On June 16, 2011, the Federal Energy Regulatory Commission (FERC) issued a notice of inquiry (NOI) in Docket Nos. RM11-24-000 and AD10-13-000 seeking comment on ways to facilitate the increased market-based provision of ancillary services traditionally supplied by transmission providers that help the bulk power grid to operate more smoothly and reliably from all resource types, especially from new electric storage technologies. FERC has taken a number of actions in recent years to foster the development of wholesale energy markets and to reduce barriers to market entry for clean energy technologies, including efforts to better integrate variable energy resources and new electric storage technologies into the bulk power grid. Based on the responses to a request for comments on various issues relating to new electric storage technologies issued by FERC Staff in June 2010 in Docket No. AD10-13-0000 and a case-by-case analysis of storage proposals, FERC found that the NOI was necessary to determine why robust markets for ancillary services were not developing in all regions of the country.
Current policy requires third-party market-based sellers of ancillary services to prove that they lack market power in a formal study before they are permitted to sell their services at market-based rates to transmission providers. Critics argue that this restriction is an unnecessary barrier to the use of energy storage technologies, which can benefit consumers by providing ancillary services and others services to the grid. As noted in the NOI, third-party providers have expressed concerns about being unable to conduct formal market power studies, while purchasers have worried about the availability of services provided by third-party suppliers.
The NOI also requests comment on whether the accounting and reporting requirements should be revised to help encourage the development of energy storage resources. In an accompanying statement, FERC Chairman Jon Wellinghoff said, “The proliferation of fast response storage grid technologies is important for the integration of renewable resources and the reliable and efficient functioning of the transmission grid and wholesale markets.” The current accounting and reporting requirements do not provide for the accounting of costs related to new energy storage resources and operations, nor do they indicate how to classify storage technologies that can provide a range of services to the grid, including, for example, both generation and transmission. Because of this uncertainty, owners of storage technologies have faced difficulty meeting reporting requirements, and regulators have faced further challenges in determining costs and rates for these resources. (In a November 2010 report regarding the integration of renewable energy resources on the grid the American Physical Society recommended regulatory reforms to address this type of ambiguity and to provide clarity on the treatment of energy storage for grid applications, which the APS claims is key to the efficient use of sources of renewable energy.)
The NOI was published in the Federal Register on June 22, 2011. Comments are due by August 22, 2011.