Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators, 86522-86550 [2016-28194]
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Table of Contents
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 35
[Docket Nos. RM16–23–000; AD16–20–000]
Electric Storage Participation in
Markets Operated by Regional
Transmission Organizations and
Independent System Operators
Federal Energy Regulatory
Commission, Department of Energy.
ACTION: Notice of proposed rulemaking.
AGENCY:
The Federal Energy
Regulatory Commission (Commission) is
proposing to amend its regulations
under the Federal Power Act (FPA) to
remove barriers to the participation of
electric storage resources and
distributed energy resource aggregations
in the capacity, energy, and ancillary
service markets operated by regional
transmission organizations (RTO) and
independent system operators (ISO)
(organized wholesale electric markets).
DATES: Comments are due January 30,
2017.
SUMMARY:
Comments, identified by
docket number, may be filed in the
following ways:
• Electronic Filing through http://
www.ferc.gov. Documents created
electronically using word processing
software should be filed in native
applications or print-to-PDF format and
not in a scanned format.
• Mail/Hand Delivery: Those unable
to file electronically may mail or handdeliver comments to: Federal Energy
Regulatory Commission, Secretary of the
Commission, 888 First Street NE.,
Washington, DC 20426.
Instructions: For detailed instructions
on submitting comments and additional
information on this process, see the
Comment Procedures Section of this
document.
ADDRESSES:
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FOR FURTHER INFORMATION CONTACT:
Michael Herbert (Technical
Information), Office of Energy Policy
and Innovation, Federal Energy
Regulatory Commission, 888 First
Street NE., Washington, DC 20426,
(202) 502–8929, michael.herbert@
ferc.gov.
Heidi Nielsen (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street NE., Washington, DC
20426, (202) 502–8435, heidi.nielsen@
ferc.gov.
SUPPLEMENTARY INFORMATION:
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I. Introduction
II. Background
A. Electric Storage Resource and
Distributed Energy Resource Aggregation
Participation in Organized Wholesale
Electric Markets
B. The Need for Reform
III. Discussion
A. Elimination of Barriers to Electric
Storage Resource Participation in
Organized Wholesale Electric Markets
1. Creation of a Participation Model for
Electric Storage Resources
i. Introduction
ii. Current Rules
iii. Comments
iv. Proposed Reforms
2. Requirements for the Participation
Model for Electric Storage Resources
a. Eligibility To Participate in Organized
Wholesale Electric Markets
i. Introduction
ii. Current Rules
iii. Comments
iv. Proposed Reforms
b. Bidding Parameters for Electric Storage
Resources
i. Introduction
ii. Current Rules
iii. Comments
iv. Proposed Reforms
c. Eligibility To Participate as a Wholesale
Seller and Wholesale Buyer
i. Introduction
ii. Current Rules
iii. Proposed Reforms
d. Minimum Size Requirement
i. Introduction
ii. Current Rules
iii. Comments
iv. Proposed Reforms
e. Energy Used To Charge Electric Storage
Resources
i. Introduction
ii. Current Rules
iii. Comments
iv. Proposed Reforms
B. Participation of Distributed Energy
Resource Aggregators in the Organized
Wholesale Electric Markets
1. Introduction
2. Current Rules
3. Comments
4. Proposed Reforms
a. Eligibility To Participate in the
Organized Wholesale Electric Markets
Through a Distributed Energy Resource
Aggregator
b. Locational Requirements for Distributed
Energy Resource Aggregations
c. Distribution Factors and Bidding
Parameters for Distributed Energy
Resource Aggregations
d. Information and Data Requirements for
Distributed Energy Resource
Aggregations
e. Modifications to the List of Resources in
a Distributed Energy Resource
Aggregation
f. Metering and Telemetry System
Requirements for Distributed Energy
Resource Aggregations
g. Coordination Between the RTO/ISO, the
Distributed Energy Resource Aggregator,
and the Distribution Utility
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h. Market Participation Agreements for
Distributed Energy Resource Aggregators
IV. Compliance
V. Information Collection Statement
VI. Regulatory Flexibility Act Certification
VII. Environmental Analysis
VIII. Comment Procedures
IX. Document Availability
I. Introduction
1. In this Notice of Proposed
Rulemaking (NOPR), the Federal Energy
Regulatory Commission (Commission) is
proposing reforms to remove barriers to
the participation of electric storage
resources 1 and distributed energy
resource 2 aggregations in the organized
wholesale electric markets.3
Specifically, we propose to require each
RTO and ISO to revise its tariff to (1)
establish a participation model
consisting of market rules that,
recognizing the physical and
operational characteristics of electric
storage resources, accommodates their
participation in the organized wholesale
electric markets and (2) define
distributed energy resource aggregators
as a type of market participant that can
participate in the organized wholesale
electric markets under the participation
model that best accommodates the
physical and operational characteristics
of its distributed energy resource
aggregation. We are taking this action
pursuant to our legal authority under
section 206 of the FPA to ensure that the
RTO/ISO tariffs are just and reasonable
and not unduly discriminatory or
preferential.4
2. Resource participation in the
organized wholesale electric markets is
currently governed by (1) participation
models 5 consisting of market rules
designed for different types of resources
and (2) the technical requirements for
1 We define an electric storage resource as a
resource capable of receiving electric energy from
the grid and storing it for later injection of
electricity back to the grid regardless of where the
resource is located on the electrical system. These
resources include all types of electric storage
technologies, regardless of their size, storage
medium (e.g., batteries, flywheels, compressed air,
pumped-hydro, etc.), or whether located on the
interstate grid or on a distribution system.
2 We define distributed energy resources as a
source or sink of power that is located on the
distribution system, any subsystem thereof, or
behind a customer meter. These resources may
include, but are not limited to, electric storage
resources, distributed generation, thermal storage,
and electric vehicles and their supply equipment.
3 We define, for present purposes, organized
wholesale electric markets as the capacity, energy,
and ancillary service markets operated by regional
transmission organizations (RTO) and independent
system operators (ISO).
4 16 U.S.C. 824e (2012).
5 We define a participation model as a set of tariff
provisions that accommodate the participation of
resources with particular physical and operational
characteristics in the organized wholesale electric
markets of the RTOs and ISOs.
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market services that those resources are
eligible to provide. Each RTO/ISO
establishes the participation models for
different types of resources and the
technical requirements for providing
services in a slightly different way.
Sometimes RTO/ISO participation
models place limitations on the services
that certain types of resources are
eligible to provide. For example, Stored
Energy Resources are only allowed to
provide regulation service in the
Midcontinent Independent System
Operator, Inc. (MISO). In addition,
sometimes the technical requirements
for providing a service may limit the
types of resources that are able to
provide it, such as the requirement for
a resource to be running and
synchronized to the grid to provide
spinning reserves. Many tariffs were
originally developed in an era when
traditional generation resources were
the only resources participating in the
organized wholesale electric markets.
As new and innovative resources have
reached commercial maturity, RTOs/
ISOs have updated their tariffs to
establish participation models for these
resources and, to some degree, reviewed
the technical requirements for each
service or determined which service the
new resource could provide. If an RTO/
ISO is not able to update its market
rules before a new resource becomes
commercially able to sell into the
organized wholesale electric markets,
the new resource may need to
participate under one of the existing
participation models developed for
some other type of resource. Doing so
may limit the market opportunities for
new resources and correspondingly
limit the potential supply of some
services. For instance, some electric
storage resources have chosen to
participate as demand response
resources simply because, absent other
participation models, that is the
participation model that more closely
resembles the manner in which electric
storage resources might participate in
the organized wholesale electric
markets. Further, new resources may
have difficulty creating momentum for
the market rule changes necessary to
facilitate their participation and may
thus need to spend considerable time
and effort to gain entry to the organized
wholesale electric markets. Where rules
designed for traditional generation
resources are applied to new
technologies, where new technologies
are required to fit into existing
participation models, and where
participation models focus on the
eligibility of resources to provide
services more so than the technical
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ability of resources to provide services,
barriers can emerge to the participation
of new technologies in the organized
wholesale electric markets. We are
therefore issuing this NOPR to address
these barriers to the participation of
electric storage resources and
distributed energy resource aggregations
in the organized wholesale electric
markets.
3. First, we propose to require each
RTO/ISO to revise its tariff to establish
a participation model consisting of
market rules that, recognizing the
physical and operational characteristics
of electric storage resources,
accommodates their participation in the
organized wholesale electric markets.
As noted above, in this NOPR, we
define a participation model as a set of
tariff provisions that accommodate the
participation of resources with
particular physical and operational
characteristics in the organized
wholesale electric markets of the RTOs
and ISOs.6 For example, the California
Independent System Operator
Corporation’s (CAISO) tariff defines
several participation models, including
those for Participating Generators, Proxy
Demand Resources, Reliability Demand
Response Resources, and Non-Generator
Resources. These participation models
create unique rules for these different
types of resources where they need to be
distinguished from other types of
market participants. For example, the
CAISO Tariff defines Non-Generator
Resources as ‘‘[r]esources that operate as
either Generation or Load and that can
be dispatched to any operating level
within their entire capacity range but
are also constrained by a MWh limit to
(1) generate Energy, (2) curtail the
consumption of Energy in the case of
demand response, or (3) consume
Energy.’’ 7 Since Non-Generator
Resources are operationally unique,
CAISO has created rules for them that
include, but are not limited to, the
requirement to enter into participating
generator and participating load
agreements to participate in the CAISO
markets,8 the ability to participate in the
Regulation Energy Management
program,9 the conditions under which
payments are rescinded due to MWh
constraints,10 and the relevant bidding
6 See
supra note 5.
Response at 3 (citing CAISO Tariff, App.
7 CAISO
A).
8 See
CAISO Tariff, sections 4.6 and 4.7.
CAISO Tariff, section 8.4.1.2. Regulation
Energy Management is a market feature for
resources located within the CAISO Balancing
Authority Area that require Energy from the RealTime Market to offer their full capacity as
Regulation. CAISO Tariff, App. A (Definitions).
10 See CAISO Tariff, sections 8.10.8.4 and
8.10.8.6.
9 See
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parameters.11 Given the unique
attributes of electric storage resources,
establishing a participation model
consisting of market rules that
acknowledge their unique attributes will
enable them to effectively participate in
the organized wholesale electric
markets. This participation model could
adapt existing market rules to
incorporate the reforms proposed below
and/or create a new set of rules to
accommodate the participation of
electric storage resources, depending on
the existing market construct in each
RTO/ISO.
4. The proposed participation model
must (1) ensure that electric storage
resources are eligible to provide all
capacity, energy and ancillary services
that they are technically capable of
providing in the organized wholesale
electric markets; (2) incorporate bidding
parameters 12 that reflect and account
for the physical and operational
characteristics of electric storage
resources; (3) ensure that electric storage
resources can be dispatched and can set
the wholesale market clearing price as
both a wholesale seller and wholesale
buyer consistent with existing market
rules that govern when a resource can
set the wholesale price; (4) establish a
minimum size requirement for
participation in the organized wholesale
electric markets that does not exceed
100 kW; and (5) specify that the sale of
energy from the organized wholesale
electric markets to an electric storage
resource that the resource then resells
back to those markets must be at the
wholesale locational marginal price
(LMP).
5. Second, we propose to require each
RTO/ISO to revise its tariff to allow
distributed energy resource
aggregators,13 including electric storage
resources, to participate directly in the
organized wholesale electric markets.
Specifically, we propose to require each
RTO/ISO to establish distributed energy
resource aggregators as a type of market
participant and allow the distributed
energy resource aggregators to register
distributed energy resource aggregations
under the participation model in the
11 See
CAISO Tariff, section 30.5.6.
refer to bidding parameters as the physical
and operational constraints that a resource would
identify per RTO/ISO requirements when
submitting offers to sell capacity, energy, or
ancillary services or bids to buy energy in the
organized wholesale electric markets. Commission
Staff referred to these as ‘‘bid parameters’’ in the
Data Requests and Request for Comments issued on
April 11, 2016 in Docket No. AD16–20–000.
13 We define distributed energy resource
aggregator as an entity that aggregates one or more
distributed energy resources for purposes of
participation in the organized wholesale capacity,
energy, and ancillary service markets of the RTOs
and ISOs.
12 We
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RTO/ISO tariff that best accommodates
the physical and operational
characteristics of the distributed energy
resource aggregation. We also propose to
require that each RTO/ISO, to
accommodate the participation of
distributed energy resource aggregations
in the organized wholesale electric
markets, establish market rules on: (1)
Eligibility to participate in the organized
wholesale electric markets through a
distributed energy resource aggregator;
(2) locational requirements for
distributed energy resource
aggregations; (3) distribution factors and
bidding parameters for distributed
energy resource aggregations; (4)
information and data requirements for
distributed energy resource
aggregations; (5) modifications to the list
of resources in a distributed energy
resource aggregation; (6) metering and
telemetry system requirements for
distributed energy resource
aggregations; (7) coordination between
the RTO/ISO, distributed energy
resource aggregator, and the distribution
utility; and (8) market participation
agreements for distributed energy
resource aggregators.
II. Background
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A. Electric Storage Resource and
Distributed Energy Resource
Aggregation Participation in Organized
Wholesale Electric Markets
6. The Commission has an ongoing
interest in removing barriers to
resources that are technically capable of
participating in the organized wholesale
electric markets and has been
monitoring electric storage resource
participation in these markets for some
time. In 2010, Commission Staff issued
a Request for Comments Regarding
Rates, Accounting and Financial
Reporting for New Electric Storage
Technologies related to alternatives for
categorizing and compensating storage
services and, in particular, ideas on how
best to develop rate policies that
accommodate the flexibility of storage,
consistent with the FPA.14 Following
that request, the Commission issued
several rulemakings that have helped
alleviate some of the barriers to electric
storage resource participation in
organized wholesale electric markets.15
14 Request for Comments Regarding Rates,
Accounting and Financial Reporting for New
Electric Storage Technologies, Docket No. AD10–
13–000 (June 11, 2010).
15 See, e.g., Frequency Regulation Compensation
in the Organized Wholesale Power Markets, Order
No. 755, FERC Stats. & Regs. ¶ 31,324 (2011), reh’g
denied, Order No. 755–A, 138 FERC ¶ 61,123 (2012)
(addressing the provision of frequency regulation in
organized wholesale electric markets); Third-Party
Provision of Ancillary Services; Accounting and
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In addition, the Commission has
addressed electric storage-related issues
on a case-by-case basis.16
7. As the capabilities of electric
storage resources and distributed energy
resources continue to improve and their
costs continue to decline, the
Commission has become concerned that
these resources may face barriers that
limit them from participating in
organized wholesale electric markets.
To further examine this issue, the
Commission hosted a panel to discuss
electric storage resources at the
November 19, 2015 Commission
meeting. Subsequently, on April 11,
2016, Commission Staff issued data
requests to each of the six RTOs/ISOs,
seeking information about the rules in
the organized wholesale electric markets
that affect the participation of electric
storage resources (Data Requests).17
Concurrently, Commission Staff issued
a Request for Comments, seeking
comments on whether barriers exist to
the participation of electric storage
resources in the organized wholesale
electric markets that may potentially
lead to unjust and unreasonable
wholesale rates (Request for Comments).
In addition to the responses from the
RTOs/ISOs, Commission Staff received
Financial Reporting for New Electric Storage
Technologies, Order No. 784, FERC Stats. & Regs.
¶ 31,349 (2013), order on clarification, Order No.
784–A, 146 FERC ¶ 61,114 (2014) (addressing thirdparty sales of ancillary services in bilateral
markets); Small Generator Interconnection
Agreements and Procedures, Order No. 792, 145
FERC ¶ 61,159 (2013), clarifying, Order No. 792–A,
146 FERC ¶ 61,214 (2014) (addressing
interconnection for small generators, including
electric storage resources).
16 See, e.g., California Indep. Sys. Operator Corp.,
156 FERC ¶ 61,110 (2016); Nev. Hydro Co., Inc., 122
FERC ¶ 61,272 (2008), reh’g denied, 133 FERC
¶ 61,155 (2010); Western Grid Development, LLC,
130 FERC ¶ 61,056, reh’g denied, 133 FERC
¶ 61,029 (2010); Midwest Indep. Trans. Sys.
Operator, Inc., 129 FERC ¶ 61,303 (2009); New York
Indep. Sys. Operator, Inc., 127 FERC ¶ 61,135
(2009); California Indep. Sys. Operator Corp., 132
FERC ¶ 61,211 (2010); PJM Interconnection L.L.C.,
151 FERC ¶ 61,208, order on reh’g, 152 FERC
¶ 61,064 (2015), order on reh’g and compliance, 155
FERC ¶ 61,157, order on reh’g and compliance, 155
FERC ¶ 61,260 (2016); PJM Interconnection, L.L.C.,
132 FERC ¶ 61,203 (2010); Commonwealth Edison
Co., 129 FERC ¶ 61,185, at P 8 (2009).
17 Specifically, Commission Staff requested
information related to (1) the eligibility of electric
storage resources to participate in the capacity,
energy, and ancillary service markets in the RTOs/
ISOs; (2) the technical qualification and
performance requirements for market participants;
(3) the bidding parameters for different types of
resources; (4) opportunities for distribution-level
and aggregated electric storage resources to
participate in the organized wholesale electric
markets; (5) the treatment of electric storage
resources when they are receiving electricity for
later injection to the grid; and (6) any forthcoming
rule changes or other stakeholder initiatives that
may affect the participation of electric storage
resources in the organized wholesale electric
markets.
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44 sets of comments from the entities
identified in Appendix A.
8. A number of RTOs/ISOs allow
participation of distributed energy
resources, including electric storage
resources, in the organized wholesale
electric markets through distributed
energy resource aggregations. For
example, CAISO’s Distributed Energy
Resource Provider model allows for the
participation of aggregated distributed
energy resources in the energy and
ancillary service markets.18 Other
RTOs/ISOs, including PJM
Interconnection, L.L.C. (PJM), MISO,
New York Independent System
Operator, Inc.’s (NYISO), and SPP,
allow aggregation in limited
circumstances, typically linked to the
requirement that the demand-side,
generation, and electric storage
resources are located behind the same
point of interconnection or pricing
node.19 ISO New England Inc. (ISO–NE)
also allows limited aggregations of
generators, Alternative Technology
Regulation Resources, Asset Related
Demands, and demand resources subject
to certain parameters.20
B. The Need for Reform
9. The Commission must ensure that
the rates, terms and conditions of
jurisdictional services under the FPA
are just and reasonable and not unduly
discriminatory or preferential. Our
proposal in this proceeding is a
continuation of efforts pursuant to our
authority under the FPA to ensure that
the RTO/ISO tariffs and market rules
produce just and reasonable rates, terms
and conditions of service.21 The
Commission has observed that market
rules designed for traditional generation
resources can create barriers to entry for
emerging technologies. The Commission
has responded by promulgating rules
that recognize the operational
characteristics of non-traditional
resources such as variable energy
18 See California Indep. Sys. Operator Corp., 155
FERC ¶ 61,229 (2016) (conditionally accepting tariff
provisions to facilitate participation of aggregations
of distribution-connected or distributed energy
resources in CAISO’s energy and ancillary service
markets).
19 See PJM Response at 20; MISO Response at 16;
SPP Response at 7.
20 ISO–NE Response at 26.
21 See, e.g., Integration of Variable Energy
Resources, Order No. 764, FERC Stats. & Regs.
¶ 31,331, order on reh’g, Order No. 764–A, 141
FERC ¶ 61,232 (2012), order on reh’g, Order No.
764–B, 144 FERC ¶ 61,222 (2013); Wholesale
Competition in Regions with Organized Electric
Markets, Order No. 719, FERC Stats. & Regs.
¶ 31,281 (2008), order on reh’g, Order No. 719–A,
FERC Stats. & Regs. ¶ 31,292 (2009), order on reh’g,
Order No. 719–B, 129 FERC ¶ 61,252 (2009).
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resources and demand response.22 For
example, in Order No. 719, the
Commission required each RTO/ISO to
accept bids from demand response
resources, on a basis comparable to any
other resources, for ancillary services
that are acquired in a competitive
bidding process, if the demand response
resources met certain criteria.23 In Order
No. 764, the Commission took action to
remedy operational and other
challenges associated with the
integration of variable energy resources
caused by existing practices as well as
the ancillary services used to manage
system variability that were developed
at a time when virtually all generation
on the system could be scheduled with
relative precision and when only load
exhibited significant degrees of intrahour variation.24
10. In this proceeding, we propose to
require RTOs/ISOs to address barriers to
participation of electric storage
resources in the organized wholesale
electric markets. As noted above, in this
NOPR, we define an electric storage
resource as a resource capable of
receiving electric energy from the grid
and storing it for later injection of
electricity back to the grid regardless of
where the resource is located on the
electrical system.25 These resources
include all types of electric storage
technologies, regardless of their size,
storage medium (e.g., batteries,
flywheels, compressed air, pumpedhydro, etc.), or whether located on the
interstate grid or on a distribution
system.26 Electric storage resources
include a number of different
technologies that can serve as a sink for,
or source of, electricity. Electric storage
resources’ ability to charge and
discharge electricity provides these
resources with significant operational
flexibility, and they can be designed to
provide a variety of grid services,
including bulk energy services (e.g.,
capacity and energy) and ancillary
services (e.g., regulation and reserves).27
11. The RTOs/ISOs have taken
different approaches to integrating
electric storage resources into their
organized wholesale electric markets.
While electric storage resources
(including batteries, flywheels, and
22 See, e.g., Order No. 764, FERC Stats. & Regs.
¶ 31,331; Order No. 719, FERC Stats. & Regs.
¶ 31,281.
23 Order No. 719, FERC Stats. & Regs. ¶ 31,281 at
PP 19, 47–48.
24 Order No. 764, FERC Stats. & Regs. ¶ 31,331.
25 See supra note 1.
26 Id.
27 Sandia National Laboratories, DOE/EPRI
Electricity Storage Handbook in Collaboration with
NRECA, Report No. SAND2015–1002, Chapter 1
(Feb. 2015) (Sandia Report).
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pumped-hydro facilities) are already
providing energy and ancillary services
in some organized wholesale electric
markets, these resources often must use
existing participation models designed
for traditional generation or load
resources that do not recognize electric
storage resources’ unique physical and
operational characteristics. Some
organized wholesale electric markets
have defined participation models in
their tariffs for electric storage
resources, but those models limit the
services that electric storage resources
may provide.28 For example, these
models often allow eligible electric
storage resources to participate only in
the regulation market. Other organized
wholesale electric market rules are
designed for electric storage resources
with very specific characteristics, such
as pumped-hydro facilities or resources
with less than a one-hour maximum run
time. Smaller electric storage resources
are also generally restricted to
participating in the organized wholesale
electric markets as demand response,
which can limit their ability to employ
their full operational range, prohibit
them from injecting power onto the grid,
and preclude them from providing
certain services that they are capable of
providing such as operating reserves.
12. We take action in this NOPR so
that electric storage resources will be
able to participate in the organized
wholesale electric markets to the extent
they are technically capable of doing so
based on rules that take into account
their unique characteristics and not
based on market rules designed for the
unique characteristics of other types of
resources. Requiring electric storage
resources to use participation models
designed for a different type of resource
may fail to recognize electric storage
resources’ physical and operational
characteristics and their capability to
provide energy, capacity and ancillary
services in the organized wholesale
28 See, e.g., Midwest Indep. Trans. Sys. Operator,
Inc., 129 FERC ¶ 61,303 at PP 40, 64 (Commission
‘‘note[d] that the Midwest ISO [SER] proposal is
intended to implement a specific technology, the
fly-wheel technology developed by Beacon Power’’;
and SER category was ‘‘specifically designed for a
specific technology that provides short-term Stored
Resources only in the regulating reserve market’’);
MISO FERC Electric Tariff, section 1.S (Stored
Energy Resources); NYISO Services Tariff, section
2.12 (defining Limited Energy Storage Resource as
a ‘‘Generator authorized to offer Regulation Service
only and characterized by limited Energy storage,
that is, the inability to sustain continuous operation
at maximum Energy withdrawal or maximum
Energy injection for a minimum period of one
hour.’’). NYISO limits Limited Energy Storage
Resources to providing regulation service only and
Demand Side Resources and Generators that can
sustain operation for longer than one hour are not
eligible to be Limited Energy Storage Resources.
NYISO Response at 3–4.
