Energy Storage
Electricity Markets

Grid operators detail energy storage landscape for wholesale markets

While energy storage participation in wholesale electricity markets remains a work in progress, grid operators are taking steps to prepare for further growth of energy storage in those markets, officials with the Electric Reliability Council of Texas and the Midcontinent Independent System Operator said at a recent conference.

Meanwhile, a top executive with public power utility Austin Energy noted that the utility has engaged in a range of storage activities, from thermal storage to a project that will integrate solar power, energy storage, smart inverters, forecasting tools, market signals, advanced communications and a software optimization platform.

The officials made their comments at the U.S. Power & Renewables Summit held by Greentech Media in early November during a panel discussion on energy storage and wholesale markets. The panel focused on, among other things, whether an inflection point had been hit for energy storage participation in wholesale markets. The conference was held in Austin, Texas.

Panelists were Elaina Ball, chief operating officer at Austin Energy, Jessica Harrison, director of research and development at MISO, and Paul Wattles, senior analyst, market design, at ERCOT.

In addressing the question of where things stand with energy storage and wholesale markets today, Wattles said, “it’s a work in progress and we’re kind of in the first half mile of what will probably be a marathon,” noting that ERCOT has some storage participation in its markets.

ERCOT does have “one market product that’s friendly to limited duration resources. That is called fast responding regulation service,” Wattles said. “It’s a subset of our normal regulation market,” he noted. “We have had active participation in that by storage devices over the past couple of years.”

At the same time, the Texas grid operator is continuing to work on new products “with limited success so far, but like I said we’re in the early stages of a marathon.”

MISO has a stored energy resource category that can offer regulation reserves, Harrison said at the conference. “We’ve had that for awhile, but we’ve had limited participation, I would say. We have currently one megawatt of battery storage participating in that,” she said.

“We also have about two gigawatts of pumped hydro,” which participates in MISO markets, Harrison said.

The MISO official said that the grid operator is closing in on a new stored energy resource category that would clear a path for storage to have greater access to the MISO markets.  “We don’t have anything registered for that right now,” she noted.

Meanwhile, in the MISO queue is 140 megawatts of battery storage, which is “significant growth, but if you look at other growth elements, we have about 30 gigawatts of wind and 15 gigawatts of solar, so just to put it into perspective, it’s still a very, very, very small part of MISO. That said, our solar also went from tiny to 15 gigawatts, so we’re wanting to be prepared for that growth and see that as something that’s likely coming,” Harrison said.

Austin Energy’s Ball said that from the perspective of a utility, “to be quite frank, in our marketplace wholesale energy prices have been so low it’s very difficult to make the case for storage on the transmission-interconnected level.”

Ball said that Austin Energy is “mostly focused at the substation level for community solar integration and then certainly commercial and retail level to suss out kind of the layered benefits,” recognizing an energy arbitrage “can’t be the sole basis for the business case at this point.”

So in a low energy price environment, what would be the driving force for energy storage participating in wholesale markets? asked Daniel Finn-Foley, senior analyst for energy storage at GTM Research, and the panel’s moderator.

“There are other economic incentives besides direct participation in the wholesale markets,” said ERCOT’s Wattles. “Demand charge avoidance is a big one.”

Austin Energy involved in solar/storage integration project

At a later point, Ball discussed the utility’s involvement with the Sustainable and Holistic Integration of Energy Storage and Solar PV, or SHINES project, a Department of Energy-funded initiative that involves the integration of solar, distributed energy storage, smart inverters, forecasting tools, market signals, advanced communications and a software optimization platform.

“We think the business case for storage has to have both the benefits to the customer and the utility, the grid and potentially the wholesale market in order to make the business case work under today’s economics,” the Austin Energy official said.

“We are on a path to study” certain stacked benefits, which for the customer could be demand charge reduction or greater control, “those sorts of things, and for the utility we have a desire to enable our customers to deploy more PV, for example. We think storage is a way to continue to grow that and balance the grid needs.”

There may be some asset management benefits as well, she noted. “That’s another piece that we’re looking at. If I can delay putting in another distribution substation transformer for a couple of years, there’s some real value there,” Ball said.

“We really are just beginning this journey to understand those stacked benefits, but we think they’re there,” she added. “We just want to be deliberate and thoughtful in how we deploy our capital around these emerging technologies.”

Austin Energy and thermal storage

Meanwhile, Ball noted that “here in Austin we’ve been investing for more than a decade in chilled water infrastructure.” In downtown Austin, many hotels and businesses, as well as city hall, “are connected to this huge chilling loop,” she said.

“Every night, we have chillers that run off peak and make ice,” Ball noted. “In the afternoons, when things heat up because a lot of our afternoon peak is air conditioning load, we provide chilling capacity to most of the buildings downtown and we shut our chillers off.”

While helping with economic development, as well as offering other benefits, “for us as a utility, we get that demand shift and it certainly is revenue diversity for the utility too.”

She said thermal storage is “a really great win for the community.”

Timeline for further energy storage participation in wholesale markets

Panelists were also asked to discuss their thoughts on the timeline for further energy storage participation in wholesale markets. More specifically, Finn-Foley asked for panelists to weigh in on the timeframe for storage reaching real scale in markets and whether that timeline will be tied to the outcome of a notice of proposed rulemaking issued by the Federal Energy Regulatory Commission.

Wattles pointed out that ERCOT doesn’t fall under the jurisdiction of FERC. “Sometimes our stakeholder process pays attention to FERC, but we don’t have to do what FERC tells us,” he said. “That’s an open book here – I have no idea what impact that’s going to have on ERCOT,” he said.

MISO’s Harrison noted that the grid operator recently established an energy storage task force, which is a stakeholder-led process. “The next meeting is November 28,” she noted. “They are eager to move quickly. We are eager to support them in that and we are eager to use a stakeholder process as opposed to say a mandate in order to create the market design that we think is suitable.”

Harrison said that ideally, “we will go through that process, as opposed to, say, having specifics determined for us – I don’t know how much they would.”

She said that with respect to the FERC NOPR, “if it happens we will comply and if it doesn’t, we’re still going to be moving forward.”

FERC storage and markets NOPR

In November 2016, the commission issued a NOPR that would require regional transmission organizations and independent system operators to revise their wholesale power tariffs to better remove barriers to RTO-run wholesale market participation by energy storage resources such as large battery systems.

The NOPR would also require RTOs and ISOs to allow aggregators of distributed energy resources to participate directly in the organized wholesale electric markets, and similarly remove barriers to DER aggregator participation.

In comments it filed on Feb. 13, the American Public Power Association said it generally supports FERC's efforts to allow storage and distributed energy resources to participate in wholesale markets, but urged the commission to keep its main focus on the end result to electricity consumers, and offered a number of recommendations. The Association was joined in its comments by the National Rural Electric Cooperative Association.

FERC addressed storage in order involving MISO and utility

FERC has also addressed energy storage and markets in specific cases brought before it. In early 2017, it determined that a MISO tariff "unnecessarily restricts" competition by preventing electric storage resources from providing all the services that they are technically capable of providing.

The Commission's Feb. 1 order responded to a complaint filed by Indianapolis Power & Light in October 2016 (Docket No. EL17-8).

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