The Federal Energy Regulatory Commission on Dec. 19 accepted in part, and rejected in part, a filing submitted by the New York Independent System Operator to comply with the requirements of rules aimed at removing barriers to the participation of energy storage resources (ESRs) in wholesale power markets operated by regional transmission organizations and independent system operators.
Enacted in February 2018, FERC Order No. 841 addresses the participation of electric storage resources in the wholesale capacity, energy and ancillary service markets to more effectively integrate ESRs, enhance competition and help ensure that those markets produce just and reasonable rates.
The rule requires each regional transmission organization and independent system operator to revise its tariff to establish a participation model consisting of market rules that recognize the physical and operational characteristics of ESR and facilitate their participation in the wholesale markets they operate.
FERC directs changes
The Commission on Dec. 19 issued an order that accepted in part, and rejected in part, NYISO’s Order No. 841 compliance filing, subject to a further compliance filing to be submitted within 60 days of the date of issuance of the order.
The Commission rejected the NYISO’s proposal to revise its Buyer-Side Mitigation rules to apply to all new generation resources below 2 megawatts, including ESRs, which are currently exempt from such mitigation. These tariff changes were found to be beyond the scope of this compliance proceeding because the revision would have applied to all generation and not just storage. The New York Power Authority and Power Supply Long Island, which is part of the Long Island Power Authority, had joined other transmission owners in asking the Commission to reject this provision, and also supported a separate complaint filed in July by the New York Public Service Commission and the New York State Energy Research and Development Authority asking that ESRs be exempt from Buyer-Side Mitigation. The Commission has not yet ruled on that complaint.
FERC determined that NYISO’s filing partially complies with the requirement of Order No. 841 to allow electric storage resources to de-rate capacity to meet minimum run-time requirements by spreading their full capability over four hours to meet the four-hour minimum run-time requirement. But because the NYISO has not provided tariff provisions allowing ESRs to de-rate their capacity to meet minimum run-time requirements, FERC directed NYISO to revise its tariff to provide such a process.
Self-management of state of charge
In addition, FERC determined that NYISO’s proposed tariff revisions partially comply with the requirement of Order No. 841 to permit electric storage resources to self-manage their state of charge in both the day-ahead and real-time markets.
In particular, the Commission said NYISO complies with Order No. 841 regarding self-management of state of charge because NYISO’s proposal provides Energy Storage Resources with the tools to self-manage State of Charge in the day-ahead and real-time markets.
“However, we find that NYISO’s proposal to require Energy Storage Resources that are installed capacity suppliers to use the ISO-managed energy level in their day-ahead market bids does not comply with the requirement in Order No. 841 ‘to allow resources using the participation model for electric storage resources to self-manage their state of charge,’” the order said.
Order No. 841 explains that, where an electric storage resource has the option to allow the RTO/ISO to manage its state of charge, the electric storage resource must be the default manager of the resource’s state of charge.
“Thus, NYISO’s proposal to require an installed capacity supplier to use the ISO-managed energy level in its day-ahead market bids conflicts with the requirement in Order No. 841 to make the electric storage resource the default manager of the resource’s state of charge,” FERC said.
In the event that an Energy Storage Resource deviates from its day-ahead schedule in order to self-manage its state of charge, NYISO’s proposal would require an installed capacity supplier that cannot meet its day-ahead schedule to buy out of that position at the real-time locational-based marginal pricing (LBMP).
FERC said this is consistent with Order No. 841’s statement that “a resource using the participation model for electric storage resources that self-manages its state of charge will be subject to any applicable penalties for deviating from a dispatch schedule to the extent that the resource deviates from the dispatch schedule in managing its state of charge.”
But FERC disagreed with NYISO’s argument that Energy Storage Resources that are installed capacity suppliers must use the ISO-managed energy level because it is not sufficient to rely on financial penalties and simply require Energy Storage Resources to buy out of infeasible day-ahead schedules if the duration limitation is not properly accounted for in the day-ahead market economic evaluation
NYISO must remove the requirement that Energy Storage Resources that are installed capacity suppliers must elect the ISO-managed energy level bidding parameter for each day-ahead market bid and designate the Energy Storage Resource as the default manager of the resource’s state of charge.
Application of transmission charges to storage resources
FERC also found that an NYISO proposal included in its compliance filing does not comply with the requirements of Order No. 841 and the clarifications set forth in Order No. 841-A with respect to the application of transmission charges to electric storage resources.
NYISO argues that, because Energy Storage Resources are negative generation, they are not responsible for transmission service charges associated with energy withdrawals, and thus proposes to exempt from transmission service charges both energy withdrawals used to charge an Energy Storage Resource for later economic dispatch and energy withdrawals by an Energy Storage Resource to provide an ancillary service.
“We disagree with NYISO’s assertion that, because transmission charges assessed to load are calculated at the zonal level while the price of electric storage resource withdrawals is calculated at the nodal level, it cannot assess transmission charges to electric storage resources when they charge,” FERC said.
The Commission said NYISO does not meet relevant requirements because its proposal exempts Energy Storage Resources that are charging for later resale from transmission charges that are applicable to other load.
“We find that NYISO has not shown, as required in Order No. 841-A, that its proposal is reasonable given how NYISO assesses transmission charges to wholesale load under NYISO’s existing rate structure.”
In its new compliance filing, the New York grid operator will need to include tariff revisions that comply with this aspect of Order Nos. 841 and 841-A by applying transmission charges to Energy Storage Resources when that resource is charging for later resale in wholesale markets but is not being dispatched by the RTO/ISO to provide a service and explaining how such charges would be calculated.
Participation in retail markets
FERC also determined that NYISO does not comply with Order No. 841 because its proposed tariff revisions do not allow electric storage resources to use the electric storage resource participation model if they also participate in retail markets.
It disagreed with NYISO that the ability of electric storage resources to participate in both wholesale and retail markets is beyond the scope of Order No. 841.
At the same time, FERC noted that on June 27 (Docket No. ER19-2276-000), NYISO submitted a proposal under Federal Power Act section 205 to allow participation by all resources in its wholesale and retail markets. Those tariff revisions would establish new market rules for aggregations of all generators, including Energy Storage Resources, as well as distributed energy resources that allow participation by all resources in its wholesale and retail markets.
NYISO also requested that the proposal become effective as of May 1, 2020, to ensure that Energy Storage Resources will be able to make use of the provisions once NYISO’s tariff revisions in compliance with Order No. 841 become effective on NYISO’s proposed effective date of May 1, 2020.
Therefore, FERC deferred further action on the Order No. 841 compliance directive to allow participation in wholesale and retail markets until the Commission takes action on the merits of NYISO’s proposal filed in Docket No. ER19-2276-000.
FERC action on other compliance filings submitted by grid operators
FERC on Oct. 17 accepted compliance filings submitted by PJM Interconnection and Southwest Power Pool in response to Order No. 841, marking the first two orders implementing Order No. 841.
FERC found that the two grid operators generally complied with the rule and therefore largely accepted their filings but provided additional directives for further action.
In November, FERC accepted the majority of tariff revisions proposed by the Midcontinent Independent System Operator, the California Independent System Operator and ISO New England in response to Order No. 841.