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electric markets. Current tariffs that do
not recognize the operational
characteristics of electric storage
resources serve to limit the participation
of electric storage resources in the
organized wholesale electric markets
and result in inefficient use of these
resources (i.e., electric storage resources
may be dispatched to provide one
service when they could, absent market
rule limitations, provide another service
more economically). As a result,
resources, including electric storage
resources, do not get dispatched
efficiently, thereby impacting the
competitiveness of the market
outcomes. Limiting the services an
electric storage resource is eligible to
provide and limiting the efficiency in
which it is dispatched to provide
services may also inhibit developers’
incentives to design their electric
storage resources to provide all capacity,
energy and ancillary services these
resources could otherwise provide. This
further reduces competition for
providing those services in the
organized wholesale electric markets.
Effective integration of electric storage
resources into the organized wholesale
electric markets would enhance
competition and, in turn, help to ensure
that these markets produce just and
reasonable rates.
13. We are also concerned that
existing RTO/ISO tariffs impede the
participation of distributed energy
resources in the organized wholesale
electric markets by providing limited
opportunities for distributed energy
resource aggregations. Distributed
energy resources include a variety of
constantly evolving technologies
(including, but not limited to, electric
storage resources, distributed
generation, thermal storage, and electric
vehicles and their supply equipment)
that are connected to the power grid at
distribution-level voltages. While these
distributed energy resources can at
times effectively supply the capacity,
energy, and ancillary services that are
exchanged in the organized wholesale
electric markets, they can at times be too
small to participate in these markets
individually. In addition, responses to
the Data Requests and Request for
Comments demonstrate that current
organized wholesale electric market
rules often limit the services distributed
energy resources are eligible to provide,
in many cases only allowing these
resources to be used as demand
response or load-side resources when
they are located behind a customer
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meter 29 or by imposing prohibitively
expensive or otherwise burdensome
requirements.30
14. As with electric storage resources,
we preliminarily find that the barriers to
the participation of distributed energy
resources through distributed energy
resource aggregations in the organized
wholesale electric markets may, in some
cases, unnecessarily restrict
competition, which could lead to unjust
and unreasonable rates. Effective
wholesale competition encourages entry
and exit and promotes innovation,
incentivizes the efficient operation of
resources, and allocates risk
appropriately between consumers and
producers. Removing these barriers will
enhance the competitiveness, and in
turn the efficiency, of organized
wholesale electric markets and thereby
help to ensure just and reasonable and
not unduly discriminatory or
preferential rates for wholesale electric
services. We also note that participation
of electric storage resources in the
organized wholesale electric markets
allows for more efficient operation of
large thermal generators, enhances
reliability, provides congestion relief,
improves integration of variable energy
resources, and reduces the burden on
the transmission system.31
29 See, e.g., MISO Response at 15 (noting that
electric storage resources connected to the
distribution system can participate in its markets as
Load Modifying Resources and Demand Response
Resources—Types I or II); PJM Response at 3–6
(stating that, if an electric storage resource is
located behind a customer meter, then PJM
considers it demand response, which is not studied
for deliverability and is not eligible to inject energy
into the distribution or PJM transmission system
and noting that any injection would subject it to
generator interconnection obligations).
30 See Energy Storage Association Comments at
29 (stating that metering and telemetry
requirements and interconnection processes can
pose prohibitively high transaction costs for the
small project sizes that characterize behind-themeter storage, which creates undue burdens on
behind-the-meter storage participation in most
RTOs/ISOs and noting that the ability to bid
aggregated distributed resources into wholesale
markets is not possible in some RTOs/ISOs and is
unclear in others (such as NYISO, which does not
allow aggregations to meet the 1 MW size for a
Limited Energy Storage Resource)). Energy Storage
Association also asserts that at present most RTOs/
ISOs do not allow behind-the-meter storage to net
inject power to provide wholesale generator
services. Id. See also NextEra Comments at 11
(stating that every RTO/ISO prohibits behind-themeter resources from having net injections to the
grid).
31 Among the benefits cited by a recent report by
the Lawrence Berkeley National Laboratory are (1)
a less costly, cleaner, and more competitive bulk
power system and (2) greater reliability through
consumer reliance upon distributed energy
resources to provide resilience from bulk power and
system and distribution service interruptions.
Lawrence Berkeley National Laboratory, Electric
Industry Structure and Regulatory Responses in a
High Distributed Energy Resources Future, at 26–28
(Report 1, Nov. 2015), https://emp.lbl.gov/sites/all/
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15. Distributed energy resource
aggregations are often limited to
participating in organized wholesale
electric markets as demand response,
which can limit the aggregations’ design
and operations, as well as the services
they may provide. However,
advancements in metering, telemetry,
and communication technologies
support the aggregation of distributed
energy resources, allowing these
resources to meet the minimum size
requirements to participate in the
organized wholesale electric markets
under participation models other than
demand response. Additionally,
demand response models often prohibit
distributed energy resources from
injecting power back onto the grid or
increasing consumption if there is an
operational requirement for such
performance.32 By requiring RTOs/ISOs
to allow the participation of distributed
energy resource aggregations,
aggregators will be able to bundle
distributed energy resources to meet
RTO/ISO qualification and performance
requirements, and the RTOs/ISOs will
be able to capitalize on the aggregation’s
full operational range. The recent
proliferation of, and technological
advancements in, distributed energy
technologies, as well as their decreasing
costs, create opportunities for
distributed energy resource aggregations
to be eligible to provide a variety of
services to the organized wholesale
electric markets.33
files/lbnl-1003823_0.pdf (Berkeley Lab Report). See
also DNV–GL, A Review of Distributed Energy
Resources: New York Independent System
Operator, at 18 (Sept. 2014) (DNV–GL Report),
http://www.nyiso.com/public/webdocs/media_
room/publications_presentations/Other_Reports/
Other_Reports/A_Review_of_Distributed_Energy_
Resources_September_2014 (‘‘Benefit streams
commonly attributed to distributed energy
resources include, among others: Avoided
expansion of generation, transmission, or
distribution facilities, power outage mitigation or
critical power support during power outages
(resiliency) and power quality improvement
(enhanced reliability); U.S. Department of Energy,
The Potential Benefits of Distributed Generation
and Rate-related Issues that May Impede Their
Expansion: A Study Pursuant to Section1817 of the
Energy Policy Act of 2005 (Feb. 2007), https://
www.ferc.gov/legal/fed-sta/exp-study.pdf.; IEA, Repowering Markets: Market design and regulation
during the transition to low-carbon power systems,
at 33 (2016) (‘‘active management of renewable
resources connected to distribution networks can
help reduce or delay distribution network
investments’’).
32 See PJM Response at 5 (stating that, like other
types of resources that participate in PJM’s markets
only by providing load reductions, demand-side
electric storage resources are not studied by PJM
through the generation interconnection process and
are not allowed to inject energy beyond the
customer’s meter and onto the distribution or
transmission system, as applicable).
33 The Berkeley Lab Report notes that
technological and procedural innovation and
advancements are leading to substantial reduction
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16. Accordingly, we propose to
require the RTOs/ISOs to revise their
tariffs to: (1) Establish a participation
model consisting of market rules that,
recognizing the physical and
operational characteristics of electric
storage resources, accommodates their
participation in the organized wholesale
electric markets and (2) define
distributed energy resource aggregators
as a type of market participant that can
participate in the organized wholesale
electric markets under the participation
model that best accommodates the
physical and operational characteristics
of its distributed energy resource
aggregation. These proposed
requirements will clarify how electric
storage resources and distributed energy
resources of all types and sizes may
provide services in the organized
wholesale electric markets that they are
technically capable of providing.
III. Discussion
A. Elimination of Barriers to Electric
Storage Resource Participation in
Organized Wholesale Electric Markets
1. Creation of a Participation Model for
Electric Storage Resources
i. Introduction
17. Resource participation in
organized wholesale electric markets is
currently governed by (1) participation
models consisting of market rules
designed for different types of resources
and (2) the technical requirements for
market services that those resources are
eligible to provide. As noted above, in
this NOPR, we define a participation
model as a set of tariff provisions that
accommodate the participation of
resources with particular physical and
operational characteristics in the
organized wholesale electric markets of
the RTOs and ISOs.34 While these
participation models are designed to
in the cost of some of these resources, such as
through a continued long-term downward trend in
the installed cost of solar PV. Berkeley Lab Report
at 50, App. A. It adds that there is a wide range of
forecasts of the potential for distributed energy
resources over the coming decades, some of which
suggest that penetrations could be significant.
Estimated increases range from a current 11 percent
distributed energy resource penetration rate to 19
percent of required capacity (MW) in the Eastern
Interconnection under a base case analysis by 2030;
and a projection of a 37.5 percent penetration in the
Western Interconnection by 2032. Id. at 51 (citing
Western Electricity Coordinating Council, SPSC
Study High EE/DR/DG (Sept. 19, 2013), https://
www.wecc.biz/_layouts/15/
WopiFrame.aspx?sourcedoc=/Reliability/2032_
HighEEDSMDG_
StudyReport.docx&action=default&DefaultItem
Open=1; Navigant Consulting, Inc., Assessment of
Demand-Side Resources Within the Eastern
Interconnection, March 2013, http://bit.ly/
EISPCdsr).
34 See supra note 5.
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accommodate the unique characteristics
of different resources, new technologies
may be required to fit into existing
participation models when market rules
for their unique characteristics have not
been developed. Moreover, even where
participation models for new
technologies, such as electric storage
resources, do exist, they may
unnecessarily limit a resource’s ability
to qualify for the participation model or
to provide certain services using it,
despite the technical capabilities of the
resource.
18. The Commission previously has
allowed flexibility for each RTO/ISO to
approach the integration of electric
storage resources in its organized
wholesale electric markets differently.
RTOs/ISOs developed most of their
participation models before electric
storage resources achieved their current
technical capability and commercial
viability, so some markets rely on these
existing models for the participation of
electric storage resources. For example,
ISO–NE indicates that, for an electric
storage resource to be eligible to provide
all wholesale services, it must register as
a Generator Asset,35 which is a
participation model designed for
traditional generation and which may
not reflect the distinct operational
characteristics or capabilities of electric
storage resources. Alternatively, some
RTOs/ISOs have created participation
models for electric storage resources
that limit the participation of those
resources to the regulation market or are
designed for electric storage resources
with very specific characteristics, such
as pumped-hydro facilities or resources
with less than a one-hour maximum run
time.36 However, other RTOs/ISOs have
created participation models for electric
storage resources to provide a wider
variety of services in the organized
wholesale electric markets (such as
PJM’s Energy Storage Resource model 37
and CAISO’s Non-Generator Resource
model 38). Establishing a robust
participation model for electric storage
resources will help remove barriers to
the participation of electric storage
resources in the organized wholesale
electric markets and ensure that electric
35 ISO–NE
Response at 3–5.
Response at 2 (stating that MISO’s Stored
Energy Resource model is limited to regulation
service); and NYISO Response at 3–4 (stating that
NYISO limits Limited Energy Storage Resources to
providing regulation service only).
37 An Energy Storage Resource is defined as a
‘‘flywheel or battery storage facility solely used for
short term storage and injection of energy at a later
time to participate in the PJM energy and/or
Ancillary Services markets as a Market Seller.’’ PJM
Response at 6 (citing PJM Tariff, Att. K, section
1.3.).
38 See supra note 7.
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storage resources can provide the
services that they are technically
capable of providing.
ii. Current Rules
19. In their responses to the Data
Requests, the RTOs/ISOs describe
opportunities for electric storage
resources to provide various energy and
ancillary service market services. For
example, in CAISO, electric storage
resources are eligible to participate in
the energy and ancillary service markets
as Participating Generators, NonGenerator Resources, Pumped Storage
Hydro Units, or Demand Response
Resources, even as part of distributed
energy resource aggregations.39 Under
ISO–NE’s market rules, electric storage
resources can provide all services when
they qualify as a generator, provide all
services except 10-minute spinning and
10-minute non-spinning reserves when
they qualify as demand response, and
provide regulation as an Alternative
Technology Regulation Resource.40
20. In MISO, electric storage resources
are eligible to participate as a Stored
Energy Resource (which is only eligible
to provide regulation), a Generation
Resource, a Use-Limited Resource that
is unable to operate continuously on a
daily basis, and several types of demand
response resources (some of which are
limited in the products that they are
eligible to provide).41 NYISO allows
electric storage resources to qualify as
Energy Limited Resources, Limited
Energy Storage Resources (which are
eligible to provide regulation service
only), or demand response resources.42
PJM allows electric storage resources to
participate as generation resources or
demand-side resources (which are not
eligible to provide non-synchronized
reserves).43 Finally, SPP allows electric
storage resources to qualify as Demand
Response Resources, Dispatchable
Resources, External Resources, External
Dynamic Resources, and Quick-Start
Resources, if they can sustain output for
60 minutes.44
21. Some RTOs/ISOs concede that
their existing participation models may
fail to address the characteristics of
certain electric storage resources.45
CAISO urges the Commission to
preserve some flexibility for the RTOs/
ISOs to develop market rules and
39 CAISO Response at 2–8. See California Indep.
Sys. Operator Corp., 155 FERC ¶ 61,229.
40 ISO–NE Response at 3–5.
41 MISO Response at 7–8.
42 NYISO Response at 1–6.
43 PJM Response at 4.
44 SPP Response at 3–4.
45 MISO Response at 3; NYISO Response at 17.
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participation models that respond to
electric storage developments.46
iii. Comments
22. Numerous commenters argue that
the lack of a participation model that
accommodates the participation of
electric storage resources creates
barriers to their participation in
organized wholesale electric markets.
For example, Alevo asserts that the lack
of a defined asset class for electric
storage resources poses a barrier to their
participation, limiting market efficiency
and competition and increasing costs.47
Advanced Energy Economy claims that
the failure to account for the unique
attributes, characteristics, and benefits
of advanced energy technologies
prevents projects from obtaining
financing.48 More specifically, Energy
Storage Association asserts that NYISO’s
Behind-the-Meter Net Generator design
still effectively excludes participation of
electric storage resources because it
does not account for electric storage
functionality.49
23. Many commenters request that the
Commission require the RTOs/ISOs to
establish a participation model for
electric storage resources that allows
them to provide all services.50 Alevo
argues that such a participation model
should not limit duration of discharge
or services provided,51 while NY
Battery and Energy Storage Consortium
states that it should utilize appropriate
bidding parameters and resource
modeling for electric storage
resources.52 California Energy Storage
Alliance asks the Commission to direct
the RTOs/ISOs to develop a market
model specific to behind-the-meter
electric storage resources, which would
allow them to respond to market signals
to provide any wholesale market service
(e.g., frequency regulation, demand
response, spinning reserve) without
restrictions, with its market
participation governed by minimum
performance requirements.53 Electric
Vehicle R&D Group supports the
creation of a separate participation
model for electric storage resources that
46 CAISO
Response at 1–2.
Comments at 4, 7–17 (pointing to its
analyses of the benefits that electric storage
resource participation could provide to energy,
capacity, and ancillary service markets).
48 Advanced Energy Economy Comments at 7.
49 Energy Storage Association Comments at 29–
30.
50 Id. at 8–9, 24; NY Battery and Energy Storage
Consortium Comments at 5; Ormat Comments at 2–
3; Electric Vehicle R&D Group Comments at 3.
51 Alevo Comments at 8.
52 NY Battery and Energy Storage Consortium
Comments at 5.
53 California Energy Storage Alliance Comments
at 4–5.
47 Alevo
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allows for bidirectional power flow.54
Duke Energy also encourages
modifications to market rules to
facilitate electric storage resource
deployment, subject to reliability
requirements and non-preferential
treatment.55
Other commenters explain how the
existing participation models for
demand response resources, under
which electric storage resources
sometimes participate in the organized
wholesale electric markets, do not
adequately accommodate electric
storage resource participation.
Advanced Microgrid Solutions asserts
that the compensation methods under
demand response resource participation
models should not be applied to electric
storage resources because, unlike the
demand reductions that demand
response resources provide, the energy
that electric storage resources deliver is
purchased in the form of energy
consumed during another time such that
any net-benefit test is unnecessary.56
Energy Storage Association, SolarCity,
and California Energy Storage Alliance
contend that the baselines used to
measure demand response resource
deliveries present a barrier to electric
storage resource participation under
demand response participation models
and can limit the ability of behind-themeter electric storage resources to
provide their full capability into
wholesale markets.57 SolarCity further
argues that requiring behind-the-meter
electric storage resources to participate
as demand response creates a barrier for
these resources, as they are physically
and economically capable of providing
electricity beyond the customer’s load.58
Tesla contends that customer-sited
resources (such as electric storage
resources) are interactive grid resources
that are often relegated to act as less
flexible demand response resources
when participating in organized
wholesale electric markets.59 Energy
Storage Association argues that
wholesale demand response constructs
can prohibit behind-the-meter electric
storage resources from offering other
services.60
24. Many commenters also state that
behind-the-meter electric storage
resources should be permitted to inject
power beyond the retail meter. Energy
Storage Association and NextEra argue
54 Electric
Vehicle R&D Group Comments at 3.
Energy Comments at 4.
56 Advanced Microgrid Solutions Comments at 5.
57 Energy Storage Association Comments at 28;
SolarCity Comments at 8; California Energy Storage
Alliance Comments at 4.
58 SolarCity Comments at 4.
59 Tesla Comments at 4.
60 Energy Storage Association Comments at 28.
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that no RTO/ISO allows behind-themeter storage to net inject power to
provide wholesale generator services.61
Similarly, Advanced Energy Economy
and Solar Grid Storage argue that PJM’s
restriction on the injection of energy
past a customer’s retail meter during
operations for providing ancillary
services in their markets is a barrier to
storage.62 Solar Grid Storage argues that
PJM’s ‘‘no injection’’ barrier effectively
excludes all residential customers with
storage from participation in the PJM
ancillary service markets, despite the
growing potential of this customer
segment to provide meaningful
resources to that organized market.63
25. Some commenters call for the
creation of a ‘‘load increase’’
participation model for electric storage
resources that allows electric storage
resources to be dispatched to receive
electricity from the grid. For example,
National Hydropower Association states
that pumped-storage projects are not
adequately valued because they are
regarded as either a generator or a load,
which results in the undervaluation of
these projects and no new major plants
being built in the last 30 years.64
National Hydropower Association asks
the Commission to consider adding
pumped-storage as a dispatchable ‘‘load
increase’’ demand response resource.65
iv. Proposed Reforms
26. As numerous commenters state,
existing RTO/ISO rules that govern
participation of electric storage
resources in some organized wholesale
electric markets fail to ensure that
electric storage resources that are
technically capable of providing specific
services are permitted to do so.
Providing a participation model that
recognizes the unique characteristics of
electric storage resources will help
eliminate barriers to their participation
in the organized wholesale electric
markets and promote competition and
economic efficiency. We therefore
propose to require each RTO/ISO to
revise its tariff to include a participation
model consisting of market rules that,
recognizing the physical and
operational characteristics of electric
storage resources, accommodates their
61 Id. at 29; NextEra Comments at 11. NextEra
explains that a net injection is when the output of
an electric storage resource exceeds the customer’s
load that it is sited with and the electric storage
resource exports power back to the grid.
62 Advanced Energy Economy Comments at 16–
17; Solar Grid Storage Comments at 2.
63 Solar Grid Storage Comments at 3.
64 National Hydropower Association Comments at
5–6.
65 Id. at 6.
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participation in organized wholesale
electric markets.
27. As the costs of electric storage
resources continue to decline and their
technical potential expands, the ability
of these resources to provide operational
and economic benefits to the organized
wholesale electric markets will increase.
We preliminarily find that it is
important to remove barriers to
participation now so that the
competitive benefits are realized
without delay.
28. We thus preliminarily find that it
is necessary to take action to remove
barriers to the participation of electric
storage resources in organized
wholesale electric markets by requiring
that the RTOs/ISOs revise their tariffs to
establish a participation model
consisting of market rules that,
recognizing the physical and
operational characteristics of electric
storage resources, accommodates their
participation in the organized wholesale
electric markets. In addition, to
accommodate the physical and
operational characteristics of electric
storage resources, we propose to require
that this participation model satisfy
each of the following requirements (as
discussed in detail in Section III.A.2 of
this NOPR):
a. Electric storage resources must be
eligible to provide all capacity, energy and
ancillary services that they are technically
capable of providing in the organized
wholesale electric markets;
b. The bidding parameters incorporated in
the participation model must reflect and
account for the physical and operational
characteristics of electric storage resources;
c. Electric storage resources can be
dispatched and can set the wholesale market
clearing price as both a wholesale seller and
a wholesale buyer consistent with existing
rules that govern when a resource can set the
wholesale price;
d. The minimum size requirement for
electric storage resources to participate in the
organized wholesale electric markets must
not exceed 100 kW; and
e. The sale of energy from the organized
wholesale electric markets to an electric
storage resource that the resource then resells
back to those markets must be at the
wholesale LMP.
29. To further ensure that the
proposed participation model for
electric storage resources will
accommodate both existing and future
electric storage resource technologies,
we propose that each RTO/ISO define
the criteria in its tariff that a resource
must meet to qualify to use this
participation model based on the
physical and operational attributes of
electric storage resources, namely their
ability to both charge and discharge
energy. As such, the qualification
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criteria for the proposed participation
model must not limit participation to
any particular type of electric storage
resource or other technology. In
addition, those qualification criteria
should ensure that the RTO/ISO is able
to dispatch the resource in a way that
recognizes its physical constraints and
optimizes its benefits to the RTO/ISO.
We do not at this time propose to define
the qualification criteria that each RTO/
ISO use but rather propose to provide
the RTOs/ISOs with flexibility to
propose qualification criteria that best
suit their proposed participation
models. However, we invite comment
on whether the Commission should
establish the qualification criteria and, if
so, what specific qualification criteria
the Commission should require.
30. We are not proposing to limit the
use of this participation model
exclusively to electric storage resources
as defined herein. While the
requirements for the proposed
participation model set forth here are
designed to accommodate the physical
and operational characteristics of
electric storage resources, we
acknowledge that there may be other
types of resources whose physical or
operational characteristics could qualify
under the proposed participation model.
This may be particularly true for the
distributed energy resource aggregations
considered in Section III.B below.66
31. In addition to including a
participation model for electric storage
resources in its tariff, we propose that
each RTO/ISO propose any necessary
additions or modifications to its existing
tariff provisions to specify: (1) Whether
resources that qualify to use the
participation model for electric storage
resources will participate in the
organized wholesale electric markets
through existing or new market
participation agreements; and (2)
whether particular existing market rules
apply to resources participating under
the electric storage resource
participation model. CAISO, for
example, has adopted numerous tariff
revisions for its Non-Generator Resource
participation model.67
66 For example, resources such as thermal storage
that can both increase and decrease their energy
consumption could aggregate with other distributed
energy resources with common physical or
operational characteristics and qualify as a market
participant using the participation model proposed
here.
67 See, e.g., CAISO Tariff, sections 4.6
(Relationship Between CAISO and supply
resources), 4.7 (Relationship between CAISO and
participating loads), 8.4.1.2 (availability of
Regulation Energy Management to Scheduling
Coordinators for Non-Generator Resources), 8.10.8.4
(Rescission of Ancillary Service Capacity Payments
for Non-Generator Resources), 8.10.8.6 (Rescission
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32. Finally, we recognize that there
are implementation costs for creating a
new participation model for electric
storage resources. While we believe the
participation model and its
characteristics described below will
benefit the participation of electric
storage resources in the organized
wholesale electric markets, we
acknowledge that the RTOs/ISOs will
need to develop rules that govern the
participation model as well as make
software changes to reflect how these
resources will be modeled and
dispatched when they participate in the
markets. We therefore seek comment
from the RTOs/ISOs on the changes that
would be required to implement the
proposed participation model for
electric storage resources as well as the
associated costs and how those costs
could be minimized.
2. Requirements for the Participation
Model for Electric Storage Resources
a. Eligibility To Participate in Organized
Wholesale Electric Markets
i. Introduction
33. Electric storage resources have the
potential to provide a diverse array of
services to the organized wholesale
electric markets and to be designed to
meet various technical requirements.
However, in many cases, the existing
participation models that electric
storage resources are eligible to use in
the RTOs/ISOs preclude electric storage
resources from providing all of the
services that they are technically
capable of providing. In other instances,
barriers may emerge as a result of the
existing technical requirements for
providing certain services that may not
be appropriate for fast and controllable
technologies such as electric storage
resources. Market rules that were
designed for traditional generation
technologies or that otherwise prevent
new technologies from providing
services that they are technically
capable of providing can have
detrimental impacts on the
of Payments for Regulation Up and Regulation
Down Capacity), 11.8 (Bid cost recovery for
scheduling coordinators for Non-Generator
Resources), 27.9 (MWh Constraints for NonGenerator Resources), 30.5.6 (bid components of
Non-Generator Resource bids), 31.2 (Day-ahead
market power mitigation process), 34.1.5
(Mitigating of Bids in the real time market),
40.10.3.2 Flexible Capacity Category—Base
Ramping Resources (addressing inclusion of NonGenerator Resources), 40.10.3.3 Flexible Capacity
Category—Peak Ramping Resources (addressing
inclusion of Non-Generator Resources), 40.10.3.4
Flexible Capacity Category—Super-Peak Ramping
Resources (addressing inclusion of Non-Generator
Resources), 40.10.6.1 (Day-Ahead and Real-Time
Availability providing for certain Non-Generator
Resources bidding requirements).
