Power & Pipes

FERC, CFTC, and State Energy Law Developments

Effective April 1, energy storage resources will have more options to participate in ISO New England’s (ISO-NE’s) markets, subject to new rules accommodating storage resources that were approved by the Federal Energy Regulatory Commission (FERC) on February 25. The new market rules reflect a first of their kind in ISO-NE, and are a product of ISO-NE’s work to build on existing rules initially designed for pumped storage hydroelectric resources.

Under the new rules, emerging electric storage technologies can be dispatched in ISO-NE’s real-time energy market “in a manner that more fully recognizes their ability to transition continuously and rapidly between a charging state and a discharging state and provide a means for their simultaneous participation in the energy, reserves, and regulation markets.” A key component of the new framework is a new asset category for storage resources called the “Continuous Storage Facility,” which is a resource that is 5 MW or larger and can switch between maximum output and maximum consumption in 10 minutes or less.​ Continuous Storage Facilities are registered as three asset types: (1) an alternative technology regulation resource; (2) a generation resource; and (3) a demand resource. As ISO-NE made clear, “[t]he three asset types, combined together, represent the single physical asset.” In other words, the new storage rules distinguish between the resource’s physical plant (e.g., the battery) and the three different ways in which that single piece of equipment can be modeled by ISO-NE.

ISO-NE initially proposed these rules in October 2018 as part of a broader effort to enhance storage participation in the markets it administers. ISO-NE explained that the work it completed on these revised rules coincided with FERC’s Order No. 841, which was issued in February 2018. That order required grid operators to revise their tariffs by December 2018 to remove barriers to energy storage resources’ participation in wholesale energy, capacity, and ancillary services markets. At that time, ISO-NE determined that the changes it ultimately submitted to FERC in October 2018 would bring the region “a long way toward compliance with Order No. 841, but that some work would remain.” Thus, ISO-NE supplemented its October 2018 proposal with a separate compliance filing in December 2018 to bring the region in full compliance with Order No. 841. FERC has not yet ruled on the December 2018 filing, which is subject to comments by various intervenors. Indeed, in its latest order approving the ISO-NE’s October 2018 proposal, FERC noted that certain comments raised by the Energy Storage Association and other intervenors would be addressed in a FERC order addressing ISO-NE’s Order No. 841 compliance filing.

Nevertheless, the recently approved ISO-NE market rules concerning battery storage resources (i.e., Continuous Storage Facilities) represents (1) a major step forward for organized markets, and (2) a tremendous opportunity for battery storage developers. To date, ISO-NE has only 19 MW of battery storage resources participating in its markets under prior more restrictive rules. However, ISO-NE has more than 800 MW of battery storage proposals currently in its interconnection queue, and an additional 170 MWs of battery storage proposals in the interconnection queue that are co-located with wind and solar energy projects. As the ISO-NE rules take effect and storage resources continue to remain cost competitive with other generation resources, storage development and participation in the ISO-NE markets are expected to grow.