FERC Opens the Door for Energy Storage Participation in Wholesale Markets

On February 15, 2018, the Federal Energy Regulatory Commission (FERC) unanimously approved Order 841, which is designed to remove barriers for the participation of energy storage resources in wholesale markets.

Key Details

  • Existing regulatory structures do not always address assets that either fall between, or span, operational categories. As a result, classifying resources under current wholesale constructs has been problematic for energy storage adoption
  • FERC Order 841 is intended to remove such barriers by requiring RTOs and ISOs to establish “market rules that recognize the physical and operational characteristics” of energy storage and accommodate their participation in organized wholesale electric markets
  • The rule allows energy storage to participate in energy, capacity, and ancillary services markets across all RTOs and ISOs
  • The rule also sets a limit on a minimum participation size of 100kW, potentially opening the doors to greater numbers of resources
  • The original Notice of Proposed Rulemaking (NOPR) was released in November of 2016, but approval had been delayed, in part, because of a lack of quorum at FERC
  • The original NOPR also included provisions requiring RTOs and ISOs to develop rules for the aggregation of distributed energy resources (DERs); however, this was removed from the final rule
    • Instead, FERC has scheduled a technical conference on April 10-11, 2018 to further explore DER aggregation

Implications

Greatly expanding the access of energy storage resources to wholesale markets will open doors to participation where opportunities are limited or are not cost effective today. With the potential opening of all wholesale markets to energy storage, we will likely see increased participation and expanded growth in energy storage due to greater certainty around wholesale market revenues and the ability to stack value streams.

The timeline presented by FERC effectively gives RTOs/ISOs until the latter part of 2018 to develop new market participation models designed to allow storage to fully participate in capacity, energy, and ancillary services markets. They will then have a year to implement those participation rules, likely significantly growing the wholesale storage market in the United States by 2020.

More Information

Utility Dive: FERC Issues Storage, Reliability Orders, Calls Conference on Aggregated DERs

SNL: FERC Acts to Help Energy Storage Resources Participate in Markets

GTM: FERC Allows Energy Storage to Play in Nationwide Wholesale Markets

This report is part of the Clean Tech & Sustainability Minute series. To view all featured Minutes, please click here.

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Contributing Authors

Kevin Hernandez Director
Josh Kmiec Manager

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