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competitiveness of the organized
wholesale electric markets.
ii. Current Rules
34. Several of the RTOs/ISOs identify
limitations on the services that electric
storage resources may provide,
depending on the participation model
an electric storage resource elects to use.
ISO–NE states that the nondispatchability of Settlement Only
Resources and non-dispatchable
generators prohibits such resources from
providing operating reserves. In
addition, resources that cannot provide
energy within 10 minutes cannot
provide 10-minute spinning or 10minute non-spinning reserves.68 ISO–
NE also states that demand response
resources with one or more controllable
generators, including storage resources,
are not eligible to provide 10-minute
spinning reserve. In ISO–NE, electric
storage resources can only provide
regulation as an Alternative Technology
Regulation Resource.69
35. MISO states that a Stored Energy
Resource is not qualified for capacity,
energy, ramp capability and
contingency reserves.70 MISO states that
Demand Response Resource—Type I is
not eligible for regulating reserve and
ramp capability products and that
Dispatchable Intermittent Resources are
a subset of Generation Resources that
are not eligible to provide regulating
reserves and contingency reserves.
MISO states that the Load Modifying
Resource category is designed to
provide energy in emergency conditions
and is only intended for the provision
of capacity. MISO also states that
Emergency Demand Response can only
provide emergency energy, on a
voluntary basis.
36. NYISO states that Limited Energy
Storage Resources are limited to selling
only regulation service in the ancillary
service market.71 NYISO further states
that Emergency Demand Response
Program resources are only eligible to
provide energy, Special Case Resources
are only eligible to provide energy and
capacity, and Demand Side Ancillary
Services Program Resources are only
eligible to provide ancillary services.
PJM states that demand response
resources, including electric storage
resources, are ineligible to provide nonsynchronized reserves because demand
response resources are already
synchronized to the grid when
consuming power, and so would always
68 ISO–NE
Response at 11.
at 3–5.
70 MISO Response at 7–8.
71 NYISO Response at 6–7.
69 Id.
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be classified as sync reserves when
curtailing.72
iii. Comments
37. Many commenters point to
organized wholesale electric markets
where electric storage resources cannot
participate, or cannot participate fully,
because market rules are either designed
for traditional generation or they place
unnecessary limitations on electric
storage resources. Both Advanced
Energy Economy and NextEra argue that
a resource’s eligibility to provide a
particular service should be based on
whether it has the technical attributes
necessary to provide that service rather
than on its participation model.73 EEI
argues that RTOs/ISOs may need to
modify their tariffs to account for
electric storage resources because many
existing market rules went into place
prior to the relatively recent advances in
electric storage technology.74 Likewise,
Alevo contends that applying market
rules to electric storage resources that
were designed for transmission,
generation, and demand assets unfairly
disadvantages electric storage
resources.75 SolarCity claims that
market rules that prevent the
participation of electric storage
resources in multiple markets,
particularly for ancillary services,
discriminate against behind-the-meter
electric storage resources that can
provide multiple services concurrently
by preventing them from stacking
multiple value streams.76 SolarCity
suggests that the provision of one
wholesale market product should not
preclude provision of other wholesale
market products when resources are
technically capable of providing
multiple services.
38. Some commenters note concerns
with the eligibility of electric storage
resources to provide services in specific
markets. According to AES Companies,
Indianapolis Power & Light Company’s
Harding Street Battery Energy Storage
System, a fully-developed grid-scale
battery, cannot participate in MISO’s
markets because of the limitations
placed on the services Stored Energy
Resources are eligible to provide and the
way they are dispatched.77 AES
Companies further note that MISO’s
Stored Energy Resource definition
specifically disallows capacity
accreditation, even though some electric
72 PJM
Response at 4.
Energy Economy Comments at 10–
11; NextEra Comments at 5.
74 EEI Comments at 4.
75 Alevo Comments at 8.
76 SolarCity Comments at 5.
77 AES Companies Comments at 9–10 (citing
MISO Response at 3).
73 Advanced
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storage resources have sufficient
discharge duration to provide capacity
and ancillary services.78 Similarly,
Minnesota Energy Storage Alliance
contends that none of the participation
models that allow electric storage
resources to participate in MISO’s
capacity, energy, and ancillary service
markets facilitate participation of
battery storage technologies and, in
some cases, they limit the products an
electric storage resource can provide.79
In contrast, Manitoba Hydro, which
operates hydroelectric facilities with
reservoir storage that participate in the
MISO market as Use-Limited Resources,
states that MISO’s current market rules
are not barriers to electric storage
resource participation.80
39. NY Battery and Energy Storage
Consortium asserts that NYISO’s market
rules prevent electric storage resources
from fully participating in NYISO’s
markets, noting that electric storage
resources with less than 60 minutes of
output duration can only participate as
Limited Energy Storage Resources and
can only provide regulation.81 NY
Transmission Owners also argue that
NYISO’s rules do not reflect the ability
of certain electric storage resources to
provide their maximum output for
regulation service over a multi-hour
period and do not allow them to
participate in the energy and ancillary
service markets.82
40. According to Energy Storage
Association, resources that participate
under CAISO’s Proxy Demand Response
participation model are prohibited from
providing frequency regulation, even
though they may be technically capable
of doing so.83 Finally, NextEra notes
that ISO–NE, NYISO, and MISO
prohibit an electric storage resource
offering regulation from offering any
other service, even though a longerduration electric storage resource could
provide regulation from a portion of its
capacity while providing other reserve
services or energy from the remainder of
its capacity.84
41. Other commenters focus on
technical requirements that limit the
78 Id.
at 2, 14.
Energy Storage Alliance Comments
at 2, 4. For example, Minnesota Energy Storage
Alliance contends that MISO’s Demand Response
Resource—Type I classification is inappropriate for
advanced electric storage resources because it is
designed for resources that respond as a single
block, on or off, and cannot provide regulating
reserve and ramping products.
80 Manitoba Hydro Comments at 4.
81 NY Battery and Energy Storage Consortium
Comments at 5.
82 NY Transmission Owners Comments at 3.
83 Energy Storage Association Comments at 28.
84 NextEra Comments at 5 (citing MISO Response
at 7; ISO NE Response at 3; NYISO Response at 7).
ability of electric storage resource to
provide certain services. NRECA states
that minimum technical requirements
should not create undue barriers to
resources capable of performing a
service.85 Similarly, APPA states that
RTOs/ISOs should establish reasonable
qualification criteria on a resourcespecific basis.86 NY Battery and Energy
Storage Consortium argues that
distributed electric storage resources,
both grid-connected and customer-sited,
face barriers to market participation due
to eligibility rules and qualification/
performance requirements that should
be eliminated.87
42. Some commenters focus on the
technical requirements in the regulation
markets. Viridity explains that, while
the rapid ramp rates of electric storage
resources allow them to provide
regulation service, their discharge is of
limited duration, so RTOs/ISOs should
utilize these resources for short
periods.88 According to Viridity,
requiring such resources to provide
regulation service over longer periods is
inconsistent with the nature of
frequency response and is detrimental
to the life span and effectiveness of
these resources. NextEra contends that,
despite implementation of Order No.
755 (which removed certain barriers to
the ability of fast-acting resources to
provide frequency regulation service),
MISO and SPP continue to rely on the
slow ramping automatic generation
control signal developed for traditional
generation resources for regulation
service.89 NextEra notes that advanced
electric storage technologies can
respond faster than these slower
regulation signals allow. NextEra points
out that, in contrast, NYISO matches the
dispatch of regulation resources to the
specific ramping capabilities of each
resource.90
43. Other commenters contend that
reliability standards may preclude
electric storage resources from
providing certain ancillary services.
Specifically, Energy Storage Association
states that NYISO suggested that the
Northeast Power Coordinating Council’s
(NPCC) qualification criteria may
prohibit grid-connected electric storage
79 Minnesota
PO 00000
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85 NRECA
Comments at 6–7.
Comments at 10–11.
87 NY Battery and Energy Storage Consortium
Comments at 6.
88 Viridity Comments at 3–4.
89 NextEra Comments at 9 (citing https://
www.misoenergy.org/Library/Repository/
Communication%20Material/
Market%20Enhancements/Market%20Roadmap/
Market%20Roadmap%20Priorities.pdf) (noting that
MISO is pursuing an automatic generation control
enhancement that would implement a faster signal
similar to those used by other RTOs/ISOs).
90 Id. at 9.
86 APPA
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resources from providing synchronized
reserves because inverter-based
resources like electric storage cannot
comply with the required settings
inherent to synchronous generators.91
Similarly, ISO–NE states that demand
response resources are precluded from
providing 10-minute spinning reserve
per the ISO–NE tariff definition, which
is based on the NPCC requirement that
loads cannot provide synchronized
reserve if the reduction in load is
dependent on starting a generator.92
44. National Electrical Manufacturers
Association argues that, in ancillary
service markets, spinning reserves are
limited to online, synchronized
spinning generation resources.
According to National Electrical
Manufacturers Association, electric
storage systems capable of providing
fast-reacting, synchronized electricity
should be allowed to compete fully to
provide spinning reserves.93 Wellhead
asks the Commission to require changes
to NERC definitions so that nonsynchronous resources are not
categorically excluded from providing
reserves. Wellhead notes that, under the
NERC definition of ‘‘Spinning
Reserves,’’ the phrase ‘‘unloaded
generation that is synchronized’’ does
not clearly allow electric storage
resources to participate as spinning
reserves. Wellhead also notes that
NERC’s definition of ‘‘Operating
Reserves—Spinning’’ also does not
clearly allow for market participation of
electric storage resources because they
are not generation synchronized to the
system.94
45. Commenters also note that the
requirement in some RTOs and ISOs to
have an energy schedule to provide
ancillary services is a barrier to electric
storage resource participation in
ancillary service markets. Commenting
on MISO’s market rules, Energy Storage
Association argues that electric storage
resources should not have to offer
energy to participate in certain ancillary
service markets because, unlike
traditional generators, electric storage
resources are able to ramp immediately
to provide spinning reserve and
ramping service without having to
provide energy to do so.95 Energy
Storage Association explains that
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91 Energy
Storage Association Comments at 14,
27.
92 ISO–NE
Response at 11.
Electrical Manufacturers Association
Comments at 3.
94 Wellhead Comments at 3–4.
95 Energy Storage Association Comments at 13–14
(citing MISO Response at 11, n.9 (referring to
Business Practice Manual sections that describe
requirements for these products, which state
‘‘Committed Generation Resources’’ are eligible to
provide these products), 14, 27).
93 National
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requiring an electric storage resource to
offer energy greatly diminishes its
capability to provide services in the
ancillary service markets because
storage resources are energy-limited.
46. For the capacity markets,
commenters ask the Commission to
clarify that an electric storage resource
should be allowed to de-rate its capacity
(i.e., offer a quantity less than its
nameplate capacity) to ensure it can
satisfy the minimum run-time
requirement.96 Energy Storage
Association states, for example, that, in
the NYISO and MISO capacity markets,
an electric storage resource with a runtime duration of less than four hours
relative to its nameplate capacity should
be able to qualify for capacity at a lower
power level than it would be able to
sustain for four hours at nameplate
output. More specifically, NY Battery
and Energy Storage Consortium states
that a 10 MW/2-hour storage resource
should be able to qualify for 5 MW of
capacity as long as it can sustain 5 MW
for 4 hours.
47. In contrast, some commenters,
such as APPA, state that eligibility is
not a significant problem for electric
storage resources.97 Similarly, Electric
Power Supply Association argues that
the RTO/ISO responses to the Data
Requests show that electric storage
resources can fully participate in the
organized wholesale electric markets.98
The PJM Market Monitor also claims
there are no market rules that artificially
preclude participation by electric
storage resources in any of PJM’s
markets.99 The PJM Market Monitor
states that electric storage resources can
make offers directly into PJM’s
wholesale markets to provide energy,
capacity, and ancillary services or can
participate as demand response
resources.
iv. Proposed Reforms
48. We propose to require RTOs/ISOs
to modify their tariffs to establish a
participation model consisting of market
rules for electric storage resources under
which a participating resource is
eligible to provide any capacity, energy,
and ancillary service that it is
technically capable of providing in the
organized wholesale electric markets. In
addition, we propose that electric
storage resources should be able, as part
of the participation model, to be eligible
to provide services that the RTOs/ISOs
96 Id. at 22–23; NY Battery and Energy Storage
Consortium Comments at 6; RES Americas
Comments at 4.
97 APPA Comments at 10.
98 Electric Power Supply Association Comments
at 9.
99 PJM Market Monitor Comments at 4.
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do not procure through a market
mechanism, such as blackstart, primary
frequency response, and reactive power,
if they are technically capable. Where
compensation for these services exists,
electric storage resources should also
receive such compensation
commensurate with the service
provided.
49. We also propose to require each
RTO/ISO to revise its tariff to clarify
that an electric storage resource may derate its capacity to meet minimum runtime requirements to provide capacity
or other services. This proposed
requirement will help ensure that
electric storage resources are able to
provide all services that they are
technically capable of providing by
accommodating their physical and
operational characteristics, while still
maintaining the quality and reliability
of services they seek to provide. In
RTOs/ISOs with capacity markets, we
propose that the de-rated capacity value
for electric storage resources be
consistent with the quantity of energy
that must be offered into the day-ahead
energy market for resources with
capacity obligations. We preliminarily
find that this reform will remove a
barrier to the participation of electric
storage resources in the organized
wholesale electric markets related to
minimum run-time requirements and
help ensure that the resources that do
de-rate their capacity will be able to
meet their capacity supply obligations if
called upon.
50. We preliminarily conclude that a
market participant’s eligibility to
provide a particular reserve service
should not be conditioned on
requirements that were designed for
synchronous generators, specifically the
requirement to be online and
synchronized to the grid to be eligible
to provide ancillary services. Newer
technologies, particularly electric
storage resources, tend to be capable of
faster start-up times and higher ramp
rates than traditional synchronous
generators and are therefore able to
provide ramping, spinning, and
regulating reserve services without
already being online and running.
Therefore, we preliminarily find that
participation in ancillary service
markets should be based on a resource’s
ability to provide services when it is
called upon rather than on the real-time
operating status of the resource.
51. However, we acknowledge that all
of the RTOs/ISOs co-optimize energy
and ancillary services dispatch and
pricing and therefore may condition
eligibility to provide ancillary services
on having an energy schedule. As a
result, it is not clear whether
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eliminating the requirement for a
resource to be online and synchronized
to the grid would be impactful given the
continued need to have an energy
schedule. Therefore we seek comment
on whether the requirement to have an
energy schedule to provide ancillary
services could be adjusted so that
electric storage resources and other
technically-capable resources could
participate in the ancillary service
markets independent of offering energy
to the RTO/ISO. Specifically, we seek
comment on whether dispatch and
pricing of energy and ancillary services
would continue to be internally
consistent if a resource were not
required to offer to provide energy in
order to offer to provide ancillary
services. Further, we seek comment on
whether the capability of resources to
provide an ancillary service absent an
energy schedule can be determined in
the regular performance tests that the
RTO/ISO conducts and whether a
resource’s start-up time and ramp
capability are generally represented in
bidding parameters and would
adequately guarantee the resource’s
ability to provide other services absent
energy market participation.
Additionally, we seek comment on the
extent of software changes necessary to
factor the elimination of such an energy
schedule requirement into the RTO/ISO
co-optimization models.
52. Several commenters also
identified concerns with how
definitions in the Glossary of Terms
used in NERC reliability standards
could potentially limit participation of
electric storage resources and other nonsynchronous resources in the reserve
markets. While it appears that some of
the Glossary of Terms definitions were
created for synchronous generation, it is
unclear the extent to which these
definitions could potentially limit
participation of non-synchronous
resources in the organized wholesale
electric markets. Therefore, we seek
comment on whether and to what extent
the Commission-approved NERC
Glossary of Terms and associated
Reliability Standards or regional
reliability requirements may create
barriers to the participation of electric
storage resources or other nonsynchronous technologies in the
organized wholesale electric markets.
b. Bidding Parameters for Electric
Storage Resources
i. Introduction
53. Bidding parameters allow
resources participating in the organized
wholesale markets to identify their
physical and operational characteristics
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so that the RTO/ISO can model and
dispatch the resource consistent with its
operational constraints. Due to an
electric storage resource’s ability to both
receive and provide electricity at
varying speeds and duration and to
transition between operating modes, it
may be more efficient for the RTOs/ISOs
to model, optimize, and dispatch
electric storage resources differently
than they do traditional generation. By
requiring electric storage resources to
use bidding parameters developed for
traditional generators or other supply
resources, RTOs/ISOs may fail to
effectively utilize these resources,
possibly precluding electric storage
resources from providing all of the
services that they are physically and
technically capable of providing in a
way that optimizes their operational
capabilities and maximizes the benefits
they provide. This barrier to electric
storage resource participation in
organized wholesale electric markets
could lead to over-procurement of less
efficient resources and increased cost to
load.
ii. Current Rules
54. Under current market rules,
resource bidding parameters vary
greatly between the RTOs/ISOs. Some
RTOs/ISOs require the same bidding
parameters from all resources offering
into a specific market, regardless of the
participation model under which these
resources participate, while others tie
bidding parameters to specific
participation models. For example, ISO–
NE requires the same bidding
parameters from all resources, including
electric storage resources, participating
in its capacity, forward reserve, and
regulation markets.100 In ISO–NE’s
energy market, bidding parameters
reflect the physical characteristics of
each participation model such as
maximum daily starts, maximum
consumption for dispatch asset related
demand, and minimum time between
reduction for demand response
resources. Similarly, SPP requires all
resources participating in its day-ahead
and real-time markets under any
participation model to provide a
specific set of bidding parameters to
validate their offers.101
55. CAISO’s market rules also require
a defined list of parameters for all bids.
In addition, however, CAISO requires
supplemental parameters depending on
the participation model under which a
resource is participating in its market
(i.e., Participating Generator,
Participating Load, or Non-Generator
100 ISO–NE
101 SPP
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Resource).102 Specifically, CAISO
explains that bids for participating
loads, which include pumping load or
Pumped-Storage Hydro Units, may
include pumping level (in megawatts
(MW)), minimum load bid (generation
mode of a pumped-storage hydro unit),
load distribution factor, ramp rate,
energy limit, pumping cost, and pump
shut-down costs.103 CAISO notes that,
unlike under the generator resource
model, these resources must submit
lower and upper charge limits.
Moreover, the Commission recently
accepted revisions to CAISO’s tariff to
allow scheduling coordinators
representing non-generator resources to
include state-of-charge as a bidding
parameter.104
56. Electric storage resources
participating in NYISO’s markets must
generally submit the same bidding
parameters as other resources, with
some exceptions.105 Limited Energy
Storage Resources providing regulation
service exchange a ‘‘state of charge
management’’ signal with the NYISO to
facilitate the efficient use of their
capabilities. NYISO does not require
Limited Energy Storage Resources,
unlike other generators, to provide
regulation capacity response rates,
normal response rates, or emergency
response rates with their regulation
service bids. In addition, in NYISO,
electric storage resources acting as a
component of a Demand Side Ancillary
Services Program resource may only
submit one normal response rate
equaling the electric storage resource’s
emergency response rate, while
traditional generators may submit up to
three normal response rates.
57. In MISO, bidding parameters vary
between markets and participation
models. MISO’s market rules allow
common bidding parameters for each
participation model, with a few
exceptions.106 For example, since MISO
manages the state of charge for Stored
Energy Resources, it requires the
following additional bidding parameters
for these resources: Hourly maximum
energy storage level; hourly maximum
energy charge rate; hourly maximum
energy discharge rate; hourly energy
102 CAISO Response at 13–14 (citing CAISO
Tariff, section 30).
103 Id. at 13–14 (citing CAISO Tariff, section
30.5.2.3).
104 California Indep. Sys. Operator Corp., 156
FERC ¶ 61,110.
105 NYISO Response at 12 (citing NYISO’s Market
Participant User’s Guide (Dec. 2015)).
106 MISO Response at 14–15 (citing MISO FERC
Electric Tariff, section 4.2.6 (Stored Energy
Resource Offer)).
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storage loss rate; and hourly full charge
energy withdrawal rate.
58. Bidding parameters in PJM also
vary between markets and participation
models.107 Additionally, pumped
storage resources offering into the PJM
energy markets may either self-schedule
or have PJM dispatch their unit
pursuant to the pumped storage
optimization tool. In either case, the
resource must submit the following
parameters: initial storage; final storage;
maximum storage; minimum storage;
pumping efficiency factor; and min/max
generating and pumping limits.108
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iii. Comments
59. Some commenters focus on the
current bidding parameters for electric
storage resources. NRECA states that the
Commission should not mandate
bidding parameters for specific electric
storage resources.109 APPA states that,
at this early stage of electric storage
resource development, the required
bidding parameters should not be so
prescriptive as to determine the
technologies allowed to deploy, which
may constrain the ability of load-serving
entities to adopt the least-cost
solution.110
60. In contrast, NextEra suggests that
each RTO/ISO evaluate how bidding
parameters could allow electric storage
resources to participate fully in the
energy, ancillary service, and capacity
markets.111 NextEra states that the
specific bidding parameters developed
for pumped hydro are inadequate for
batteries and other advanced electric
storage technologies. California Energy
Storage Alliance also urges evaluation of
existing market bidding parameters to
identify revisions focused on the unique
characteristics of electric storage
resources and their ability to act as both
generation and load.112 Energy Storage
Association and NY Battery and Energy
Storage Consortium agree,
recommending that RTOs/ISOs establish
a participation model that incorporates
appropriate bidding parameters and
resource modeling for electric storage
resources.113
61. Some commenters address the
physical and operational characteristics
of electric storage resources that create
a need for bidding parameters in a
107 PJM Response at 18 (citing PJM Operating
Agreement, Schedule 1, section 6.6(f)).
108 Id. (citing PJM Manual 11, Attachment B).
109 NRECA Comments at 7.
110 APPA Comments at 11.
111 NextEra Comments at 10–11.
112 California Energy Storage Alliance Comments
at 1–2.
113 Energy Storage Association Comments at 8–12;
NY Battery and Energy Storage Consortium
Comments at 5.
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participation model for electric storage
resources that may differ from those
required under participation models for
more traditional resources. For example,
Alevo argues that electric storage
resources are not certain that they can
participate in RTO/ISO markets given
modeling and bidding parameter
limitations in the current RTO/ISO
market clearing and dispatch engines.114
Alevo and Energy Storage Association
state that the RTOs’/ISOs’ market
modeling, which Alevo argues is based
on traditional resource types that only
withdraw electricity from or inject
electricity to the grid, does not
accommodate electric storage resources’
charge and discharge cycles.115 Alevo
further contends that no current bidding
parameters offer charge and discharge
signals that would allow electric storage
resources to provide peaking
services.116 Similarly, RES Americas
contends that accounting for injections
and withdrawals of energy to and from
the grid in bidding parameters would
improve optimization and dispatch
across all asset classes.117
62. A few commenters address
bidding parameters in specific
organized wholesale electric markets.
Energy Storage Association states that
MISO’s Stored Energy Resource, ISO–
NE’s Alternative Technology Regulation
Resource, and NYISO’s Limited Energy
Storage Resource participation models
explicitly allow electric storage resource
participation.118 According to Energy
Storage Association, these participation
models offer the bidding parameters and
modeling mechanisms (such as energyneutral signal or state-of-charge
management) necessary for electric
storage resource participation.
Minnesota Energy Storage Alliance and
AES Companies, however, believe that
MISO’s current dispatch algorithms do
not effectively use electric storage
resources because they were designed
for flywheels, while advanced battery
systems have the ability to continuously
charge and discharge.119
63. Other commenters discuss bidding
parameters that relate to specific
services in the organized wholesale
electric markets. National Hydropower
Association states that bidding
parameters should reflect electric
storage resources’ ability to respond to
transients with automatic voltage
regulation, power system stability, and
114 Alevo
115 Id.;
Comments at 20.
Energy Storage Association Comments at
9.
116 Alevo
Comments at 20.
Americas Comments at 4.
118 Energy Storage Association Comments at 9–10.
119 Minnesota Energy Storage Alliance Comments
at 4; AES Companies Comments at 21.
