial compliance with Order No. 841 well before the December 3, 2019, compliance deadline.