The New York Independent System Operator on Dec. 4 released a report in which it outlines a timeline for the integration, development, and deployment of a new NYISO market participation model for energy storage resources, or ESRs, sized 0.1 megawatts and above.
In the new report, The State of Storage: Energy Storage Resources in New York’s Wholesale Electricity Markets, the NYISO examines the technical, regulatory, and market landscape for ESRs and outlines the steps it will take to develop a full market participation model.
The report said that the NYISO is currently engaged in developing a new market design concept that reflects ESR technological advancements and policy development to allow wholesale grid operators and ESR managers to take better advantage of ESR capabilities.
The NYISO currently allows energy storage resources to participate as ELRs, which are resources that can operate up to four hours at a time and can receive capacity payments; limited energy storage resources, that exchange energy with the NYISO market and participate in the regulation market; or in demand response programs. ESRs are eligible for four demand response programs: (1) demand side ancillary service program; (2) special case resources; (3) day-ahead demand response program and (4) emergency demand response program. However, the majority of resources participate in either the demand side ancillary service program or the special case resources program. All of these programs require resources to have a capacity of at least one MW, with aggregation allowed in the demand response programs.
NYISO DER Roadmap issued earlier this year
The report noted that under the participation model contemplated by the NYISO’s DER Roadmap, which was unveiled in early 2017, ESRs 20 MW or less (whether front of the meter or behind the meter) will be allowed to aggregate with other non-ESR distributed energy resources in order to facilitate wholesale market participation; minimum aggregation size for the DER participation model will be 0.1 MW.
Separately, front of the meter ESRs less than one MW will be allowed to aggregate with similar ESRs in order to facilitate wholesale market participation under the ESR participation model; minimum aggregation size will be 0.1 MW.
Report focuses on front of the meter ESRs
The report released by the NYISO on Dec. 4 focuses on front of the meter ESRs with a capability of 0.1 MW or more that want to participate in the NYISO-administered wholesale markets.
The report said that ESRs could offer various services into the NYISO markets.
The NYISO oversees a day-ahead market and a real-time market. The NYISO schedules energy, regulation, and operating reserves in the day-ahead and real-time markets.
The grid operator also administers a seasonal (summer and winter) capacity market. Capacity for each six-month capability period is sold in a six-month strip auction, a monthly auction (all remaining months in the Capability Period), and a spot market auction (prompt month).
The report said the ability of ESRs to shift load as a consumer when load is low and as a supplier when load is peaking, can help grid operators handle peak demand, manage the variability of intermittent resources, and potentially defer transmission upgrades in some instances.
“ESRs could help the NYISO manage daily peak demand in the energy markets by storing excess supply to deploy during greater demand,” the report said.
ESRs can also help the NYISO manage increasing levels of intermittent renewable energy, the grid operator said.
It pointed out that the energy markets have only a limited ability to dispatch intermittent resources and usually schedule the resources based on the projected availability of the resource’s fuel (e.g., sun and wind).
The energy markets may need to curtail output of intermittent resources at times when output from these resources are not economic due to transmission constraints, or when there are potential reliability concerns due to mismatches of supply and demand.
Curtailment of wind resources at the NYISO is accomplished economically – wind plant operators identify price points at which they are willing to reduce output.
“ESRs, like other fully dispatchable resources, can timely respond to economic signals to help manage the variability of intermittent resources. Absent system constraints like congested transmission, storage could ‘firm’ renewable energy by saving excess production or by supplementing injections during underproduction,” the New York grid operator said in the report.
Wind power production typically peaks at night and solar power around midday.
“Storage resources could purchase this energy to sell hours later. ESRs could support greater renewable energy penetration while maintaining grid reliability,” the report said.
It said that existing transmission infrastructure may not be sufficient to deliver new renewable energy from northern and eastern New York to the large load centers of New York City and Long Island because of congested transmission lines. The report includes a graphic that shows how the locations for renewable energy installation and large load centers are separated by transmission constraints.
The report said that ESRs could enable further penetration of renewable resources by storing renewable energy for delivery when the transmission system is not constrained.