117 RES
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generator droop.120 National
Hydropower Association claims that the
NERC standards often require these
services, but RTOs/ISOs do not include
them in any bid evaluation parameters.
64. Some commenters focus on state
of charge as a bidding parameter for
electric storage resources. Alevo,
NextEra, SolarCity, and Energy Storage
Association agree that bidding
parameters need to reflect an electric
storage resource’s state of charge.121
Alevo states that the inability of the
RTOs’/ISOs’ dispatch and clearing
engines to manage hourly and subhourly dispatch and consider electric
storage resources’ states of charge is a
barrier to electric storage resource
participation.122 Alevo and Energy
Storage Association recommend
including a state of charge bidding
parameter in market engine
optimization and dispatch modeling
because an electric storage resource’s
energy level at any given moment affects
the services it is capable of providing in
the subsequent interval.123 NextEra
asserts that, although some RTOs/ISOs
manage batteries’ state of charge when
providing regulation service, it is
unclear how electric storage resources
(or the RTOs/ISOs) can reflect their state
of charge in the unit commitment and
dispatch algorithms when providing
other services.124
65. Some commenters focus on the
ability of electric storage resources to
manage their own state of charge.
SolarCity states that RTOs/ISOs should
allow electric storage resources to
manage their state of charge rather than
relying on RTO/ISO accounting
estimates of their state of charge, which
could lead to faulty dispatch
instructions.125 Likewise, NextEra
recommends that the RTOs/ISOs should
allow electric storage resources to
choose between RTO/ISO-management
and self-management of state of
charge.126 Energy Storage Association
asks that RTOs/ISOs clarify how they
would model, optimize, dispatch, and
settle electric storage resources using
120 National
Hydropower Association Comments
at 4.
121 Alevo Comments at 20; NextEra Comments at
10; SolarCity Comments at 9; Energy Storage
Association Comments at 11.
122 Alevo Comments at 20.
123 Id.; Energy Storage Association Comments at
11.
124 NextEra Comments at 10–11. NextEra points to
CAISO’s proposal to allow energy storage resources
to submit their state of charge as a bid parameter
in the day-ahead market. This proposal was
accepted by the Commission. See California Indep.
Sys. Operator Corp., 156 FERC ¶ 61,110 at P 10.
125 SolarCity Comments at 9.
126 NextEra Comments at 10–11. See also Ormat
Comments at 3.
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negative generation and state of charge
parameters so that electric storage
resources understand how they will bid
into the market, receive dispatch
signals, respond to those signals, and be
compensated.127 AES Companies state
that electric storage resources should be
permitted to optimize their own state of
charge because MISO’s operating
software ignores the benefits of constant
charge and availability.128
iv. Proposed Reforms
66. We propose to require each RTO/
ISO to revise its tariff to include a
participation model for electric storage
resources that incorporates bidding
parameters that reflect and account for
the physical and operational
characteristics of electric storage
resources. The lack of a state-of-charge
bidding parameter and the lack of
ability for electric storage resources to
identify their maximum energy charge
rate and maximum energy discharge rate
could result in electric storage resources
being dispatched in a manner that limits
their operational effectiveness. While
some existing bidding parameters were
developed for older electric storage
technologies (such as pumped-hydro
facilities), newer storage technologies
(such as battery storage) have greater
flexibility to transition between
charging and discharging. Therefore,
bidding parameters designed for slower
storage technologies or other types of
generation resources that are not
capable of charging and discharging
energy may limit the opportunity for
faster electric storage resources to
participate in the organized wholesale
electric markets. Appropriate bidding
parameters will allow electric storage
resources to provide all services they are
technically capable of providing and
allow the RTOs/ISOs to procure these
services more efficiently.
67. Specifically, we propose that the
RTOs/ISOs establish state of charge,
upper charge limit, lower charge limit,
maximum energy charge rate, and
maximum energy discharge rate as
bidding parameters for the participation
model for electric storage resources that
participating resources must submit, as
applicable. The state of charge will
allow resources using the participation
model for electric storage resources to
identify their forecasted state of charge
at the end of a market interval,129 as
127 Energy
Storage Association Comments at 7.
Companies Comments at 21.
129 See, e.g., CAISO Tariff, Att. A, section 30.5.6
(stating that scheduling coordinators representing
Non-Generator Resources may submit bids
including the state of charge for the day-ahead
market to indicate the forecasted starting physical
position of the Non-Generator Resource.).
defined by the RTO/ISO, while the
upper and lower charge limits will
prevent the operator from trying to give
or take too much energy from the
resource. We expect that the state of
charge would be telemetered in real
time when the RTO/ISO is managing the
state of charge, as discussed further
below, so that the upper and lower
charge limits are not exceeded, but do
not propose any specific telemetry
requirements. The maximum energy
charge rate and maximum energy
discharge rate will be used to indicate
how quickly the resource can receive
electricity from or inject it back to the
grid. We preliminarily find that these
are the minimum bidding parameters
necessary for RTOs/ISOs to effectively
dispatch electric storage resources
because they provide the RTOs/ISOs
with the information about the physical
and operational characteristics of
electric storage resources that allow
these resources to provide the services
that they are technically capable of
providing.
68. We also propose to require that
the participation models for electric
storage resources include the following
bidding parameters that market
participants may submit, at their
discretion, for their resource based on
its physical constraints or desired
operation: minimum charge time,
maximum charge time, minimum run
time, and maximum run time.130 We
preliminarily conclude that these
optional bidding parameters are
necessary to reflect the wide range of
physical and operational characteristics
of existing and future electric storage
technologies. Specifically, electric
storage technologies such as pumpedhydro facilities that seek to provide
energy in the organized wholesale
electric markets have some physical and
operational characteristics that are
closer to those of traditional generation
than those of small electric storage
resources designed primarily to provide
regulation service. The optional bidding
parameters that we propose here would
allow electric storage resources to
indicate their operational constraints to
the RTO/ISO and would help these
resources to manage any costs or
operational constraints that they incur
when transitioning between charging
and discharging electricity. For
example, the opportunity to submit
these optional bidding parameters could
allow an electric storage resource to
128 AES
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130 We acknowledge that some of these optional
bidding parameters may not be necessary for
resources participating under the proposed
participation model for electric storage resources
that provide certain information to the RTO/ISO
through telemetry.
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prevent excessive variability in its
operations to help optimize the services
that it is available to provide and to
preserve the life of the electric storage
resource.
69. Also, where the RTO/ISO has
reserved for itself the right to manage
the state of charge of an electric storage
resource, we propose to require that the
RTOs/ISOs allow electric storage
resources to self-manage their state of
charge and upper and lower charge
limits. An electric storage resource that
opts to self-manage its state of charge
and upper and lower charge limits
would keep its state of charge at an
optimal level through its own bidding
strategy, rather than the RTO/ISO
market processes ensuring that dispatch
does not violate its physical constraints.
The Commission recently accepted
revisions to the CAISO tariff that allow
non-generator resources to self-manage
their energy limits and state-of-charge in
real-time.131
70. Of course, an electric storage
resource that self-manages its state of
charge is subject to any penalties for
deviating from a dispatch schedule to
the extent the resource manages its state
of charge by deviating from the dispatch
schedule. While RTOs/ISOs may be in
a better position to effectively manage
the state of charge for an electric storage
resource that, for example, exclusively
provides regulation service in the
organized wholesale electric markets,
some electric storage resources may be
interested in providing multiple service
or providing services to another party,
such as to a load with which it is colocated. Affording electric storage
resources the option to manage their
state of charge would allow these
resources to optimize their operations to
provide all of the services that they are
technically capable of providing, similar
to the operational flexibility that
traditional generators have to manage
the wholesale services that they offer.
However, we seek comment on whether
there are conditions under which an
RTO/ISO should not allow an electric
storage resource to manage its state of
charge and upper and lower charge
limits.
71. While the inclusion of these
bidding parameters would allow for
more efficient use of electric storage
resources, their implementation also
requires the RTOs/ISOs to program
these bidding parameters into their
modeling and dispatch software. The
difficulty of implementing these bidding
parameters would likely vary from RTO/
ISO to RTO/ISO. Therefore, we seek
131 California Indep. Sys. Operator, Corp., 156
FERC ¶ 61,110 at P 10.
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comment on the time and resources that
would be necessary for the RTOs/ISOs
to incorporate these bidding parameters,
including the optional bidding
parameters, into their modeling and
dispatch software.
c. Eligibility To Participate as a
Wholesale Seller and Wholesale Buyer
sradovich on DSK3GMQ082PROD with PROPOSALS3
i. Introduction
72. The ability of electric storage
resources to receive and provide
electricity positions them to be both
buyers and sellers in the organized
wholesale electric markets. As the
Commission has previously recognized,
a market functions effectively only
when both supply and demand can
meaningfully participate.132 Improving
electric storage resources’ opportunity
to participate as both wholesale sellers
of services and wholesale buyers of
energy could improve market efficiency
by allowing the RTO/ISO to dispatch
these resources in accordance with their
most economically efficient use (i.e., as
supply when the market clearing price
for energy is higher than their offer and
as demand when the market clearing
price is lower than their bid). Moreover,
allowing electric storage resources to
participate in the organized wholesale
electric markets as dispatchable load
would allow these resources, under
certain circumstances, to set the price in
these markets, better reflecting the value
of the marginal resource and ensuring
that electric storage resources are
dispatched in accordance with the
highest value service that they are
capable of providing during a set market
interval.
ii. Current Rules
73. Each RTO’s/ISO’s market rules
that govern the eligibility of electric
storage resources to participate in the
organized wholesale electric markets as
a demand resource are different. For
example, CAISO explains that an
electric storage resource interconnected
to the CAISO grid with a participating
generator agreement and participating
load agreement can submit offers to sell
and bids to buy energy in the wholesale
market.133 According to SPP, submitting
bids to purchase energy in its market is
within the resource owner’s
discretion.134 SPP notes that electric
storage resources may submit virtual
bids in the day-ahead market at any
location and a fixed or price-sensitive
bid at their registered load. In contrast,
PJM explains that electric storage
resources do not submit wholesale bids
to buy electricity.135
74. ISO–NE states that, because it is
dispatchable, an electric storage
resource participating as a Dispatchable
Asset Related Demand resource may
submit bids to buy energy in both the
day-ahead and real-time energy markets;
however, if it is participating as a load
asset or an Asset Related Demand, it
may submit bids to buy energy in the
day-ahead market but would be a price
taker in real-time.136
75. MISO explains that, in the dayahead market, electric storage resources
may submit bids to buy energy at the
LMP when they need to recharge as
dispatchable demand or may submit
virtual bids.137 MISO further explains
that in the real-time market, most load
buys energy as fixed demand and only
Demand Response Resources—Type II
can submit demand response offers to
buy energy.
76. NYISO states that Energy Limited
Resources obtain charging energy
through negative MW value generation
offers, rather than a bid to buy
energy.138 NYISO explains that demandside resources participating in the
Special Case Resource Program,
Emergency Demand Response Program,
Demand Side Ancillary Services
Program, or Day-Ahead Demand
Response Program do not submit bids to
buy energy in the wholesale markets
unless the resource is a load-serving
entity, in which case it purchases its
entire load. NYISO states that a
demand-side resource may submit
price-responsive load bids to take
advantage of off-peak prices to charge its
electric storage resource. NYISO adds
that electric storage resources are not
required to bid to buy electricity from
the NYISO market, but, like any load,
may bid into the day-ahead market as a
price cap load bid.139
77. The eligibility for an electric
storage resource to set the price in the
organized wholesale electric markets
also varies among the RTOs/ISOs. For
example, CAISO states that an electric
storage resource that is the marginal
resource may set the price of energy and
ancillary services in CAISO’s markets
based on its economic bid.140 PJM states
that, with the exception of demand-side
resources in the non-synchronized
135 PJM
Response at 22.
Response at 28 (citing ISO–NE Tariff,
section I.2.2).
137 MISO Response at 16.
138 NYISO Response at 14–15.
139 Id. at 15 (citing NYISO Services Tariff, section
21.1).
140 CAISO Response at 10.
136 ISO–NE
132 Demand Response Compensation in
Organized Wholesale Energy Markets, Order No.
745, FERC Stats. & Regs. ¶ 31,322, at P 1, order on
reh’g, Order No. 745–A, 137 FERC ¶ 61,215 (2011).
133 CAISO Response at 16.
134 SPP Response at 7.
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reserve market, electric storage
resources may set the price as either a
generation or as a demand-side resource
in the capacity, energy, and ancillary
service markets.141 SPP states that any
resource, including an electric storage
resource, qualified to participate in an
SPP market may set the price for the
relevant market.142
78. ISO–NE states that, in each of its
markets, electric storage resources may
be able to set the clearing price,
depending on the participation model
that they are using to participate.143
ISO–NE explains that only dispatchable
resources (i.e., dispatchable generator
assets and dispatchable asset related
demand) may set the clearing price in
the real-time energy market. ISO–NE
explains that, in the day-ahead energy
market, an electric storage resource may
set the price by offering into the market
as a generator resource, Asset Related
Demand, or Dispatchable Asset Related
Demand. ISO–NE adds that, by
qualifying as a new generator resource
or as a demand resource, an electric
storage resource may bid its qualified
MWs into the capacity market and set
the clearing price. ISO–NE notes that an
electric storage resource or aggregation
of electric storage resources may set the
regulation market clearing prices by
offering as an Alternative Technology
Regulation Resource. ISO–NE states that
an electric storage resource may also set
the market-clearing regulation price by
offering into the regulation market as a
generator resource or Dispatchable Asset
Related Demand.
79. MISO states that electric storage
resources may set prices for products in
the market(s) in which they are eligible
to participate. MISO explains that, for
example, an electric storage resource
registered as a Load Modifying Resource
may set the price in the capacity market.
MISO states that an electric storage
resource registered as a Stored Energy
Resource may set the price for
regulating reserve.144
80. NYISO explains that supply offers
of electric storage resources that
participate as Energy Limited Resources
may set the price for capacity, energy,
and ancillary services; Limited Energy
Storage Resources may set the price for
regulation service. NYISO explains that
Special Case Resources and Emergency
141 PJM
Response at 10.
Response at 4.
143 ISO–NE Response at 12–13. ISO–NE explains
that, today, Real-Time Demand Response assets are
price-takers in the real-time energy market but that,
with the full integration of demand response into
the energy market scheduled for June 1, 2018,
demand response resources will have the potential
to set market clearing prices.
144 MISO Response at 10.
142 SPP
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Demand Response Program resource
energy offers do not directly set the
price; rather, when these resources are
dispatched, the NYISO’s scarcity pricing
rules are triggered in the zone(s) in
which they are activated and may alter
energy and certain ancillary services
prices.145
iii. Proposed Reforms
81. We propose to require each RTO/
ISO to revise its tariff to ensure that
electric storage resources can be
dispatched and can set the wholesale
market clearing price as both a
wholesale seller and wholesale buyer
consistent with existing rules that
govern when a resource can set the
wholesale price. This proposal includes
the requirements that the RTOs/ISOs
accept wholesale bids from electric
storage resources to buy energy so that
the economic preferences of the electric
storage resources are fully integrated
into the market, the electric storage
resource can set the price as a load
resource where market rules allow, and
the electric storage resource can be
available to the RTO/ISO as a
dispatchable demand asset. However,
we note that these requirements must
not prohibit electric storage resources
from participating in organized
wholesale electric markets as price
takers, consistent with the existing rules
for self-scheduled load resources. We
also clarify that, while resources are not
dispatched when they clear the capacity
markets, we are proposing that
resources using the participation model
for electric storage resources be able to
set the price in the capacity markets,
where applicable.
82. To optimize the capabilities of
electric storage resources and for the
RTOs/ISOs to use them efficiently, it is
important for the RTOs/ISOs to be able
to symmetrically utilize the capabilities
of these resources to both receive
electricity from the grid and inject it
back to the grid. In other words, they
must be able to dispatch electric storage
resources as supply when the market
clearing price exceeds their offers to sell
and to dispatch electric storage
resources as demand when their bids to
buy exceed the market clearing price.
The bidirectional capabilities of electric
storage resources are what make them
unique, and allowing electric storage
resources to participate in the organized
wholesale electric markets as both
wholesale sellers and wholesale buyers
will help optimize the value that they
provide and enhance price formation, as
they will be dispatched in accordance
with their most economic use.
145 NYISO
Response at 8.
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83. We preliminarily conclude that
the proposed requirement to participate
as a supply and demand resource
simultaneously (i.e., submit bids to buy
and offers to sell during the same
market interval) is necessary to
maximize the value that electric storage
resources can provide in the organized
wholesale electric markets, allowing the
markets to identify whether it is more
economic to dispatch an electric storage
resource as supply or demand during a
given market interval. We expect that,
through its bidding strategy, a resource
using the electric storage resource
participation model would be able to
prevent any conflicting dispatch signals
to itself. However, we seek comment on
whether there should be a mechanism
that identifies bids and offers coming
from the same resource that ensures the
price for the offer to sell is not lower
than the price for the bid to buy during
the same market interval so that an
RTO/ISO does not accept both the offer
and bid of a resource using the electric
storage resource participation model for
that interval.
84. Generally, in the organized
wholesale electric markets, resources
that cannot be dispatched by the RTO/
ISO do not set wholesale prices. This is
because the marginal clearing prices are
based on the shadow price of the next
unit of incremental production, and a
resource that cannot be dispatched by
the RTO/ISO cannot provide that
incremental unit of production.
Therefore, we propose that, for a
resource using the proposed
participation model for electric storage
resources to be able to set prices in the
organized wholesale electric markets as
either a wholesale seller or a wholesale
buyer, it must be available to the RTO/
ISO as a dispatchable resource. We
believe this proposal is consistent with
RTO/ISO rules on price setting and are
further proposing that the ability for
resources using the participation model
for electric storage resources to set the
price be consistent with existing rules
that govern when a resource can set the
wholesale price. However, we seek
comment on whether any existing RTO/
ISO rules may unnecessarily limit the
ability of resources using the
participation model for electric storage
resources to set prices in the organized
wholesale electric markets.
85. We note that resources using the
proposed participation model for
electric storage resources that elect to
submit economic bids as a wholesale
buyer and participate as dispatchable
demand resources would still be able to
self-schedule their charging and be price
takers. However, it is also possible that
the RTO/ISO could dispatch an electric
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storage resource as load when the
wholesale price for energy is above the
price of their bid to buy (a circumstance
under which they would lose the
opportunity to earn greater revenues as
a supply resource). Therefore, to help
alleviate any potential financial risk to
these resources when being dispatched
as a demand resource, we seek
comments on whether the proposed
participation model for electric storage
resources should allow make-whole
payments when a resource participating
under this participation model is
dispatched as load and the price of
energy is higher than the resource’s bid
price.
d. Minimum Size Requirement
i. Introduction
86. Depending on the technology,
electric storage resources range in size
from 1 kW to 1 GW,146 and most of them
tend to be under 1 MW.147 RTO/ISO
market rules may restrict electric storage
resources from participating in the
organized wholesale electric markets
based on minimum size
requirements 148 that may have been
designed for different types of resources.
This is particularly true for smaller
electric storage resources, which may be
limited to participating in the organized
wholesale electric markets as demand
response resources. Such restrictions
can limit these resources’ ability to
employ their full operational range
because they are prohibited from
injecting electricity into the grid in
excess of their host load and preclude
them from providing services such as
reserves.
ii. Current Rules
87. Under existing market rules,
minimum capacity, minimum offer and
minimum bid requirements for electric
storage resources to participate in the
organized wholesale electric markets
vary across the RTOs/ISOs, with
minimum size requirements ranging
from 100 kW to 5 MW. PJM and SPP
have minimum offer requirements of
100 kW for all resources, with other
146 Sandia Report at 29, Figure 19 (Positioning of
Energy Storage Technologies).
147 U.S. Department of Energy, Grid Energy
Storage at 12 (Dec. 2013) (stating that most storage
systems are in the 10 kW to 10 MW range, with the
largest proportion of those resources in the 100 kW
to 1 MW range).
148 We use the term ‘‘minimum size requirement’’
to collectively describe minimum capacity
requirements to qualify to use a given participation
model, ‘‘minimum offer requirements’’ for offers to
sell services in the organized wholesale electric
markets, and ‘‘minimum bid requirements’’ for bids
to buy energy in these markets. When we are
referring to a specific category of minimum size
requirement, we will use that specific term.
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RTO/ISO minimum size requirements
varying across participation models and
markets.149
88. CAISO states that the minimum
capacity requirement for demand
response resources is 100 kW and that
all resources other than demand
response have minimum capacity
requirements of 500 kW. Resources can
meet these minimum capacity
requirements through aggregation.150
Alternatively, ISO–NE minimum
capacity requirements range from 100
kW for demand response resources, to 1
MW for Alternative Technology
Regulation Resources, to 5 MW for
generators seeking to provide demand
response in the regulation market.151
Under MISO tariff rules, minimum
capacity requirements vary from 100 kW
for Load Modifying Resources, to 1 MW
for demand response resources, to 5
MW for generators.152 MISO states that
it has not determined a minimum size
for Stored Energy Resources but believes
a minimum of 1 MW is appropriate.153
In NYISO, the minimum size
requirement is 100 kW for demand
response resources and 1 MW for
Energy Limited Resources and Limited
Energy Storage Resources.154
89. The RTOs/ISOs also define
minimum bid requirements for load
resources to buy energy from the
organized wholesale electric markets. In
CAISO, the minimum bid requirement
is 10 kW, the same as for traditional
generators.155 In MISO and SPP, the
minimum bid requirements are 100
kW.156 In ISO–NE, energy market bids
cannot be smaller than 100 kW.157 In
NYISO, the minimum bid requirement
is 1 MW, with the option to aggregate to
meet that requirement.158 Electric
storage resources do not submit bids to
buy energy in the PJM wholesale
markets.159
sradovich on DSK3GMQ082PROD with PROPOSALS3
iii. Comments
90. Several commenters address the
minimum size requirements to
participate in the RTO/ISO markets,
questioning whether the RTOs/ISOs
based those standards on technological
requirements and system needs. For
149 PJM Response at 10 (citing PJM Tariff, Att. DD,
section 5.6); SPP Response at 5 (citing SPP Tariff,
Att. AE section 1.1 (definition of ‘‘Offer’’)).
150 CAISO Response at 10–11 (citing CAISO
Tariff, App. K, Part A 1.1.1; Part B1.1; Part C1.1).
151 ISO–NE Response at 13–14 (citing ISO–NE
Tariff, App. E2, section I–III).
152 MISO Response at 10.
153 Id. at 16–17.
154 NYISO Response at 9.
155 CAISO Response at 16.
156 MISO Response at 17; SPP Response at 8.
157 ISO–NE Response at 29.
158 NYISO Response at 15.
159 PJM Response at 22.
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example, NY Battery and Energy Storage
Consortium argues that the minimum
size requirement for participation in
organized wholesale electric markets
should be lowered.160 Public Interest
Organizations claim that minimum size
requirements for electric storage
resources to participate in the organized
wholesale electric markets may be a
barrier to distributed electric storage
resources, especially those that are
small. Public Interest Organizations
contend that, while the opportunity to
offer distributed energy resource
aggregations into the markets could help
mitigate this concern, that opportunity
is lacking or unclear in some RTOs/
ISOs.161
91. Several commenters specifically
cite the variability in the minimum size
requirements of the various RTO/ISO
market participation models as a barrier
to electric storage resource
participation. Energy Storage
Association contends that minimum
size requirements for electric storage
resources may prohibit storage
participation and lead to inconsistencies
across regions.162 Advanced Energy
Economy argues that it is not clear why
the minimum size requirements for
providing services should vary from
RTO/ISO to RTO/ISO and that these
market rule variations are a barrier to
electric storage resource participation in
the organized wholesale electric
markets.163 Public Interest
Organizations assert that disparate
requirements in the RTO/ISO reports
indicate that some of these minimum
limits may be arbitrary.164
92. Other commenters identify
specific minimum size requirements in
certain RTO/ISO markets as barriers to
the participation of electric storage
resources in those markets. Minnesota
Energy Storage Alliance claims that
MISO’s 1 MW minimum size
requirement for demand response
resources is not appropriate due to the
lower minimum size requirements in
other RTOs/ISOs.165 Minnesota Energy
Storage Alliance further states that
removing this requirement would allow
electric storage resources to more
readily participate, providing economic
160 NY Battery and Energy Storage Consortium
Comments at 6.
161 Public Interest Organizations Comments at 5.
162 Energy Storage Association Comments at 29.
163 Advanced Energy Economy Comments at 10–
11.
