Energy Storage Gets Biggest Boost in Years. Thank you FERC
By Lisa Cohn
A recent federal ruling is likely to give energy storage its biggest boost in years, and buoy microgrids along the way, by granting storage more access to revenue from competitive wholesale electricity markets.
Issued February 15 by the Federal Energy Regulatory Commission, the rule aims to eliminate barriers that prevent energy storage from taking part in wholesale capacity, energy and ancillary services markets.
This is a critical issue for the storage and microgrid industries, whose members have said that storage should be able to participate on a level playing field with generation and other resources.
Grid-connected microgrids benefit from the new rule because they increasingly use energy storage as a tool to enhance project economics.
In the final decision, FERC required regional transmission organizations (RTO) and independent system operators (ISO) to revise their tariffs and create models that allow energy storage into the market.
Game changer for microgrids too
“The new FERC rules will be a game changer for energy storage in microgrids because they will create more economic options for storage, with less risk involved,” said David Jones, manager at ICF, which provides business consulting. “The guarantee of participating in wholesale electricity markets will provide more certainty and stability compared to the currently available frequency regulation, demand response, and price hedging options for energy storage in grid-connected microgrids.”
The ruling will allow microgrids to pencil out better by letting them pull in revenues from different streams, including wholesale and retail-level streams, said Kelly Speakes-Backman, CEO of the Energy Storage Association (ESA). She noted that wholesale prices ultimately affect retail prices.
For the ESA, the ruling comes after two years of hard work pushing the changes.
“We’re really excited about this,” she said. ”By asking the RTOs and ISOs to look at integrating electric storage into the grid, they are saying, ‘Take a look at the different products storage can offer, and make sure they are incorporated into different opportunities.’”
Path to 35 GW of energy storage
Speakes-Backman added that the FERC ruling will have the biggest impact she’s seen on storage in many years. “It opens the market for so much more storage to come online.”
An ESA vision statement said that if regulatory barriers were removed, allowing storage to participate in wholesale and retail markets, the industry could aim for a goal of 35 GW of storage online by 2025, she said. As of 2017, the U.S. had only 0.5 GW of energy storage.
“This decision had to happen in order to reach that goal,” Speakes-Backman said.