Also, as the “edge of the grid becomes more dynamic,” ESRs located downstream of transmission constraints could improve the ability for grid operators to manage congested transmission lines, the NYISO said.
Other possible roles
Meanwhile, the report also detailed other roles that ESRs can play in several other market areas such as reducing peak demand, meeting installed reserve margin requirements, meeting additional regulation and ramping needs resulting from greater levels of renewable resources, or providing operating reserves.
For example, the report said that depending on its characteristics, an ESR could provide reserve services. “Or, when coupled with an ESR, a 30 minute-start natural gas turbine may be able to provide 10-minute reserves; the ESR would provide the short-term output until the turbine finished start-up.”
The Federal Energy Regulatory Commission in November 2016 issued a Notice of Proposed Rulemaking to encourage the removal of barriers to ESRs and DER integration in the wholesale markets. The NYISO said it will develop its market design to be consistent with FERC’s proposed rules.
The grid operator said that unlike other resources that participate in the wholesale markets, ESRs must buy electricity in order to sell electricity and provide market services.
ESRs therefore obtain the greatest value from buying energy in low-cost intervals and reselling it during high-priced intervals.
“The buying and selling of electricity could be done over the larger course of the day through DAM [day-ahead market] participation or over shorter time periods” through real-time market participation, the report said.
Currently, there is no market model in New York that would allow ESRs to change from producers to consumers intra-hour.
“Keeping in the spirit of the FERC NOPR, the NYISO will address this gap in its new ESR participation model,” the report said.
In addition, Some ESRs may be able to inject maximum output for more than one hour, but less than four hours.
Currently, these resources cannot offer energy because they do not meet the minimum ELR requirements. In its new market participation model, the NYISO will remove this barrier, the grid operator said.
FERC also noted in the NOPR that the parameters included with an energy offer are not always applicable to ESRs and recommended parameters to include with a new participation model for ESRs.
ISO says ESRs should be eligible to set prices: NYISO
The NYISO believes that ESRs should be eligible to set energy, capacity, and ancillary service prices.
For setting locational based marginal prices, the NYISO includes all fixed block and dispatchable resources that are willing to follow NYISO commitment and dispatch instructions as eligible to set price.
“Allowing ESRs to set price will encourage wholesale market competition between ESRs and other technologies which results in lower costs for consumers,” the report argued.
Minimum size requirement
The report said that while special case resources have a 0.1 MW minimum requirement, demand side ancillary service program participants, ELRs, and limited energy storage resources have a one MW minimum requirement.
“Storage developers have expressed interest in reducing the minimum offer requirement to less than one MW. The NYISO is devising aggregation concepts that will assist small ESR participation in the wholesale market and continues to review the impact minimum offers of less than one MW has on the dispatch process and commitment evaluation,” the grid operator said.
Dependent on the outcome of the NYISO evaluation, the FERC NOPR and stakeholder feedback, the NYISO said it may reduce the minimum offer level to 0.1 MW.
Three phases of market design work
The report proposes three phases of market design work:
- Phase One: Energy Storage Integration (2017-2020). This phase will identify parameters important to include in an ESR offer and create a new ESR participation model. The NYISO proposes that, rather than submitting separate offers as load and supply, ESRs will be able to submit a single offer that reflects the resources physical constraints. Under this model, ESRs will switch between withdrawing and injecting electricity within the hour based on prices.
- Phase Two: Energy Storage Optimization (2019-2022). This phase will look to more efficiently utilize ESR services taking into account the resource’s energy constraints over the course of a day. In this phase, ESR operators may grant the NYISO permission to use its software to economically schedule the charging and discharging of the ESR to maximize the ESR’s potential instead of submitting day-ahead market or real-time or real-time market offers.
- Phase Three: Renewable and storage aggregation ((2020-2023). This phase will analyze the pairing of ESRs with intermittent resources, to firm the variable resource as a dispatchable unit.
The full report is available here.
The release of the report follows closely on the heels of New York Governor Andrew Cuomo signing into law a bill that requires the state to establish an energy storage deployment goal for 2030.
The governor said energy storage technologies serve a critical role in promoting his agenda to move the Empire state away from fossil fuels and toward renewable energy resources and energy efficiency.
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.
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.