164 Public Interest Organizations Comments at 5.
165 Minnesota Energy Storage Alliance notes that
size restrictions do not apply to the load-modifying
resource classification, but such resources are only
eligible to provide capacity for MISO-declared
emergency events and cannot provide energy or
ancillary services. Minnesota Energy Storage
Alliance Comments at 3–4.
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justification for project development
and increasing MISO’s operational
flexibility. NY Battery and Energy
Storage Consortium asserts that NYISO’s
1 MW size requirement limits behindthe-meter electric storage resources from
participating in NYISO’s day-ahead
market, despite having the technical
capability to perform.166
93. Solar City and Viridity ask the
Commission to consider requiring all
RTOs/ISOs to set a minimum
requirement of 100 kW for electric
storage resource participation in their
markets.167 Solar City argues that a 100
kW minimum size requirement will
ensure that electric storage resources
can provide value to markets at
relatively modest levels of penetration
and participate in organized wholesale
energy markets even when locational
requirements reduce the area over
which resources can be aggregated.168
iv. Proposed Reforms
94. We propose that the minimum
size requirement to participate in the
organized wholesale electric markets
under the proposed electric storage
resource participation model must not
exceed 100 kW. While we acknowledge
that minimum size requirements may be
necessary to ensure that the RTOs/ISOs
can effectively model and dispatch the
resources participating in their markets,
large minimum size requirements create
a barrier to the participation of smaller
electric storage resources. We
preliminarily conclude that requiring
that the minimum size requirement not
exceed 100 kW balances the benefits of
increased competition with the ability
of RTO/ISO market clearing software to
effectively model and dispatch smaller
resources often located on the
distribution system. Thus, we propose
to require each RTO/ISO to revise its
tariffs to include a participation model
for electric storage resources that
establishes a minimum size requirement
for participation in the organized
wholesale electric markets that does not
exceed 100 kW. This would include any
minimum capacity requirements,
minimum offer requirements, and
minimum bid requirements for
resources participating in these markets
under the electric storage resource
participation model.
166 NY Battery and Energy Storage Consortium
Comments at 5–6.
167 SolarCity Comments at 9; Viridity Comments
at 3.
168 SolarCity Comments at 9.
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e. Energy Used To Charge Electric
Storage Resources
i. Introduction
95. Electric storage resources must
absorb electricity (i.e., charge) to sell
that electricity, net of losses, back to an
RTO/ISO as energy or ancillary services.
The manner in which an electric storage
resource charges (consumes) energy and
discharges (produces) energy will
determine whether the electric storage
resource is engaging in a sale for resale
subject to our jurisdiction.
sradovich on DSK3GMQ082PROD with PROPOSALS3
ii. Current Rules
96. For the most part, the RTOs/ISOs
indicate that electric storage resources
that are charging to later provide
wholesale services in their markets
already pay LMP for that electricity.
CAISO states that all electric storage
resources participating in its wholesale
markets pay LMP for their charging
energy.169 ISO–NE states that electric
storage resources purchasing energy
directly from the wholesale market pay
the LMP for the electricity they
receive.170 MISO states that any
resources eligible to participate in
MISO’s capacity, energy, and ancillary
service markets pay LMP for the
electricity they receive.171 NYISO states
that Energy Limited Resources using
electric storage resource technology and
Limited Energy Storage Resources will
pay the wholesale price for the
electricity they consume to meet a
regulation service schedule or to charge
the resource if the resource is either in
front-of-the-meter (a generator) or a
direct NYISO customer (a load-serving
entity). NYISO notes that, if the resource
is behind-the-meter and served by a
separate load-serving entity, then it
would pay the load-serving entity’s
retail rate.172 PJM states that an electric
storage resource would pay wholesale
LMP if the resource is taking power off
the system solely to inject into the
energy or ancillary service markets at a
later time.173 SPP states that, in its realtime market, electric storage resources
pay the real-time LMP for their load
consumption, although they may also be
subject to retail rules for electric
consumption.174
iii. Comments
97. Several commenters address the
issue of the price that electric storage
resources should pay for charging
electricity when that electricity is for
169 CAISO
Response at 17.
Response at 29–30.
171 MISO Response at 17.
172 NYISO Response at 16.
173 PJM Response at 23.
174 SPP Response at 7.
170 ISO–NE
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later use in the organized wholesale
electric markets. For example, Alevo
argues that it is not clear whether an
electric storage resource connected at
the distribution level will pay the LMP
for its charging electricity, even if it is
charging to provide a wholesale
service.175 Electric Vehicle R&D Group
and NextEra contend that current RTO/
ISO tariffs do not provide enough clarity
on the price that storage pays for
electricity,176 and that the RTOs/ISOs
should revise their tariffs to settle
discharging and recharging resources at
LMP.177 Similarly, Tesla asks the
Commission to clarify that electricity
stored for resale is not a retail sale and
thus should be settled at the wholesale
LMP.178
98. In contrast, Manitoba Hydro
asserts that dispatchable electric storage
resources should either pay a lower
LMP than non-dispatchable resources or
should receive a storage capacity credit
for their services because a MWh
received by a storage resource for later
injection is different than a MWh
consumed by traditional load.179
Minnesota Energy Storage Alliance
similarly requests that dispatchable
electric storage resources pay a lower
LMP or be compensated for the
service.180 AES Companies contend that
it is inappropriate for an electric storage
resource to pay LMP when it is directed
to charge and that such a payment is a
disincentive to new storage
installation.181
99. SoCal Edison argues that behindthe-meter electric storage resources
should not be allowed to charge at a
wholesale rate and discharge to serve a
retail customer to allow the retail
customer to avoid paying the retail rate
for its consumption.182 Addressing this
concern, some commenters suggest that
metering and accounting practices can
be designed to delineate between
wholesale and retail activities.183
iv. Proposed Reforms
100. The Commission has found that
the sale of energy from the grid that is
used to charge electric storage resources
for later resale into the energy or
ancillary service markets constitutes a
175 Alevo
Comments at 29.
Vehicle R&D Group Comments at 13.
177 NextEra Comments at 13.
178 Tesla Comments at 5–6.
179 Manitoba Hydro Comments at 10–12.
180 Minnesota Energy Storage Alliance Comments
at 5.
181 AES Companies Comments at 23.
182 SoCal Edison Comments at 8.
183 Independent Energy Producers Association
Comments, Att. at 7; Minnesota Energy Storage
Alliance Comments at 5.
176 Electric
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sale for resale.184 As such, the just and
reasonable rate for that wholesale sale of
energy used to charge the electric
storage resource is the RTO/ISO
market’s wholesale price for energy or
LMP. We thus propose to require each
RTO/ISO to revise its tariff to specify
that the sale of energy from the
organized wholesale electric markets to
an electric storage resource that the
resource then resells back to those
markets must be at the wholesale LMP.
101. The proposed clarification also
provides developers and operators of
electric storage resources certainty about
the price that they will be charged for
purchasing charging electricity in the
organized wholesale electric markets
when they will use that electricity to
provide wholesale services. We note
that this proposed clarification is
consistent with most current RTO/ISO
practices as reflected in their responses.
102. We recognize SoCal Edison’s
concern that behind-the-meter electric
storage resources should not be allowed
to charge at a wholesale rate and
discharge to serve a retail customer as
a means for the retail customer to avoid
paying the retail rate. This situation
could be even more complex if the retail
customer in question also uses a behindthe-meter generator in conjunction with
its storage device. Given the comments
in the record indicating that metering
and accounting practices can be
designed to delineate between
184 See Norton Energy Storage, L.L.C., 95 FERC
¶ 61,476, at 62,701–02 (2001) (citations omitted)
(‘‘[T]he use of compressed air as a medium for the
storage of energy in an energy storage facility is a
new technology. However, we find that a
compressed air energy storage facility is analogous
to a pumped storage hydroelectric facility, in that
compressed air is used in a conversion/storage
cycle just as water is used in a pumped storage
hydroelectric facility in the conversion/storage
cycle. . . . [T]he Commission views the pumping
energy not as being consumed, but rather as being
converted and stored, as water in the upper
reservoir, for later re-conversion . . . back to
electric energy. It is this conversion/storage cycle
that distinguishes energy storage facilities, whether
pumped storage hydroelectric facilities or
compressed air energy storage facilities, from
facilities that consume electricity (in the form of
station power or otherwise). The fact that pumping
energy or compression energy is not consumed
means that the provision of such energy is not a sale
for end use that this Commission cannot regulate.
Rather, based on Norton’s representations in its
petition, we find that deliveries of compression
energy to the Norton energy storage facility as part
of energy exchange transactions employing the
conversion/storage cycle are wholesale transactions
subject to our exclusive authority under the FPA.’’).
See also PJM Interconnection, L.L.C., 132 FERC at
62,053 (‘‘Like pumping energy and compression
energy, the energy used to charge Energy Storage
Resources will be stored for later delivery and not
used for operating the electric equipment on the site
of a generation facility or associated buildings as
Station Power is used.’’).
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wholesale and retail activities,185 we
seek comment on whether such
metering and accounting practices
would need to be established in the
RTO/ISO tariffs to facilitate compliance
with this proposal or whether it is
possible to determine the end use for
energy used to charge an electric storage
resource under existing requirements.
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B. Participation of Distributed Energy
Resource Aggregators in the Organized
Wholesale Electric Markets
1. Introduction
103. There has been significant
industry attention paid to the
development of distributed energy
resources and the potential for such
resources to contribute to grid services.
More recently, the discussion has
focused on new distributed energy
resources that are smaller,
interconnected to lower voltage
networks, and geographically dispersed.
These new distributed energy resources
are enabled by increasing deployment of
and improvements in metering,
telemetry, and communication
technologies. With such advances, more
localized power and energy services and
more supply resources and potential
market participants have emerged. We
are interested in removing barriers in
current RTO/ISO market rules that
would prevent these new, smaller
distributed energy resources that are
technically capable of participating in
the organized wholesale electric markets
from doing so.
104. As noted above, in this NOPR,
we define distributed energy resources
as a source or sink of power that is
located on the distribution system, any
subsystem thereof, or behind a customer
meter.186 These resources may include,
but are not limited to, electric storage
resources, distributed generation,
thermal storage, and electric vehicles
and their supply equipment.187
105. As a general matter, distributed
energy resources tend to be too small to
participate directly in the organized
wholesale electric markets on a standalone basis. First, they often do not meet
the minimum size requirements to
participate in these markets under
existing participation models. Second,
they may have difficulty satisfying all of
the operational performance
requirements of the various
participation models due to their small
size. Allowing these resources to
participate in the organized wholesale
185 Independent Energy Producers Association
Comments, Att. at 7; Minnesota Energy Storage
Alliance Comments at 5.
186 See supra note 2.
187 Id.
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electric markets through distributed
energy resource aggregations can help to
remove these barriers to their
participation, providing a means for
these resources to, in the aggregate,
satisfy minimum size and performance
requirements that they could not meet
on a stand-alone basis.
106. The Commission recently
accepted CAISO’s proposal 188 to allow
distributed energy resource aggregations
in its markets. In addition, the RTOs/
ISOs have implemented some models
for aggregated resources to participate in
their organized wholesale electric
markets. These are described in more
detail below but are generally for
demand response resources, with a few
exceptions. As a result, the majority of
distribution-connected electric storage
and other distributed energy resources
that seek to access the organized
wholesale electric markets must do so
by participating as behind-the-meter
demand response. While these demand
response programs have helped reduce
barriers to load curtailment resources,
they often limit the operations of other
types of distributed energy resources,
such as electric storage or distributed
generation, as well as the services that
they are eligible to provide.
2. Current Rules
107. The RTOs/ISOs describe the
opportunities for electric storage
resources connected to the distribution
system and electric storage resource
aggregations to participate in their
capacity, energy, and ancillary service
markets. CAISO supports the
aggregation of distributed energy
resources, including storage, seeking to
participate in the CAISO markets.189 In
addition, CAISO states that electric
storage resources that wish to aggregate
into a resource that can participate in
the wholesale markets can participate
by providing load curtailment as Proxy
Demand Resources or Reliability
Demand Response Resources.190
108. ISO–NE explains that, under
each participation model, a single
resource may be composed of multiple
resources if those resources are either
physically in the same location or
require coordinated control.191 ISO–NE
explains that Alternative Technology
Regulation Resources may include
aggregations of multiple end-use
customers, each with less than 1 MW of
188 See California Indep. Sys. Operator Corp., 155
FERC ¶ 61,229.
189 CAISO Response at 2–3. See also California
Indep. Sys. Operator Corp., 155 FERC ¶ 61,229.
190 CAISO Response at 7.
191 ISO–NE Response at 26 (citing ISO–NE
Operating Procedure 14, section II.A).
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86539
regulation capacity.192 ISO–NE adds
that Asset Related Demands may be
aggregated if they are served by the
same point of electrical connection and
meet a 1 MW threshold.193
109. ISO–NE states that electric
storage resources that meet its definition
of Distributed Generation (i.e., behindthe-meter resources with an aggregate
nameplate capacity of less than 5 MW
or the demand of the end-use customer,
whichever is greater) may qualify as
Real-Time Demand Response Assets,
which allows for participation in the
forward capacity market, the
transitional price-responsive demand
program, and the regulation market if it
is also registered as an Alternative
Technology Regulation Resource.194
ISO–NE explains that, for the capacity
market, demand resources may consist
of an aggregation of multiple end-use
customers, though they must be at least
100 kW and located within a dispatch
zone or load zone as required under the
participation model through which they
are participating.195 ISO–NE further
explains that for the energy and reserve
markets, demand response resources
may also be aggregated as long as they
are individually at least 10 kW, have an
expected maximum interruptible
capacity of 5 MW or less, and are
located within a dispatch zone and
reserve zone.196
110. MISO states that Stored Energy
Resources and Demand Response
Resources—Type II are allowed to
aggregate under a single elemental
pricing node. MISO adds that Demand
Response Resources—Type I and Load
Modifying Resources are allowed to
aggregate within one local balancing
authority.197
111. NYISO states that aggregated
resources can participate in the
Emergency Demand Response Program,
Day-Ahead Demand Response Program,
Demand Side Ancillary Services
Program, and Special Case Resource
Programs. NYISO notes that aggregated
electric storage resources may be used to
generate demand reductions in any of
those programs.198
112. PJM states that aggregated
electric storage resources can participate
in the capacity, energy, and ancillary
service markets. In the capacity market,
PJM states that demand-side resources
192 Id.
(citing ISO–NE Tariff, section III.14.2(c)).
at 27 (citing ISO–NE Operating Procedure
14, section I.2.2).
194 Id. at 6–7.
195 Id. at 27 (citing ISO–NE Operating Procedure
14, section III.13.1.4.1).
196 Id. (citing ISO–NE Operating Procedure 14,
section III.E2.1.1).
197 MISO Response at 15.
198 NYISO Response at 13.
193 Id.
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assets and sites, should be able to
participate in the organized wholesale
electric markets to enhance competition
needed for just and reasonable rates.206
Energy Storage Association asks the
Commission to consider extending the
best practices learned in CAISO to all
organized wholesale electric markets to
address common barriers in metering,
telemetry, and resource eligibility. RES
Americas supports Energy Storage
Association’s comments and encourages
the Commission to investigate the
barriers to the participation of
distributed energy resources in
organized wholesale electric markets.207
NY Battery and Energy Storage
Consortium argues that behind-themeter energy storage resources should
be able to participate in organized
wholesale electric markets directly or in
aggregate form, and points out that
behind-the-meter storage participating
in NYISO as a demand side ancillary
services program resource is not
allowed to bid into the day-ahead
demand response market, even though it
is technically capable of doing so.208
116. Some commenters cite the
3. Comments
inability for distributed energy
114. Many commenters note that it is
resources to inject energy when
important for distributed energy
participating as demand response as a
resources to be allowed to fully
barrier to distributed energy resources.
participate in organized wholesale
SolarCity states that this inability
electric markets. For example,
hinders the ability of behind-the-meter
Advanced Energy Economy contends
resources to provide energy services and
that, absent legitimate technical needs,
limits their capacity.209 Advanced
distributed energy resources should be
Energy Economy and Solar Grid Storage
allowed to fully participate in organized argue that PJM’s restriction on the
wholesale electric markets.204 Advanced injection of energy past a customer’s
Energy Economy claims that certain
retail meter during operations for
RTOs/ISOs have excluded these
providing ancillary services in its
resources through artificial
markets is a barrier to electric storage
classifications (e.g., the inability of
resources.210 Energy Storage
multiple behind-the-meter generation
Association and NextEra argue that no
and electric storage resources to provide RTO/ISO allows behind-the-meter
frequency regulation in PJM). Similarly, storage to net inject power to provide
SolarCity asks the Commission to
wholesale generator services.211 NextEra
require RTOs/ISOs to revise or
agrees that this prohibition effectively
implement rules to ensure that behindlimits the size of electric storage
the-meter resources, including electric
resources designed for customer
storage resources, have a clear path for
applications. Energy Storage
participation in all wholesale energy
Association notes that NYISO recently
markets.205
received the Commission’s conditional
115. Energy Storage Association
acceptance of its behind-the-meter net
agrees that distribution-connected
generator enhancement, but Energy
electric storage resources, including
Storage Association asserts that it still
aggregation across multiple storage
effectively excludes participation of
sradovich on DSK3GMQ082PROD with PROPOSALS3
can be aggregated to provide load
reductions.199 Under PJM’s capacity
performance proposal, electric storage
resources are eligible to aggregate with
other electric storage resources,
Intermittent Resources, Demand
Resources, Energy Efficiency Resources,
and Environmentally-Limited Resources
to provide capacity.200 In the PJM
regulation market, PJM states that all
resources, including electric storage
resources, may elect to be part of a
performance group for the purpose of
improving their overall performance
score.201 In the PJM energy market, PJM
adds that multiple batteries located
behind a single node and owned by the
same entity would be eligible to offer
into the energy market as one
resource.202
113. SPP states that resources at the
same point of injection may register at
the unit or plant level and electric
storage resources may be aggregated if
the resources are electrically equivalent
from the transmission system
perspective (i.e., use the same point of
injection).203
199 PJM Response at 20 (citing PJM Tariff,
Attachment DD, sections 11, 11A).
200 Id. (citing PJM Tariff, Attachment DD, section
5.6.1(h)).
201 Id. at 20–21 (citing PJM Manual 12, section
4.5.7).
202 Id. at 21.
203 SPP Response at 7.
204 Advanced Energy Economy Comments at 16–
18.
205 SolarCity Comments at 4.
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206 Energy Storage Association Comments at 30
(citing California Indep. Sys. Operator Corp., 155
FERC ¶ 61,229).
207 RES Americas Comments at 4–5.
208 NY Battery and Energy Storage Consortium
Comments at 6.
209 SolarCity Comments at 4.
210 Advanced Energy Economy Comments at 16–
17; Solar Grid Storage Comments at 2.
211 Energy Storage Association Comments at 29;
NextEra Comments at 12.
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electric storage resources because it
does not include electric storage
functionality (e.g., state of charge
management).212
117. Other comments focus on the
benefits of allowing distributed energy
resources to participate in the organized
wholesale markets as aggregations. RES
Americas contends that aggregation of
electric storage resources, either within
the asset class or across other resources
that can be limited in their ability to
offer a breadth of market products (i.e.,
renewables or demand response), could
be a means to realize market efficiencies
and other policy objectives without
creating entirely new market products
or otherwise disrupting grid
operations.213 Electric Vehicle R&D
Group states that third-party aggregators
are the most practical approach to
utilizing distributed electric storage
resources connected to the low- and
medium-voltage system.214 Electric
Vehicle R&D Group argues that, given
the value that distributed electric
storage resources provide to both
transmission and distribution system
operators and the lack of technical
abilities of a distribution system
operator to-date to build, qualify, and
cost-effectively operate a distributed
storage system aggregator, rules should
not prohibit third-party aggregators or
require distribution operators to manage
them. Electric Vehicle R&D Group adds
that the Commission should allow thirdparty aggregators to provide service to
both RTOs and distribution system
operators.
118. National Electrical
Manufacturers Association states that
organized wholesale electric markets
should accommodate aggregated electric
storage resources, including electric
storage resources installed behind-themeter, without imposing excessive
requirements that would preclude the
participation of smaller resources (e.g.,
arduous study processes and/or
expensive data telemetry
requirements).215 Similarly, NY Battery
and Energy Storage Consortium argues
that NYISO should avoid creating
metering and telemetry requirements
with prohibitively high transaction costs
and imposing undue burdens on
behind-the-meter storage
participation.216 Energy Storage
Association agrees that metering and
telemetry requirements and
212 Energy
Storage Association Comments at 29–
30.
213 RES
Americas Comments at 5.
Vehicle R&D Group Comments at 2.
215 National Electrical Manufacturers Association
Comments at 5.
216 NY Battery and Energy Storage Consortium
Comments at 6.
214 Electric
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sradovich on DSK3GMQ082PROD with PROPOSALS3
interconnection processes can pose
prohibitively high transaction costs for
the small project sizes that characterize
behind-the-meter electric storage
resources, creating undue burdens on
their participation in most RTOs/
ISOs.217
119. Similarly, California Energy
Storage Alliance claims that the
overhead costs of registering individual
resources within an aggregation can be
burdensome and costly.218 Specifically,
California Energy Storage Alliance
argues that the registration of individual
customer sites with load-serving
entities, the California Public Utilities
Commission, and CAISO can impose
significant costs that discourage
participation as proxy demand response
and other wholesale market resources.
California Energy Storage Alliance
asserts that a separate administrative
process under a behind-the-meter
electric storage resource-specific model,
or a streamlined version under existing
constructs, could reduce these
administrative costs by standardizing
forms and processes across all
individual resources and allowing the
submission of a single application.
120. Some commenters identify
problems with opportunities for
aggregations in the RTOs/ISOs. Energy
Storage Association is concerned that
aggregated distributed energy resources
are not permitted to offer into some
RTO/ISO markets, while it is not clear
how they can offer into others.219
Energy Storage Association claims that
market rules present barriers to
aggregation (particularly minimum size
requirements) because they are often
designed around individual sites as a
resource, rather than the capabilities of
an aggregated set of sites.220 NextEra
asserts that, to enable aggregators to
participate effectively in the organized
wholesale electric markets, more work
is needed by the RTOs/ISOs, like the
recent CAISO initiative that led to new
aggregation opportunities for small
distributed resources.221
121. Public Interest Organizations
agree that the opportunity to aggregate
distributed energy resources could help
mitigate minimum size or duration
requirements, but state that this
opportunity is lacking or unclear in
217 Energy
Storage Association Comments at 29.
Energy Storage Alliance Comments
218 California
222 Public
Interest Organizations Comments at 5.
Battery and Energy Storage Consortium
Comments at 6; NY Transmission Owners
Comments at 3 (citing NYISO Installed Capacity
Manual at 108, 110).
224 Minnesota Energy Storage Alliance Comments
at 4.
225 Solar Grid Storage Comments at 4.
226 EEI Comments at 5.
223 NY
at 7.
219 Energy Storage Association Comments at 29
(citing ISO–NE Response at 26; NYISO Response at
13).
220 Id. at 27–28.
221 NextEra Comments at 12–13 (citing California
Indep. Sys. Operator Corp., 155 FERC ¶ 61,229 at
P 60).
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some RTOs/ISOs.222 NY Battery and
Energy Storage Consortium and NY
Transmission Owners point out that
NYISO rules do not allow smaller
resources with a capacity less than 1
MW to aggregate and provide generation
above their host loads, though they can
participate as an aggregated demand
response resource.223 Similarly,
Minnesota Energy Storage Alliance
states that MISO’s market rules prevent
robust participation of distributed
electric storage resources in its energy
and ancillary service markets because
they do not permit the aggregation of
these resources to meet the 5 MW
minimum capacity requirement for a
Demand Response Resource.224
122. Solar Grid Storage states that,
while PJM’s 100 kW minimum size
requirement to participate in its
ancillary service markets allows electric
storage resources to aggregate their
dispatch, aggregated resources must be
part of a ‘‘performance group’’ in the
same location.225 Solar Grid Storage
asserts that, because some ancillary
services like frequency regulation are
not site specific and can be provided
with equal value to PJM over vastly
different areas within the ISO, this
locational restriction is unreasonable.
123. Some commenters stress the
need to ensure that grid reliability
concerns are addressed in rules
governing behind-the-meter resources,
including aggregations of such
resources. EEI states that, because
behind-the-meter resources are
interconnected to the distribution grid
and ultimately impact the transmission
system, EEI members are interested in
ensuring that any actions the RTOs/ISOs
take to allow these resources, including
aggregated resources, to participate in
the organized wholesale electric markets
do not negatively affect the electric
distribution company’s ability to
maintain the reliability of the
distribution system.226 EEI claims that
electric distribution utilities need to
have visibility and input/control of the
resources that are integrated to the
distribution system for planning and
operating purposes. SoCal Edison states
that safety and reliability needs must
take precedence over wholesale market
dispatch and asks the Commission to
consider the safe and reliable operation
of the distribution system as a key
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86541
principle when addressing the
participation of distribution systemconnected electric storage resources in
the organized wholesale electric
markets.227
4. Proposed Reforms
124. We are interested in removing
barriers in current RTO/ISO market
rules that would prevent these new,
smaller distributed energy resources
that are technically capable of
participating in the organized wholesale
electric markets from doing so. It is clear
from the comments that the ability to
meaningfully participate in the
organized wholesale electric markets for
these smaller distributed energy
resources is through aggregations. Thus,
we propose to require each RTO/ISO to
revise its tariff as necessary to allow
distributed energy resource aggregators
to offer to sell capacity, energy, and
ancillary services in the organized
wholesale electric markets. Specifically,
we propose to require each RTO/ISO to
revise its tariff to define distributed
energy resource aggregators as a type of
market participant that can participate
in the organized wholesale electric
markets under the participation model
that best accommodates the physical
and operational characteristics of its
distributed energy resource aggregation.
This proposal is similar to CAISO’s
market rules that establish a distributed
energy resource provider as a new type
of market participant.228 Our proposal
would expand the types of resources
that are eligible to participate in the
organized wholesale electric markets
through aggregators and require the
RTOs/ISOs to remove any unnecessary
limitations on how the distributed
energy resources that participate in such
aggregations must be operated.
125. Distributed energy resources may
be unable or unwilling to participate in
the organized wholesale electric markets
absent the opportunity to participate as
part of a distributed energy resource
aggregation. Distributed energy
resources are generally smaller than
other resources connected to the grid
and therefore may be unable to meet all
of the qualification or performance
requirements for participation in the
organized wholesale electric markets.
Specifically, they may be too small to
satisfy minimum size requirements on a
stand-alone basis and, as small
resources, may face operational
constraints that prevent them from
satisfying minimum performance
227 SoCal
Edison Comments at 2, 5–6.
e.g., California Indep. Sys. Operator
Corp., 155 FERC ¶ 61,229 at PP 3–7.
228 See,
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requirements.229 However, if these
distributed energy resources were
permitted to aggregate with other
distributed energy resources to
participate in the organized wholesale
electric markets, they may be able to, in
the aggregate, meet any minimum size
and performance requirements,
particularly if the operational
characteristics of different distributed
energy resources in a given distributed
energy resource aggregation
complement each other.
126. Distributed energy resource
aggregations will also help to address
the commercial and transactional
barriers to distributed energy resource
participation in the organized wholesale
electric markets. Owners and operators
of individual distributed energy
resources may be reluctant to incur the
significant costs of participating in the
organized wholesale electric markets,
such as the costs of the necessary
metering, telemetry and communication
equipment. The smaller a resource is,
the more likely the transaction costs to
sell services into the organized
wholesale electric markets outweigh the
benefits that the prospective market
participant may realize from selling
wholesale services. However, some of
these costs can be reduced by
participating in the organized wholesale
electric markets through a distributed
energy resource aggregation, for
example the time and resources
necessary to learn the market rules and
actively submit bids and/or offers into
the organized wholesale electric
markets.
127. We also believe that some of the
restrictions placed on aggregators in the
RTOs/ISOs, such as the types of
resources that can participate in those
aggregations and the inability to inject
energy onto the grid, may limit the
operation and effectiveness of existing
RTO/ISO programs for aggregations.
Therefore, as discussed further below,
we propose to expand the types of
distributed energy resources that are
eligible to participate in the organized
wholesale electric markets through
aggregators and require RTOs/ISOs to
remove any unnecessary limitations on
how the distributed energy resources
that participate in such aggregations
must be operated.
128. Our proposal requires the RTOs/
ISOs to define distributed energy
resource aggregators as a type of market
participant that can participate in the
229 For example, combining the discharge times of
multiple electric storage resources and/or
combining them with distributed generation
resources could allow aggregated resources to meet
minimum run-time requirements that individual
electric storage resources may not be able to meet.
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organized wholesale electric markets
under the participation model that best
accommodates the physical and
operational characteristics of its
distributed energy resource aggregation.
This proposed requirement means that
the distributed energy resource
aggregator would register as, for
example, a generation asset if that is the
participation model that best reflects its
physical characteristics. While we
expect efficiencies to be gained by
allowing distributed energy resources
aggregations to participate under
existing participation models, we also
acknowledge that the use of existing
participation models may not be
possible in every RTO/ISO based on
how market participation is structured.
However, where this is possible, we
emphasize that the distributed energy
resource aggregation must still satisfy
any eligibility requirements of the
applicable participation model before it
can participate in the organized
wholesale electric markets under that
participation model. Therefore, to
accommodate the participation of
distributed energy resource aggregations
under the various participation models,
we propose that each RTO/ISO modify
the eligibility requirements for existing
participation models as necessary to
allow for the participation of distributed
energy resource aggregators.
129. The costs of distributed energy
resources have decreased
significantly,230 which when paired
with alternative revenue streams and
innovative financing solutions, is
increasing these resources’ potential to
compete in and deliver value to the
organized wholesale electric markets.
Moreover, integrating these resources’
capabilities into the organized
wholesale electric markets will help the
RTOs/ISOs to account for their impacts
on installed capacity requirements and
day-ahead energy demand, thereby
reducing uncertainty in load forecasts
and reducing the risk of over
procurement of resources and the
associated costs.
130. We believe that our proposal will
provide numerous supplementary
benefits to the RTO/ISO systems. For
example, by removing barriers to the
participation of distributed energy
resources in organized wholesale
electric markets through aggregators,
these resources may locate where price
signals indicate that new capacity is
most needed, potentially helping to
alleviate congestion and congestion
230 See, e.g., Revolution . . . No, The Future
Arrives for Five Clean Energy Technologies, 2016
Update, at 1; and Tracking the Sun VIII, Lawrence
Berkeley National Lab, at 15 (Aug. 2015).
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costs during peak load conditions and to
reduce transmission investment costs
for transmitting energy into persistently
high-priced load pockets. Moreover,
unlike larger fossil fuel generators that
often are not able to locate in load
pockets due to environmental or other
citing concerns, distributed energy
resources are more able to co-locate
with load and provide associated
benefits. We also believe that the shorter
lead time to develop many forms of
distributed energy resources compared
to traditional generators or transmission
lines allows them to rapidly respond to
near-term generation or transmission
reliability-related requirements, further
improving their ability to enhance
reliability and reduce system costs.
131. Additionally, we agree with the
comments of Advanced Energy
Economy and Public Interest
Organizations that electric storage
resources and other resources connected
to the distribution system should be
able to participate in all of the organized
wholesale electric markets in which
they are technically capable of
participating and that barriers that
unnecessarily prevent distributed
energy resources from providing certain
services may be caused by market rules
that are unduly discriminatory. The
most commonly cited example of these
barriers to participation in the
comments we received are market rules
that relegate electric storage resources,
particularly behind-the-meter electric
storage resources, to market
participation using demand response
programs. We agree with commenters
that existing RTO/ISO demand response
programs may restrict the ability of
electric storage and other distributed
energy resources from providing the full
suite of services that they are capable of
providing, and therefore propose this
alternative path for distributed energy
resources to access the organized
wholesale electric markets.
132. As such, we propose to require
each RTO/ISO to revise its tariff to allow
distributed energy resource aggregators
to participate directly in the organized
wholesale electric markets and to
establish market rules to accommodate
the participation of distributed energy
resource aggregations, consistent with
the following:
a. Eligibility to participate in the
organized wholesale electric markets
through a distributed energy resource
aggregator;
b. Locational requirements for
distributed energy resource
aggregations;
c. Distribution factors and bidding
parameters for distributed energy
resource aggregations;
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d. Information and data requirements
for distributed energy resource
aggregations;
e. Modifications to the list of
resources in a distributed energy
resource aggregation;
f. Metering and telemetry system
requirements for distributed energy
resource aggregations;
g. Coordination between the RTO/
ISO, the distributed energy resource
aggregator, and the distribution utility;
and
h. Market participation agreements for
distributed energy resource aggregators.
a. Eligibility To Participate in the
Organized Wholesale Electric Markets
Through a Distributed Energy Resource
Aggregator
133. We preliminarily find that
limiting the types of technologies that
are allowed to participate in the
organized wholesale electric markets
through distributed energy resource
aggregator would create a barrier to
entry for emerging or future
technologies, potentially precluding
them from being eligible to provide all
of the capacity, energy and ancillary
services that they are technically
capable of providing. While some
individual resources or certain
technologies may not be able to meet the
qualification or performance
requirements to provide services to the
organized wholesale electric markets on
their own, they may satisfy such
requirements as part of a distributed
energy resource aggregation where
resources complement one another’s
capabilities.231 To help ensure that the
market rules that the RTOs/ISOs
develop to comply with any Final Rule
issued in this proceeding are
sufficiently flexible to accommodate the
participation of new distributed energy
resources as technology continues to
evolve and to acknowledge the potential
for distributed energy resources to
satisfy qualification or performance
requirements through a distributed
energy resource aggregator, we propose
that each RTO/ISO revise its tariff so
that it does not prohibit the
participation of any particular type of
technology in the organized wholesale
electric markets through a distributed
energy resource aggregator. However, to
the extent existing rules or regulations
explicitly prohibit certain technologies
from participating in the organized
231 Combining electric storage resources with
distributed generation could allow the aggregate
resource to achieve performance requirements (such
as minimum run times) that an electric storage
resource could not meet on its own and provide
services (such as regulation) that distributed
generation may not be able to provide on its own.
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wholesale electric markets, we do not
intend to overturn those rules or
regulations.
134. We also propose that it is
appropriate for each RTO/ISO to limit
the participation of resources in the
organized wholesale electric markets
through a distributed energy resource
aggregator that are receiving
compensation for the same services as
part of another program. Since resources
able to register as part of a distributed
energy resources aggregation will be
located on the distribution system, they
may also be eligible to participate in
retail compensation programs, such as
net metering, or other wholesale
programs, such as demand response
programs. Therefore, to ensure that
there is no duplication of compensation,
we propose that distributed energy
resources that are participating in one or
more retail compensation programs
such as net metering or another
wholesale market participation program
will not be eligible to participate in the
organized wholesale electric markets as
part of a distributed energy resource
aggregation.
135. With respect to the capacity of
the individual distributed energy
resources that can participate in the
wholesale electric markets through a
distributed energy resource aggregator,
we propose not to establish a minimum
or maximum capacity requirement. We
believe participation in the organized
wholesale electric markets through a
distributed energy resource aggregator
should not be conditioned on the size of
the resource, but we recognize that
existing organized wholesale electric
market rules may require resources to
meet certain minimum or maximum
capacity requirements under certain
participation models. Therefore, we
seek comment on whether we should
establish a minimum or maximum
capacity limit for individual resources
seeking to participate in the organized
wholesale electric markets through a
distributed energy resource aggregator,
or whether we should allow each RTO/
ISO to propose such a minimum or
maximum capacity requirement on
compliance with any Final Rule issued
in this rulemaking proceeding. To the
extent that commenters think that we
should adopt a minimum or maximum
capacity requirement for individual
distributed energy resources
participating in the organized wholesale
markets through a distributed energy
resource aggregator, we seek comment
on what that requirement should be.
136. With respect to the size of the
distributed energy resource aggregations
themselves, we propose that these
aggregations meet any minimum size
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requirements of the participation model
under which they elect to participate in
the organized wholesale electric
markets. For example, if a distributed
energy resource aggregator decides to
register using the participation model
for electric storage resources proposed
above given the cumulative physical
and operational characteristics of the
distributed energy resources in its
aggregation, then its distributed energy
resource aggregation would be required
to meet the 100 kW minimum size
requirement we propose for that
participation model. Alternatively, if the
distributed energy resource aggregator
decides to register as a generator, then
its aggregation would be required to
meet the minimum size requirement for
the generator participation model in the
relevant RTO/ISO market. We seek
comment on this proposal to require
distributed energy resource aggregations
to meet the minimum size requirements
of the participation model that they use
to participate in the organized
wholesale electric markets.
137. Consistent with Order No. 719,
we also propose that each RTO/ISO
revise its tariff to allow a single
qualifying distributed energy resource to
avail itself of the proposed distributed
energy resource aggregation rules by
serving as its own distributed energy
resource aggregator.232
b. Locational Requirements for
Distributed Energy Resource
Aggregations
138. Some RTO/ISO market rules
permit only those resources that are
located behind the same point of
interconnection or at a single pricing
node to aggregate. These limitations
could be the result of several concerns.
For instance, an RTO/ISO may be
concerned that geographically dispersed
resources participating in the organized
wholesale electric markets through a
distributed energy resource aggregation
may exacerbate a transmission
constraint or otherwise cause a
reliability concern if dispatched as a
single resource by the RTO/ISO.
Similarly, an RTO/ISO may be
concerned about price formation for
services with geographically specific
prices if geographically dispersed
resources participating in the organized
wholesale electric markets through a
distributed energy resource aggregation
were dispatched as a single resource by
the RTO/ISO. That said, we are
concerned that some existing
232 See Order No. 719, FERC Stats. & Regs.
¶ 31,281 at P 158(d) (‘‘An [aggregator of retail
customers] can bid demand response either on
behalf of only one retail customer or multiple retail
customers.’’).
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requirements for aggregations to be
located behind a single point of
interconnection or pricing node may be
overly stringent and may unnecessarily
restrict the opportunities for distributed
energy resources to participate in the
organized wholesale electric markets
through a distributed energy resource
aggregator. We also note that recent
improvements in metering, telemetry,
and communication technology should
facilitate better situational awareness
and enable management of
geographically disperse distributed
energy resource aggregations,
potentially rendering such restrictive
locational requirements unnecessary.
139. Therefore, we propose to require
each RTO/ISO to revise its tariff to
establish locational requirements for
distributed energy resources to
participate in a distributed energy
resource aggregation that are as
geographically broad as technically
feasible. Our proposal would give each
RTO/ISO flexibility to adopt locational
requirements that both allow for the
participation of geographically disperse
distributed energy resources in the
organized wholesale electric markets
through a distributed energy resource
aggregation, where technically feasible,
and account for the modeling and
dispatch of the RTO’s/ISO’s
transmission system. We further
acknowledge that the appropriate
locational requirements may differ
based on the services that a distributed
energy resource aggregator seeks to
provide (e.g., the locational
requirements for participation in the
day-ahead energy market may differ
from those for participation in the
ancillary service markets).
140. To the extent that commenters
would prefer that we require the RTOs/
ISOs to adopt consistent locational
requirements, we seek further comment
on what locational requirements we
could require each RTO/ISO to adopt
that would allow distributed energy
resources to be aggregated as widely as
possible without threatening the
reliability of the transmission grid or the
efficiency of the organized wholesale
electric markets. We note that, in some
RTOs/ISOs and for some services, the
only geographic limitations imposed on
distributed energy resource aggregations
are by zone or due to modeled
transmission constraints.233
233 See, e.g., CAISO Tariff, Att. A, section 4.17.3
(e) (‘‘Each Distributed Energy Resource Aggregation
must be located in a single Sub-LAP.’’). CAISO
defines a sub-LAP as a subset of pricing nodes
within a default load aggregation point. See CAISO
Tariff, Appendix A, Master Definitions and
Supplement. See also NYISO Market
Administration and Control Area Service Tariff,
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141. We seek comment on potential
concerns about dispatch, pricing, or
settlement that the RTOs/ISOs must
address if the distributed energy
resources in a particular distributed
energy resource aggregation are not
limited to the same pricing node or
behind the same point of
interconnection. We also note that, as
discussed in Section III.B.4.g, we
propose to allow the relevant
distribution utility or utilities to review
the list of distributed energy resources
in a distributed energy resource
aggregation, which will also help ensure
that dispatch of the aggregated
distributed energy resources as a single
resource will not cause any reliability
concerns.
c. Distribution Factors and Bidding
Parameters for Distributed Energy
Resource Aggregations
142. RTOs/ISOs need to know which
resources in a distributed energy
resource aggregation will be responding
to their dispatch signals and where
those resources are located. This
information is particularly important if
the resources in a distributed energy
resource aggregation are located across
multiple points of interconnection,
multiple transmission or distribution
lines, or multiples nodes on the grid.
143. We, therefore, propose that the
market rules governing distributed
energy resource aggregations allow the
RTOs/ISOs to require sufficient
information from the resources in a
distributed energy resource aggregation
to reliably operate their systems.
Specifically, we propose to require each
RTO/ISO to revise its tariff to include
the requirement that distributed energy
resource aggregators (1) provide default
distribution factors 234 when they
register their distributed energy resource
aggregation and (2) update those
distribution factors if necessary when
they submit offers to sell or bids to buy
into the organized wholesale electric
markets. In turn, we propose to require
each RTO/ISO to revise the bidding
section 2.4 (Definitions–D) (‘‘Demand Side
Ancillary Service Program Resource (DSASP
Resource): A Demand Side Resource or an
aggregation of Demand Side Resources located in
the [New York Control Area (NYCA)] with at least
1 MW of load reduction that is represented by a
point identifier (PTID) and is assigned to a Load
Zone or Subzone by the ISO . . . .’’); NYISO DayAhead Demand Response Program Manual at 2.16.4
(‘‘A process and procedures will be drawn to . . .
set limits to aggregation projects by zone, provider,
program, or any other category.’’).
234 For purposes of this NOPR, distribution
factors indicate how much of the total response
from a distributed energy resource aggregation
would be coming from each pricing node at which
one or more resources participating in the
aggregation are located.
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parameters for each participation model
in its tariff to allow distributed energy
resource aggregators to update their
distribution factors when participating
in the organized wholesale electric
markets. In addition to comments on
this proposal, we seek comment on
alternative approaches that may provide
the RTOs/ISOs with the information
from geographically or electrically
disperse resources in a distributed
energy resource aggregation necessary to
reliably operate their systems.
144. Moreover, we preliminarily find
that the bidding parameters for each
participation model in the RTO/ISO
tariffs may have to account for the
physical and operational characteristics
of distributed energy resource
aggregations. Therefore, we seek
comment on whether bidding
parameters in addition to those already
incorporated into existing participation
models may be necessary to adequately
characterize the physical or operational
characteristics of distributed energy
resource aggregations.
d. Information and Data Requirements
for Distributed Energy Resource
Aggregations
145. The RTOs/ISOs need sufficient
information about the distributed energy
resource aggregation and the individual
resources in a distributed energy
resource aggregation to effectively
model, dispatch, and settle the
aggregation. We preliminarily find that
the information and data requirements
that apply to distributed energy resource
aggregations must not pose barriers to
the participation of small distributed
energy resources or distributed energy
resources relying on any specific
technology in the organized wholesale
electric markets through a distributed
energy resource aggregator. We refer to
information and data requirements as
the information that the distributed
energy resource aggregator is required to
provide to the RTO/ISO when the
distributed energy resource aggregator
and its list of resources register as a
market participant as well as the
information and data necessary for
settlement and auditing purposes. In
this NOPR, we seek to balance the
information needs of RTOs/ISOs with
information requirements so
burdensome that they could limit the
benefit of these proposed changes. The
RTO/ISO will require certain
information for the distributed energy
resource aggregation as a whole, as well
as the individual resources in the
aggregation. While some of this
information may be replicated in
bidding parameters, we propose that the
distributed energy resource aggregator
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initially provide to the RTO/ISO a
description of the physical parameters
of the distributed energy resource
aggregation, including (1) the total
capacity; (2) the minimum and
maximum operating limits; (3) the ramp
rate; (4) the minimum run time; and (5)
the default distribution factors, if
applicable. We propose to require each
RTO/ISO to revise its tariff to require
distributed energy resource aggregators
to provide the RTO/ISO with a list of
the distributed energy resources in the
distributed energy resource aggregation
that includes information about each of
those distributed energy resources,
including each resource’s capacity,
location on the distribution system, and
its operating limits.
146. Electric Vehicle R&D Group
identifies PJM’s requirement for
resources in a distributed energy
resource aggregation to provide a oneline diagram of the resource as too
cumbersome, especially for small
resources at residential locations.235
Additionally, in CAISO’s distributed
energy resource provider filing, CAISO
declined to require renewable
generation resources in an aggregation
to provide the same meteorological data
that standalone intermittent generators
are required to provide because they
believed the requirement would create
an undue burden on individual
distributed energy resources.236 We
agree that certain information
requirements may be so burdensome for
individual distributed energy resources
that they pose a barrier to the
participation of these distributed energy
resources in the organized wholesale
electric markets through aggregations.
We therefore seek comment on whether
there are information and data
requirements imposed by RTOs/ISOs
that apply to other market participants
that should not apply to individual
distributed energy resources
participating in the organized wholesale
electric markets through a distributed
energy resource aggregation.
147. We also propose to require each
RTO/ISO to revise its tariff to require
distributed energy resource aggregators
to maintain aggregate settlement data for
the distributed energy resource
aggregation so that the RTO/ISO can
regularly settle with the distributed
energy resource aggregator for its market
participation. Finally, we propose to
require distributed energy resource
aggregators to maintain data for a length
of time consistent with the RTO’s/ISO’s
235 Electric
Vehicle R&D Group Comments at 8–
9.
236 See CAISO Transmittal Letter, Docket No
ER16–1085–000, at 22. (Mar. 4, 2016).
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auditing requirements, for each
individual resource in its distributed
energy resource aggregation so that each
resource can verify its performance if
audited. We seek comment on these
proposed data requirements and on
whether distributed energy resource
aggregators should be required to
provide additional data to the RTO/ISO.
e. Modifications to the List of Resources
in a Distributed Energy Resource
Aggregation
148. The requirements for a
distributed energy resource aggregator
associated with modifications to the list
of resources in a distributed energy
resource aggregation can present a
barrier to the participation of distributed
energy resource aggregations in the
organized wholesale electric markets.
Electric Vehicle R&D Group notes that,
to modify its distributed energy resource
aggregation in PJM, it has to un-register
all resources in its aggregation and then
re-run the testing protocol for the
revised aggregation to re-qualify to
participate in the PJM markets.237
Electric Vehicle R&D Group argues that
testing every incremental addition to an
aggregation is unnecessary because they
are required to continuously report their
available capacity and meter their
aggregate power response. Because the
incremental impacts on the organized
wholesale electric markets of the
addition or removal of individual
distributed energy resources from a
distributed energy resource aggregation
will likely be minimal, and they are
short lead time resources that can be
developed and built quickly, we
preliminarily conclude that they should
be able to enter and exit distributed
energy resource aggregations
participating in the organized wholesale
electric markets without undue burden.
149. We therefore propose that each
RTO/ISO revise its tariff to allow a
distributed energy resource aggregator to
modify the list of resources in its
distributed energy resource aggregation
without reregistering all of the resources
if the modification will not result in any
safety or reliability concerns. We
emphasize, however, pursuant to the
proposed requirements in Section
III.B.4.g below, that the relevant
distribution utility or utilities must have
the opportunity to review the list of
individual resources that are located on
their distribution system in a distributed
energy resource aggregation before those
resources may participate in the
organized wholesale electric markets
through the aggregation, so that they can
assess whether the resources would be
237 Electric
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able to respond to RTO/ISO dispatch
instructions without posing any
significant risk to the distribution
system.
f. Metering and Telemetry System
Requirements for Distributed Energy
Resource Aggregations
150. While the distributed energy
resources in an aggregation will need to
be directly metered, the metering and
telemetry system, i.e., hardware and
software, requirements RTOs/ISOs
impose on distributed energy resource
aggregators and individual resources in
distributed energy resource aggregations
can pose a barrier to the participation of
these aggregations in organized
wholesale electric markets. We
recognize that RTOs/ISOs need metering
data for settlement purposes, and
telemetry data to determine a resource’s
real-time operational capabilities so that
they can efficiently dispatch resources.
However, metering and telemetry
systems are often expensive potentially
creating a burden for small distributed
energy resources. While telemetry data
about a distributed energy resource
aggregation as a whole is necessary for
the RTO/ISO to efficiently dispatch the
aggregation, telemetry data for each
individual resource in the aggregation
may not be.
151. While we are not proposing to
prescribe specific metering and
telemetry systems for distributed energy
resource aggregators, we propose to
require each RTO/ISO to revise its tariff
to identify any necessary metering and
telemetry hardware and software
requirements for distributed energy
resource aggregators and the individual
resources in a distributed energy
resource aggregation. These
requirements must ensure that the
distributed energy resource aggregator
will be able to provide the necessary
information and data to the RTO/ISO
discussed in Section III.B.4.d but also
not impose unnecessarily burdensome
costs on the distributed energy resource
aggregators and individual resources in
a distributed energy resource
aggregation that may create a barrier to
their participation in the organized
wholesale electric markets. We also note
that there may be different types of
resources in these aggregations, some in
front of the meter, some behind the
meter with the ability to inject energy
back to the grid, and some behind the
meter without the ability to inject
energy to the grid. We therefore seek
comment on whether the RTOs/ISOs
need to establish metering and telemetry
hardware and software requirements for
each of the different types of distributed
energy resources that participate in the
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organized wholesale electric markets
through distributed energy resource
aggregations, as well as whether we
should establish specific metering and
telemetry system requirements and, if
so, what requirements would be
appropriate.
152. With respect to telemetry, we
believe that the distributed energy
resource aggregator should be able to
provide to the RTO/ISO the real-time
capability of its resource in a manner
similar to the requirements for
generators, so the RTO/ISO knows the
operating level of the resource and how
much that resource can ramp up or
ramp down over its full range of
capability, including its charging
capability for distributed energy
resource aggregations that include
electric storage resources. These
telemetry system requirements may also
need to be in place at different locations
for geographically dispersed distributed
energy resource aggregations that have
to provide distribution factors or other
similar factors, as discussed above. With
respect to metering, we recognize that
distributed energy resources may be
subject to metering system requirements
established by the distribution utility or
local regulatory authority. Therefore, we
propose that each RTO/ISO should rely
on meter data obtained through
compliance with these distribution
utility or local regulatory authority
metering system requirements whenever
possible for settlement and auditing
purposes, only applying additional
metering system requirements for
distributed energy resource aggregations
when this data is insufficient.
g. Coordination Between the RTO/ISO,
the Distributed Energy Resource
Aggregator, and the Distribution Utility
153. The market rules that each RTO/
ISO adopts to facilitate the participation
of distributed energy resource
aggregations must address coordination
between the RTO/ISO, the distributed
energy resource aggregator, and the
distribution utility to ensure that the
participation of these resources in the
organized wholesale electric markets
does not present reliability or safety
concerns for the distribution or
transmission system. Thus, we propose
to require each RTO/ISO to revise its
tariff to provide for coordination among
the RTO/ISO, a distributed energy
resource aggregator, and the relevant
distribution utilities with respect to (1)
the registration of new distributed
energy resource aggregations and (2)
ongoing coordination, including
operational coordination, between the
RTO/ISO, a distributed energy resource
aggregator, and the relevant distribution
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utility or utilities. We seek comment on
the detailed proposals described below.
154. First, we propose that each RTO/
ISO revise its tariff to provide for
coordination among itself, a distributed
energy resource aggregator, and the
relevant distribution utility or utilities
when a distributed energy resource
aggregator registers a new distributed
energy resource aggregation or modifies
an existing distributed energy resource
aggregation to include new resources.
The purpose of this coordination would
be to ensure that all of the individual
resources in the distributed energy
resource aggregation are technically
capable of providing services to the
RTO/ISO through the aggregator and are
eligible to be part of the aggregation (i.e.,
are not participating in another retail or
wholesale compensation program, as
discussed in Section III.B.4.a above). In
addition, we propose that this
coordination provide the relevant
distribution utility or utilities with the
opportunity to review the list of
individual resources that are located on
their distribution system that enroll in
a distributed energy resource
aggregation before those resources may
participate in the organized wholesale
electric markets through the aggregation.
The opportunity for the relevant
distribution utility or utilities to review
the list of these resources would allow
them to assess whether the resources
would be able to respond to RTO/ISO
dispatch instructions without posing
any significant risk to the distribution
system and to ensure these resources are
not participating in any other retail
compensation programs. Finally, we
propose that this coordination provide
the relevant distribution utility or
utilities the opportunity to report such
information to the RTO/ISO for its
consideration prior to the RTO/ISO
allowing the new or modified
distributed energy resource aggregation
to participate in the organized
wholesale electric market. We seek
comment on whether the RTO/ISO
tariffs should provide for any additional
review by or coordination with other
parties prior to a new or existing
distributed energy resource aggregation
participating in the organized wholesale
electric markets.
155. Second, we acknowledge that
ongoing coordination between the RTO/
ISO, a distributed energy resource
aggregator, and the relevant distribution
utility or utilities may be necessary to
ensure that the distributed energy
resource aggregator is disaggregating
dispatch signals from the RTO/ISO and
dispatching individual resources in a
distributed energy resource aggregation
consistent with the limitations of the
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distribution system. Thus, we propose
that each RTO/ISO revise its tariff to
establish a process for ongoing
coordination, including operational
coordination, among itself, the
distributed energy resource aggregator,
and the distribution utility to maximize
the availability of the distributed energy
resource aggregation consistent with the
safe and reliable operation of the
distribution system. To account for the
possibility that distribution facilities
may be out of service and impair the
operation of certain individual
resources in a distributed energy
resource aggregation, we also propose to
require each RTO/ISO to revise its tariff
to require the distributed energy
resource aggregator to report to the
RTO/ISO any changes to its offered
quantity and related distribution factors
that result from distribution line faults
or outages. We seek comment on the
level of detail necessary in the RTO/ISO
tariffs to establish a framework for
ongoing coordination between the RTO/
ISO, a distributed energy resource
aggregator, and the relevant distribution
utility or utilities. We also seek
comment on any related reliability,
safety, and operational concerns and
how they may be effectively addressed.
156. Further, we seek comment on the
appropriate lines of communication to
require. While it may be commercially
efficient for the distributed energy
resource aggregator to have the burden
of communicating with both the RTO/
ISO and the distribution utility, and
acknowledging the assumption that the
distributed energy resource aggregator
will be the single point of contact with
the RTO/ISO, are there reasons (e.g.,
distribution operations or a distributed
energy resource aggregator’s commercial
interest) why this would be insufficient
communication? Does a distribution
utility that serves distributed energy
resources need real-time direct
communication with the RTO/ISO, such
as in the form of operating procedures
or software-enabled communications, in
order to operate its distribution system,
or can that communication be organized
through the distributed energy resource
aggregator? Finally, we welcome
comments on how the distributed
energy resource aggregator model
proposed herein would interact with or
complement the distribution system
operator (DSO) model being discussed
in some states, and whether a DSO
model might add value to the
distributed energy resource aggregator
model in terms of facilitating
communication among affected entities?
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h. Market Participation Agreements for
Distributed Energy Resource
Aggregators
157. To ensure that a distributed
energy resource aggregator complies
with all relevant provisions of the RTO/
ISO tariffs, it must execute an agreement
with the RTO/ISO that defines its roles
and responsibilities and its relationship
with the RTO/ISO before it can
participate in the organized wholesale
electric markets. Since the individual
resources in these distributed energy
resource aggregations will likely fall
under the purview of multiple
organizations (e.g., the RTO/ISO, state
regulatory commissions, relevant
distribution utilities, and local
regulatory authorities), these agreements
must also require that the distributed
energy resource aggregator attests that
its distributed energy resource
aggregation is compliant with the tariffs
and operating procedures of the
distribution utilities and the rules and
regulations of any other relevant
regulatory authority.238 We therefore
propose that each RTO/ISO revise its
tariff to include a market participation
agreement for distributed energy
resource aggregators. We do not propose
specific requirements for such
agreements at this time, but instead seek
comment on the information these
agreements should contain.
158. While these agreements will
define the roles and responsibilities of
the distributed energy resource
aggregator, they should not limit the
business models under which
distributed energy resource aggregators
can operate. Therefore, we propose that
the market participation agreement for
distributed energy resource aggregators
that each RTO/ISO must include in its
tariff does not restrict the business
models that distributed energy resource
aggregators may adopt. For example,
while the third-party aggregator is a
common business model, the market
participation agreement for distributed
energy resource aggregators should not
preclude distribution utilities,
cooperatives, or municipalities from
aggregating distributed energy resources
238 This may include any laws or regulations of
the relevant retail regulatory authority that do not
permit demand response resources to participate in
the RTO/ISO markets as the Commission
considered in Order No. 719. See Order No. 719,
FERC Stats. & Regs. ¶ 31,281 at P 154.
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on their systems or even microgrids
from participating in the organized
wholesale electric markets as a
distributed energy resource aggregation.
IV. Compliance
159. We propose to require each RTO/
ISO to submit a compliance filing to
demonstrate that it satisfies the
proposed requirements set forth in the
Final Rule within six months of the date
the Final Rule in this proceeding is
published in the Federal Register.
While we believe that six months is
sufficient for each RTO/ISO to develop
and submit its compliance filing, we
recognize that implementation of the
reforms proposed herein could take
more time due to the changes that may
be necessary to each RTO’s/ISO’s
modeling and dispatch software.
Therefore, we propose to allow twelve
months from the date of the compliance
filing for implementation of the
proposed reforms to become effective.
160. We seek comment on the
proposed deadline for each RTO/ISO to
submit its compliance filing, as well as
the proposed deadline for each RTO’s/
ISO’s implementation of the proposed
reforms to become effective.
Specifically, we seek comment on
whether the proposed compliance and
implementation timeline would allow
sufficient time for each RTO/ISO to
implement changes to its technological
systems and business processes in
response to a Final Rule. We also seek
comment on whether the RTOs/ISOs
will require more or less time to
implement certain reforms versus
others.
161. To the extent that any RTO/ISO
believes that it already complies with
any of the requirements adopted in a
Final Rule in this proceeding, the RTO/
ISO would be required to demonstrate
how it complies in the filing due within
six months of the date any Final Rule in
this proceeding is published in the
Federal Register. The proposed
implementation deadline would apply
only to the extent that an RTO/ISO does
not already comply with the reforms
proposed in this NOPR.
V. Information Collection Statement
162. The Paperwork Reduction Act
(PRA) 239 requires each federal agency to
239 44
PO 00000
U.S.C. 3501–3520.
Frm 00027
Fmt 4701
seek and obtain Office of Management
and Budget (OMB) approval before
undertaking a collection of information
directed to ten or more persons or
contained in a rule of general
applicability. OMB’s regulations,240 in
turn, require approval of certain
information collection requirements
imposed by agency rules. Upon
approval of a collection(s) of
information, OMB will assign an OMB
control number and an expiration date.
Respondents subject to the filing
requirements of a rule will not be
penalized for failing to respond to these
collection(s) of information unless the
collection(s) of information display a
valid OMB control number.
163. In this NOPR, we are proposing
to amend the Commission’s regulations
under Part 35 to require each RTO/ISO
to propose revisions to its tariff to (1)
establish a participation model
consisting of market rules that,
recognizing the physical and
operational characteristics of electric
storage resources, accommodates their
participation in the organized wholesale
electric markets and (2) define
distributed energy resource aggregators
as a type of market participant that can
participate in the organized wholesale
electric markets under the participation
model that best accommodates the
physical and operational characteristics
of its distributed energy resource
aggregation. Accordingly, we encourage
comments regarding the time burden
expected to be required to comply with
the proposed rule regarding the
requirement for the RTOs/ISOs to
change their tariffs to conform to the
proposed rule. Specifically, this NOPR
seeks comment on the additional
burden and cost (human, hardware, and
software) associated with
implementation, operation, and
maintenance of these new provisions in
RTO/ISO tariffs. The Commission will
provide estimates for these costs in any
future Final Rule, as appropriate.
Burden Estimate and Information
Collection Costs: We believe that the
burden estimates below are
representative of the average burden on
respondents. The estimated burden and
cost for the requirements contained in
this NOPR follow.
240 5
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FERC–516, AS MODIFIED BY THE NOPR IN DOCKET RM16–23–000
Number of
respondents
Annual number
of responses
per respondent
Total number
of responses
Average burden (hours) &
cost per response
Total annual
burden hours &
total annual cost
Cost per
respondent
($)
(1)
(2)
(1) × (2) = (3)
(4)
(3) × (4) = (5)
(5) ÷ (1)
One-Time Tariff Filings
(Year 1).
241 6
1
Title: FERC–516, Electric Rate
Schedules and Tariff Filings.
Action: Proposed revisions to an
information collection.
OMB Control No.: 1902–0096.
Respondents for this Rulemaking:
RTOs and ISOs.
Frequency of Information: One-time
during Year One.
Necessity of Information: The
Commission implements this rule to
eliminate barriers to electric storage
resource participation in the organized
wholesale electric markets and allow for
participation of aggregated distributed
energy resources in the organized
wholesale electric markets.
Internal Review: The Commission has
reviewed the changes and has
determined that such changes are
necessary. These requirements conform
to the Commission’s need for efficient
information collection, communication,
and management within the energy
industry. The Commission has specific,
objective support for the burden
estimates associated with the
information collection requirements.
Interested persons may obtain
information on the reporting
requirements by contacting the
following: Federal Energy Regulatory
Commission, 888 First Street NE.,
Washington, DC 20426 [Attention: Ellen
Brown, Office of the Executive Director]
Email: DataClearance@ferc.gov Phone:
241 Respondent
entities are either RTOs or ISOs.
estimated hourly cost (salary plus
benefits) provided in this section is based on the
salary figures for May 2015 posted by the Bureau
of Labor Statistics for the Utilities sector (http://
www.bls.gov/oes/current/naics2_22.htm#13-0000)
and scaled to reflect benefits using the relative
importance of employer costs in employee
compensation from June 2016 (http://www.bls.gov/
news.release/ecec.nr0.htm). The hourly estimates
for salary plus benefits are:
Legal (code 23–0000), $128.94
Computer and mathematical (code 15–0000),
$60.54
Information systems manager (code 11–3021),
$91.63
IT security analyst (code 15–1122), $63.55
Auditing and accounting (code 13–2011), $53.78
Information and record clerk (code 43–4199),
$37.69
Electrical Engineer (code 17–2071), $64.20
Economist (code 19–3011), $74.43
Management (code 11–0000), $88.94
The average hourly cost (salary plus benefits),
weighting all of these skill sets evenly, is $73.74.
The Commission rounds it to $74 per hour.
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242 The
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6
1,040 hrs;
$76,960 242
(202) 502–8663; fax: (202) 273–0873.
Comments concerning the collection of
information and the associated burden
estimate(s) may also be sent to: Office of
Information and Regulatory Affairs,
Office of Management and Budget, 725
17th Street NW., Washington, DC 20503
[Attention: Desk Officer for the Federal
Energy Regulatory Commission]. Due to
security concerns, comments should be
sent electronically to the following
email address: oira_submission@
omb.eop.gov. Comments submitted to
OMB should refer to FERC–516 and
OMB Control No. 1902–0096.
VI. Regulatory Flexibility Act
Certification
164. The Regulatory Flexibility Act of
1980 (RFA) 243 generally requires a
description and analysis of proposed
rules that will have significant
economic impact on a substantial
number of small entities. The RFA
mandates consideration of regulatory
alternatives that accomplish the stated
objectives of a rule and that minimize
any significant economic impact on a
substantial number of small entities.
The Small Business Administration’s
(SBA) Office of Size Standards develops
the numerical definition of a small
business.244 These standards are
provided on the SBA Web site.245
165. The SBA classifies an entity as
an electric utility if it is primarily
engaged in the transmission, generation
and/or distribution of electric energy for
sale. Under this definition, the six
RTOs/ISOs are considered electric
utilities, specifically focused on electric
bulk power and control. The size
criterion for a small electric utility is
500 or fewer employees.246 Since every
RTO/ISO has more than 500 employees,
none are considered small entities.
166. Furthermore, because of their
pivotal roles in wholesale electric power
markets in their regions, none of the
RTOs/ISOs meet the last criterion of the
two-part RFA definition of a small
243 5
U.S.C. 601–12.
CFR 121.101.
245 U.S. Small Business Administration, Table of
Small Business Size Standards Matched to North
American Industry Classification System Codes
(effective Feb. 26, 2016), https://www.sba.gov/sites/
default/files/files/Size_Standards_Table.pdf.
246 13 CFR 121.201 (Sector 22, Utilities).
244 13
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.....
6,240 hrs; $461,760 .........
$76,960
entity: ‘‘Not dominant in its field of
operation.’’ 247 As a result, we certify
that the reforms required by this NOPR
would not have a significant economic
impact on a substantial number of small
entities.
VII. Environmental Analysis
167. The Commission is required to
prepare an Environmental Assessment
or an Environmental Impact Statement
for any action that may have a
significant adverse effect on the human
environment.248 We conclude that
neither an Environmental Assessment
nor an Environmental Impact Statement
is required for this NOPR under section
380.4(a)(15) of the Commission’s
regulations, which provides a
categorical exemption for approval of
actions under sections 205 and 206 of
the FPA relating to the filing of
schedules containing all rates and
charges for the transmission or sale of
electric energy subject to the
Commission’s jurisdiction, plus the
classification, practices, contracts and
regulations that affect rates, charges,
classifications, and services.249
VIII. Comment Procedures
168. The Commission invites
interested persons to submit comments
on all matters and issues proposed in
this Proposal to be adopted, including
any related matters or alternative
proposals that commenters may wish to
discuss. Comments are due January 30,
2017. Comments must refer to Docket
No. RM16–23–000 and must include the
commenter’s name, the organization
they represent, if applicable, and their
address.
169. The Commission encourages
comments to be filed electronically via
247 The RFA definition of ‘‘small entity’’ refers to
the definition provided in the Small Business Act,
which defines a ‘‘small business concern’’ as a
business that is independently owned and operated
and that is not dominant in its field of operation.
The Small Business Administration’s regulations at
13 CFR 121.201 define the threshold for a small
Electric Bulk Power Transmission and Control
entity (NAICS code 221121) to be 500 employees.
See 5 U.S.C. 601(3) (citing to section 3 of the Small
Business Act, 15 U.S.C. 632).
248 Regulations Implementing the National
Environmental Policy Act of 1969, Order No. 486,
52 FR 47,897 (Dec. 17, 1987), FERC Stats. & Regs.,
¶ 30,783 (1987).
249 18 CFR 380.4(a)(15).
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the eFiling link on the Commission’s
Web site at http://www.ferc.gov. The
Commission accepts most standard
word processing formats. Documents
created electronically using word
processing software should be filed in
native applications or print-to-PDF
format and not in a scanned format.
Commenters filing electronically do not
need to make a paper filing.
Commenters that are not able to file
comments electronically must send an
original of their comments to: Federal
Energy Regulatory Commission,
Secretary of the Commission, 888 First
Street NE., Washington, DC 20426.
170. All comments will be placed in
the Commission’s public files and may
be viewed, printed, or downloaded
remotely as described in the Document
Availability section below. Commenters
on this Proposal are not required to
serve copies of their comments on other
commenters.
IX. Document Availability
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171. In addition to publishing the full
text of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
view and/or print the contents of this
document via the Internet through the
Commission’s Home Page (http://
www.ferc.gov) and in the Commission’s
Public Reference Room during normal
business hours (8:30 a.m. to 5:00 p.m.
Eastern time) at 888 First Street NE.,
Room 2A, Washington, DC 20426.
172. From the Commission’s Home
Page on the Internet, this information is
available on eLibrary. The full text of
this document is available on eLibrary
in PDF and Microsoft Word format for
viewing, printing, and/or downloading.
To access this document in eLibrary,
type the docket number of this
document, excluding the last three
digits, in the docket number field.
173. User assistance is available for
eLibrary and the Commission’s Web site
during normal business hours from the
Commission’s Online Support at (202)
502–6652 (toll free at 1–866–208–3676)
or email at ferconlinesupport@ferc.gov,
or the Public Reference Room at (202)
502–8371, TTY (202) 502–8659. Email
the Public Reference Room at
public.referenceroom@ferc.gov.
List of Subjects in 18 CFR Part 35
Electric power rates; Electric utilities.
By direction of the Commission.
Issued: November 17, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
In consideration of the foregoing, the
Commission proposes to amend Part 35
Chapter 1, Title 18 of the Code of
Federal Regulations as follows:
PART 35—FILING OF RATE
SCHEDULES AND TARIFFS
1. The authority citation continues to
read as follows:
■
Authority: 16 U.S.C. 791a–825r, 2601–
2645; 31 U.S.C. 9701; 42 U.S.C. 7101–7352.
2. Amend § 35.28 by adding new
paragraphs (b)(9) through (12), (g) (9),
and (g)(10).
■
§ 35.28 Non-discriminatory open access
transmission tariff.
*
*
*
(b) * * *
*
*
(9) Electric storage resource as used in this
section means a resource capable of receiving
electric energy from the grid and storing it for
later injection of electricity back to the grid
regardless of where the resource is located on
the electrical system.
(10) Distributed energy resource as used in
this section means a source or sink of power
that is located on the distribution system, any
subsystem thereof, or behind a customer
meter.
(11) Distributed energy resource aggregator
as used in this section means the entity that
aggregates one or more distributed energy
resources for purposes of participation in the
capacity, energy and ancillary service
markets of the regional transmission
organizations and independent system
operators.
(12) Organized wholesale electric markets
as used in this section means the capacity,
energy, and ancillary service markets
operated by regional transmission
organizations and independent system
operators.
*
*
*
*
*
(g) * * *
(9) Electric Storage Resources. (i) Each
Commission-approved independent system
operator and regional transmission
organization must have tariff provisions
providing a participation model for electric
storage resources that
(A) Ensures that electric storage resources
are eligible to provide all capacity, energy
and ancillary services that they are
technically capable of providing in the
organized wholesale electric markets;
(B) Incorporates bidding parameters that
reflect and account for the physical and
operational characteristics of electric storage
resources;
(C) Ensures that electric storage resources
can be dispatched and can set the wholesale
market clearing price as both a wholesale
Abbreviation
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seller and wholesale buyer consistent with
existing rules that govern when a resource
can set the wholesale price;
(D) Establishes a minimum size
requirement for participation in the
organized wholesale electric markets that
does not exceed 100 kW; and
(E) Specifies that the sale of energy from
the organized wholesale electric markets to
an electric storage resource that the resource
then resells back to those markets must be at
the wholesale locational marginal price.
(ii) [Reserved]
(10) Distributed Energy Resource
Aggregators. (i) Each independent system
operator and regional transmission
organization must have tariff provisions that
allow distributed energy resource
aggregations to participate directly in the
organized wholesale electric markets. Each
regional transmission organization and
independent system operator must establish
distributed energy resource aggregators as a
type of market participant and must allow
the distributed energy resource aggregators to
register distributed energy resource
aggregations under the participation model in
the regional transmission operator or the
independent system operator’s tariff that best
accommodates the physical and operational
characteristics of the distributed energy
resource aggregation.
(ii) Each regional transmission operator
and independent system operator, to
accommodate the participation of distributed
energy resource aggregations, must establish
market rules on:
(A) Eligibility to participate in the
organized wholesale electric markets through
a distributed energy resource aggregation;
(B) Locational requirements for distributed
energy resource aggregations;
(C) Distribution factors and bidding
parameters for distributed energy resource
aggregations;
(D) Information and data requirements for
distributed energy resource aggregations;
(E) Modification to the list of resources in
a distributed energy resource aggregation;
(F) Metering and telemetry system
requirements for distributed energy resource
aggregations;
(G) Coordination between the regional
transmission organization or independent
system operator, the distributed energy
resource aggregator, and the distribution
utility;
(H) Market participation agreements for
distributed energy resource aggregators.
Note: The following appendix will not
appear in the Code of Federal
Regulations
Appendix A: Abbreviated Names of
Commenters
The following table contains the
abbreviated names of the commenters that
are used in this Notice of Proposed
Rulemaking.
Commenters
Advanced Energy Economy ...............................................
AEP ....................................................................................
PO 00000
Advanced Energy Economy
American Electric Power Service Corporation
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Abbreviation
Commenters
AES Companies .................................................................
Indianapolis Power & Light Company, The Dayton Power and Light Company, AES
Energy Storage LLC, AES ES Tait LLC and all other AES U.S. operating companies that own generation and storage
Alevo Analytics
Advanced Microgrid Solutions, Inc.
American Public Power Association
Advanced Rail Energy Storage, LLC
Brookfield Renewable
California Department of Water Resources
California Energy Storage Alliance
Delaware Public Service Commission
Duke Energy Corporation
Edison Electric Institute
Enel Green Power North America, Inc.
Electric Power Supply Association
University of Delaware Electric Vehicle R&D Group
Energy Storage Association
FirstLight Power Resources Management LLC
Golden Spread Electric Cooperative, Inc.
Ice Energy
Independent Energy Producers Association
Manitoba Hydro
Minnesota Energy Storage Alliance
National Electrical Manufacturers Association
National Hydropower Association
New York Battery and Energy Storage Technology Consortium
NextEra Energy Resources, LLC
National Rural Electric Cooperative Association
Central Hudson Gas & Electric Corporation, Consolidated Edison Company of New
York, Inc., New York Power Authority, New York State Electric & Gas Corporation,
Niagara Mohawk Power Corporation, Orange and Rockland Utilities, Inc., Power
Supply Long Island, and Rochester Gas and Electric Corporation
Ormat Nevada Inc.
Pacific Gas and Electric Company
Sustainable FERC Project on behalf of Natural Resources Defense Council and
Union of Concerned Scientists
Independent Market Monitor For PJM
Ralph Masiello, Quanta Technologies, LLC
Renewable Energy Systems Americas Inc.
Southern California Edison Company
Schulte Associates LLC
Solar Grid Storage, LLC
SolarCity Corporation
Steffes
Tesla Motors, Inc.
Viridity Energy, Inc.
Wellhead Electric Company
Xcel Energy Services, Inc., on behalf of its operating company affiliates, Northern
States Power and Southwestern Public Service Company
Alevo ..................................................................................
Advanced Microgrid Solutions ...........................................
APPA ..................................................................................
Advanced Rail Energy Storage ..........................................
Brookfield Renewable ........................................................
California Department of Water Resources .......................
California Energy Storage Alliance ....................................
Delaware Commission .......................................................
Duke Energy ......................................................................
EEI ......................................................................................
Enel Green Power ..............................................................
Electric Power Supply Association ....................................
Electric Vehicle R&D Group ...............................................
Energy Storage Association ...............................................
FirstLight .............................................................................
Golden Spread ...................................................................
Ice Energy ..........................................................................
Independent Energy Producers Association ......................
Manitoba Hydro ..................................................................
Minnesota Energy Storage Alliance ...................................
National Electrical Manufacturers Association ...................
National Hydropower Association ......................................
New York Battery and Energy Storage Consortium ..........
NextEra ..............................................................................
NRECA ...............................................................................
NY Transmission Owners ..................................................
Ormat .................................................................................
Pacific Gas & Electric ........................................................
Public Interest Organizations .............................................
PJM Market Monitor ...........................................................
Quanta ................................................................................
RES Americas ....................................................................
SoCal Edison .....................................................................
Schulte Associates .............................................................
Solar Grid Storage .............................................................
SolarCity .............................................................................
Steffes ................................................................................
Tesla ...................................................................................
Viridity .................................................................................
Wellhead ............................................................................
Xcel Energy Services .........................................................
[FR Doc. 2016–28194 Filed 11–29–16; 8:45 am]
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Agencies
[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)]
[Proposed Rules]
[Pages 86522-86550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28194]
[[Page 86521]]
Vol. 81
Wednesday,
No. 230
November 30, 2016
Part IV
Department of Energy
-----------------------------------------------------------------------
Federal Energy Regulatory Commission
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18 CFR Part 35
Electric Storage Participation in Markets Operated by Regional
Transmission Organizations and Independent System Operators; Proposed
Rule
Federal Register / Vol. 81 , No. 230 / Wednesday, November 30, 2016 /
Proposed Rules
[[Page 86522]]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 35
[Docket Nos. RM16-23-000; AD16-20-000]
Electric Storage Participation in Markets Operated by Regional
Transmission Organizations and Independent System Operators
AGENCY: Federal Energy Regulatory Commission, Department of Energy.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Federal Energy Regulatory Commission (Commission) is
proposing to amend its regulations under the Federal Power Act (FPA) to
remove barriers to the participation of electric storage resources and
distributed energy resource aggregations in the capacity, energy, and
ancillary service markets operated by regional transmission
organizations (RTO) and independent system operators (ISO) (organized
wholesale electric markets).
DATES: Comments are due January 30, 2017.
ADDRESSES: Comments, identified by docket number, may be filed in the
following ways:
Electronic Filing through http://www.ferc.gov. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not in a scanned
format.
Mail/Hand Delivery: Those unable to file electronically
may mail or hand-deliver comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
Instructions: For detailed instructions on submitting comments and
additional information on this process, see the Comment Procedures
Section of this document.
FOR FURTHER INFORMATION CONTACT:
Michael Herbert (Technical Information), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street NE.,
Washington, DC 20426, (202) 502-8929, michael.herbert@ferc.gov.
Heidi Nielsen (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, (202) 502-8435, heidi.nielsen@ferc.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Background
A. Electric Storage Resource and Distributed Energy Resource
Aggregation Participation in Organized Wholesale Electric Markets
B. The Need for Reform
III. Discussion
A. Elimination of Barriers to Electric Storage Resource
Participation in Organized Wholesale Electric Markets
1. Creation of a Participation Model for Electric Storage
Resources
i. Introduction
ii. Current Rules
iii. Comments
iv. Proposed Reforms
2. Requirements for the Participation Model for Electric Storage
Resources
a. Eligibility To Participate in Organized Wholesale Electric
Markets
i. Introduction
ii. Current Rules
iii. Comments
iv. Proposed Reforms
b. Bidding Parameters for Electric Storage Resources
i. Introduction
ii. Current Rules
iii. Comments
iv. Proposed Reforms
c. Eligibility To Participate as a Wholesale Seller and
Wholesale Buyer
i. Introduction
ii. Current Rules
iii. Proposed Reforms
d. Minimum Size Requirement
i. Introduction
ii. Current Rules
iii. Comments
iv. Proposed Reforms
e. Energy Used To Charge Electric Storage Resources
i. Introduction
ii. Current Rules
iii. Comments
iv. Proposed Reforms
B. Participation of Distributed Energy Resource Aggregators in
the Organized Wholesale Electric Markets
1. Introduction
2. Current Rules
3. Comments
4. Proposed Reforms
a. Eligibility To Participate in the Organized Wholesale
Electric Markets Through a Distributed Energy Resource Aggregator
b. Locational Requirements for Distributed Energy Resource
Aggregations
c. Distribution Factors and Bidding Parameters for Distributed
Energy Resource Aggregations
d. Information and Data Requirements for Distributed Energy
Resource Aggregations
e. Modifications to the List of Resources in a Distributed
Energy Resource Aggregation
f. Metering and Telemetry System Requirements for Distributed
Energy Resource Aggregations
g. Coordination Between the RTO/ISO, the Distributed Energy
Resource Aggregator, and the Distribution Utility
h. Market Participation Agreements for Distributed Energy
Resource Aggregators
IV. Compliance
V. Information Collection Statement
VI. Regulatory Flexibility Act Certification
VII. Environmental Analysis
VIII. Comment Procedures
IX. Document Availability
I. Introduction
1. In this Notice of Proposed Rulemaking (NOPR), the Federal Energy
Regulatory Commission (Commission) is proposing reforms to remove
barriers to the participation of electric storage resources \1\ and
distributed energy resource \2\ aggregations in the organized wholesale
electric markets.\3\ Specifically, we propose to require each RTO and
ISO to revise its tariff to (1) establish a participation model
consisting of market rules that, recognizing the physical and
operational characteristics of electric storage resources, accommodates
their participation in the organized wholesale electric markets and (2)
define distributed energy resource aggregators as a type of market
participant that can participate in the organized wholesale electric
markets under the participation model that best accommodates the
physical and operational characteristics of its distributed energy
resource aggregation. We are taking this action pursuant to our legal
authority under section 206 of the FPA to ensure that the RTO/ISO
tariffs are just and reasonable and not unduly discriminatory or
preferential.\4\
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\1\ We define an electric storage resource as a resource capable
of receiving electric energy from the grid and storing it for later
injection of electricity back to the grid regardless of where the
resource is located on the electrical system. These resources
include all types of electric storage technologies, regardless of
their size, storage medium (e.g., batteries, flywheels, compressed
air, pumped-hydro, etc.), or whether located on the interstate grid
or on a distribution system.
\2\ We define distributed energy resources as a source or sink
of power that is located on the distribution system, any subsystem
thereof, or behind a customer meter. These resources may include,
but are not limited to, electric storage resources, distributed
generation, thermal storage, and electric vehicles and their supply
equipment.
\3\ We define, for present purposes, organized wholesale
electric markets as the capacity, energy, and ancillary service
markets operated by regional transmission organizations (RTO) and
independent system operators (ISO).
\4\ 16 U.S.C. 824e (2012).
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2. Resource participation in the organized wholesale electric
markets is currently governed by (1) participation models \5\
consisting of market rules designed for different types of resources
and (2) the technical requirements for
[[Page 86523]]
market services that those resources are eligible to provide. Each RTO/
ISO establishes the participation models for different types of
resources and the technical requirements for providing services in a
slightly different way. Sometimes RTO/ISO participation models place
limitations on the services that certain types of resources are
eligible to provide. For example, Stored Energy Resources are only
allowed to provide regulation service in the Midcontinent Independent
System Operator, Inc. (MISO). In addition, sometimes the technical
requirements for providing a service may limit the types of resources
that are able to provide it, such as the requirement for a resource to
be running and synchronized to the grid to provide spinning reserves.
Many tariffs were originally developed in an era when traditional
generation resources were the only resources participating in the
organized wholesale electric markets. As new and innovative resources
have reached commercial maturity, RTOs/ISOs have updated their tariffs
to establish participation models for these resources and, to some
degree, reviewed the technical requirements for each service or
determined which service the new resource could provide. If an RTO/ISO
is not able to update its market rules before a new resource becomes
commercially able to sell into the organized wholesale electric
markets, the new resource may need to participate under one of the
existing participation models developed for some other type of
resource. Doing so may limit the market opportunities for new resources
and correspondingly limit the potential supply of some services. For
instance, some electric storage resources have chosen to participate as
demand response resources simply because, absent other participation
models, that is the participation model that more closely resembles the
manner in which electric storage resources might participate in the
organized wholesale electric markets. Further, new resources may have
difficulty creating momentum for the market rule changes necessary to
facilitate their participation and may thus need to spend considerable
time and effort to gain entry to the organized wholesale electric
markets. Where rules designed for traditional generation resources are
applied to new technologies, where new technologies are required to fit
into existing participation models, and where participation models
focus on the eligibility of resources to provide services more so than
the technical ability of resources to provide services, barriers can
emerge to the participation of new technologies in the organized
wholesale electric markets. We are therefore issuing this NOPR to
address these barriers to the participation of electric storage
resources and distributed energy resource aggregations in the organized
wholesale electric markets.
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\5\ We define a participation model as a set of tariff
provisions that accommodate the participation of resources with
particular physical and operational characteristics in the organized
wholesale electric markets of the RTOs and ISOs.
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3. First, we propose to require each RTO/ISO to revise its tariff
to establish a participation model consisting of market rules that,
recognizing the physical and operational characteristics of electric
storage resources, accommodates their participation in the organized
wholesale electric markets. As noted above, in this NOPR, we define a
participation model as a set of tariff provisions that accommodate the
participation of resources with particular physical and operational
characteristics in the organized wholesale electric markets of the RTOs
and ISOs.\6\ For example, the California Independent System Operator
Corporation's (CAISO) tariff defines several participation models,
including those for Participating Generators, Proxy Demand Resources,
Reliability Demand Response Resources, and Non-Generator Resources.
These participation models create unique rules for these different
types of resources where they need to be distinguished from other types
of market participants. For example, the CAISO Tariff defines Non-
Generator Resources as ``[r]esources that operate as either Generation
or Load and that can be dispatched to any operating level within their
entire capacity range but are also constrained by a MWh limit to (1)
generate Energy, (2) curtail the consumption of Energy in the case of
demand response, or (3) consume Energy.'' \7\ Since Non-Generator
Resources are operationally unique, CAISO has created rules for them
that include, but are not limited to, the requirement to enter into
participating generator and participating load agreements to
participate in the CAISO markets,\8\ the ability to participate in the
Regulation Energy Management program,\9\ the conditions under which
payments are rescinded due to MWh constraints,\10\ and the relevant
bidding parameters.\11\ Given the unique attributes of electric storage
resources, establishing a participation model consisting of market
rules that acknowledge their unique attributes will enable them to
effectively participate in the organized wholesale electric markets.
This participation model could adapt existing market rules to
incorporate the reforms proposed below and/or create a new set of rules
to accommodate the participation of electric storage resources,
depending on the existing market construct in each RTO/ISO.
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\6\ See supra note 5.
\7\ CAISO Response at 3 (citing CAISO Tariff, App. A).
\8\ See CAISO Tariff, sections 4.6 and 4.7.
\9\ See CAISO Tariff, section 8.4.1.2. Regulation Energy
Management is a market feature for resources located within the
CAISO Balancing Authority Area that require Energy from the Real-
Time Market to offer their full capacity as Regulation. CAISO
Tariff, App. A (Definitions).
\10\ See CAISO Tariff, sections 8.10.8.4 and 8.10.8.6.
\11\ See CAISO Tariff, section 30.5.6.
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4. The proposed participation model must (1) ensure that electric
storage resources are eligible to provide all capacity, energy and
ancillary services that they are technically capable of providing in
the organized wholesale electric markets; (2) incorporate bidding
parameters \12\ that reflect and account for the physical and
operational characteristics of electric storage resources; (3) ensure
that electric storage resources can be dispatched and can set the
wholesale market clearing price as both a wholesale seller and
wholesale buyer consistent with existing market rules that govern when
a resource can set the wholesale price; (4) establish a minimum size
requirement for participation in the organized wholesale electric
markets that does not exceed 100 kW; and (5) specify that the sale of
energy from the organized wholesale electric markets to an electric
storage resource that the resource then resells back to those markets
must be at the wholesale locational marginal price (LMP).
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\12\ We refer to bidding parameters as the physical and
operational constraints that a resource would identify per RTO/ISO
requirements when submitting offers to sell capacity, energy, or
ancillary services or bids to buy energy in the organized wholesale
electric markets. Commission Staff referred to these as ``bid
parameters'' in the Data Requests and Request for Comments issued on
April 11, 2016 in Docket No. AD16-20-000.
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5. Second, we propose to require each RTO/ISO to revise its tariff
to allow distributed energy resource aggregators,\13\ including
electric storage resources, to participate directly in the organized
wholesale electric markets. Specifically, we propose to require each
RTO/ISO to establish distributed energy resource aggregators as a type
of market participant and allow the distributed energy resource
aggregators to register distributed energy resource aggregations under
the participation model in the
[[Page 86524]]
RTO/ISO tariff that best accommodates the physical and operational
characteristics of the distributed energy resource aggregation. We also
propose to require that each RTO/ISO, to accommodate the participation
of distributed energy resource aggregations in the organized wholesale
electric markets, establish market rules on: (1) Eligibility to
participate in the organized wholesale electric markets through a
distributed energy resource aggregator; (2) locational requirements for
distributed energy resource aggregations; (3) distribution factors and
bidding parameters for distributed energy resource aggregations; (4)
information and data requirements for distributed energy resource
aggregations; (5) modifications to the list of resources in a
distributed energy resource aggregation; (6) metering and telemetry
system requirements for distributed energy resource aggregations; (7)
coordination between the RTO/ISO, distributed energy resource
aggregator, and the distribution utility; and (8) market participation
agreements for distributed energy resource aggregators.
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\13\ We define distributed energy resource aggregator as an
entity that aggregates one or more distributed energy resources for
purposes of participation in the organized wholesale capacity,
energy, and ancillary service markets of the RTOs and ISOs.
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II. Background
A. Electric Storage Resource and Distributed Energy Resource
Aggregation Participation in Organized Wholesale Electric Markets
6. The Commission has an ongoing interest in removing barriers to
resources that are technically capable of participating in the
organized wholesale electric markets and has been monitoring electric
storage resource participation in these markets for some time. In 2010,
Commission Staff issued a Request for Comments Regarding Rates,
Accounting and Financial Reporting for New Electric Storage
Technologies related to alternatives for categorizing and compensating
storage services and, in particular, ideas on how best to develop rate
policies that accommodate the flexibility of storage, consistent with
the FPA.\14\ Following that request, the Commission issued several
rulemakings that have helped alleviate some of the barriers to electric
storage resource participation in organized wholesale electric
markets.\15\ In addition, the Commission has addressed electric
storage-related issues on a case-by-case basis.\16\
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\14\ Request for Comments Regarding Rates, Accounting and
Financial Reporting for New Electric Storage Technologies, Docket
No. AD10-13-000 (June 11, 2010).
\15\ See, e.g., Frequency Regulation Compensation in the
Organized Wholesale Power Markets, Order No. 755, FERC Stats. &
Regs. ] 31,324 (2011), reh'g denied, Order No. 755-A, 138 FERC ]
61,123 (2012) (addressing the provision of frequency regulation in
organized wholesale electric markets); Third-Party Provision of
Ancillary Services; Accounting and Financial Reporting for New
Electric Storage Technologies, Order No. 784, FERC Stats. & Regs. ]
31,349 (2013), order on clarification, Order No. 784-A, 146 FERC ]
61,114 (2014) (addressing third-party sales of ancillary services in
bilateral markets); Small Generator Interconnection Agreements and
Procedures, Order No. 792, 145 FERC ] 61,159 (2013), clarifying,
Order No. 792-A, 146 FERC ] 61,214 (2014) (addressing
interconnection for small generators, including electric storage
resources).
\16\ See, e.g., California Indep. Sys. Operator Corp., 156 FERC
] 61,110 (2016); Nev. Hydro Co., Inc., 122 FERC ] 61,272 (2008),
reh'g denied, 133 FERC ] 61,155 (2010); Western Grid Development,
LLC, 130 FERC ] 61,056, reh'g denied, 133 FERC ] 61,029 (2010);
Midwest Indep. Trans. Sys. Operator, Inc., 129 FERC ] 61,303 (2009);
New York Indep. Sys. Operator, Inc., 127 FERC ] 61,135 (2009);
California Indep. Sys. Operator Corp., 132 FERC ] 61,211 (2010); PJM
Interconnection L.L.C., 151 FERC ] 61,208, order on reh'g, 152 FERC
] 61,064 (2015), order on reh'g and compliance, 155 FERC ] 61,157,
order on reh'g and compliance, 155 FERC ] 61,260 (2016); PJM
Interconnection, L.L.C., 132 FERC ] 61,203 (2010); Commonwealth
Edison Co., 129 FERC ] 61,185, at P 8 (2009).
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7. As the capabilities of electric storage resources and
distributed energy resources continue to improve and their costs
continue to decline, the Commission has become concerned that these
resources may face barriers that limit them from participating in
organized wholesale electric markets. To further examine this issue,
the Commission hosted a panel to discuss electric storage resources at
the November 19, 2015 Commission meeting. Subsequently, on April 11,
2016, Commission Staff issued data requests to each of the six RTOs/
ISOs, seeking information about the rules in the organized wholesale
electric markets that affect the participation of electric storage
resources (Data Requests).\17\ Concurrently, Commission Staff issued a
Request for Comments, seeking comments on whether barriers exist to the
participation of electric storage resources in the organized wholesale
electric markets that may potentially lead to unjust and unreasonable
wholesale rates (Request for Comments). In addition to the responses
from the RTOs/ISOs, Commission Staff received 44 sets of comments from
the entities identified in Appendix A.
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\17\ Specifically, Commission Staff requested information
related to (1) the eligibility of electric storage resources to
participate in the capacity, energy, and ancillary service markets
in the RTOs/ISOs; (2) the technical qualification and performance
requirements for market participants; (3) the bidding parameters for
different types of resources; (4) opportunities for distribution-
level and aggregated electric storage resources to participate in
the organized wholesale electric markets; (5) the treatment of
electric storage resources when they are receiving electricity for
later injection to the grid; and (6) any forthcoming rule changes or
other stakeholder initiatives that may affect the participation of
electric storage resources in the organized wholesale electric
markets.
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8. A number of RTOs/ISOs allow participation of distributed energy
resources, including electric storage resources, in the organized
wholesale electric markets through distributed energy resource
aggregations. For example, CAISO's Distributed Energy Resource Provider
model allows for the participation of aggregated distributed energy
resources in the energy and ancillary service markets.\18\ Other RTOs/
ISOs, including PJM Interconnection, L.L.C. (PJM), MISO, New York
Independent System Operator, Inc.'s (NYISO), and SPP, allow aggregation
in limited circumstances, typically linked to the requirement that the
demand-side, generation, and electric storage resources are located
behind the same point of interconnection or pricing node.\19\ ISO New
England Inc. (ISO-NE) also allows limited aggregations of generators,
Alternative Technology Regulation Resources, Asset Related Demands, and
demand resources subject to certain parameters.\20\
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\18\ See California Indep. Sys. Operator Corp., 155 FERC ]
61,229 (2016) (conditionally accepting tariff provisions to
facilitate participation of aggregations of distribution-connected
or distributed energy resources in CAISO's energy and ancillary
service markets).
\19\ See PJM Response at 20; MISO Response at 16; SPP Response
at 7.
\20\ ISO-NE Response at 26.
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B. The Need for Reform
9. The Commission must ensure that the rates, terms and conditions
of jurisdictional services under the FPA are just and reasonable and
not unduly discriminatory or preferential. Our proposal in this
proceeding is a continuation of efforts pursuant to our authority under
the FPA to ensure that the RTO/ISO tariffs and market rules produce
just and reasonable rates, terms and conditions of service.\21\ The
Commission has observed that market rules designed for traditional
generation resources can create barriers to entry for emerging
technologies. The Commission has responded by promulgating rules that
recognize the operational characteristics of non-traditional resources
such as variable energy
[[Page 86525]]
resources and demand response.\22\ For example, in Order No. 719, the
Commission required each RTO/ISO to accept bids from demand response
resources, on a basis comparable to any other resources, for ancillary
services that are acquired in a competitive bidding process, if the
demand response resources met certain criteria.\23\ In Order No. 764,
the Commission took action to remedy operational and other challenges
associated with the integration of variable energy resources caused by
existing practices as well as the ancillary services used to manage
system variability that were developed at a time when virtually all
generation on the system could be scheduled with relative precision and
when only load exhibited significant degrees of intra-hour
variation.\24\
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\21\ See, e.g., Integration of Variable Energy Resources, Order
No. 764, FERC Stats. & Regs. ] 31,331, order on reh'g, Order No.
764-A, 141 FERC ] 61,232 (2012), order on reh'g, Order No. 764-B,
144 FERC ] 61,222 (2013); Wholesale Competition in Regions with
Organized Electric Markets, Order No. 719, FERC Stats. & Regs. ]
31,281 (2008), order on reh'g, Order No. 719-A, FERC Stats. & Regs.
] 31,292 (2009), order on reh'g, Order No. 719-B, 129 FERC ] 61,252
(2009).
\22\ See, e.g., Order No. 764, FERC Stats. & Regs. ] 31,331;
Order No. 719, FERC Stats. & Regs. ] 31,281.
\23\ Order No. 719, FERC Stats. & Regs. ] 31,281 at PP 19, 47-
48.
\24\ Order No. 764, FERC Stats. & Regs. ] 31,331.
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10. In this proceeding, we propose to require RTOs/ISOs to address
barriers to participation of electric storage resources in the
organized wholesale electric markets. As noted above, in this NOPR, we
define an electric storage resource as a resource capable of receiving
electric energy from the grid and storing it for later injection of
electricity back to the grid regardless of where the resource is
located on the electrical system.\25\ These resources include all types
of electric storage technologies, regardless of their size, storage
medium (e.g., batteries, flywheels, compressed air, pumped-hydro,
etc.), or whether located on the interstate grid or on a distribution
system.\26\ Electric storage resources include a number of different
technologies that can serve as a sink for, or source of, electricity.
Electric storage resources' ability to charge and discharge electricity
provides these resources with significant operational flexibility, and
they can be designed to provide a variety of grid services, including
bulk energy services (e.g., capacity and energy) and ancillary services
(e.g., regulation and reserves).\27\
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\25\ See supra note 1.
\26\ Id.
\27\ Sandia National Laboratories, DOE/EPRI Electricity Storage
Handbook in Collaboration with NRECA, Report No. SAND2015-1002,
Chapter 1 (Feb. 2015) (Sandia Report).
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11. The RTOs/ISOs have taken different approaches to integrating
electric storage resources into their organized wholesale electric
markets. While electric storage resources (including batteries,
flywheels, and pumped-hydro facilities) are already providing energy
and ancillary services in some organized wholesale electric markets,
these resources often must use existing participation models designed
for traditional generation or load resources that do not recognize
electric storage resources' unique physical and operational
characteristics. Some organized wholesale electric markets have defined
participation models in their tariffs for electric storage resources,
but those models limit the services that electric storage resources may
provide.\28\ For example, these models often allow eligible electric
storage resources to participate only in the regulation market. Other
organized wholesale electric market rules are designed for electric
storage resources with very specific characteristics, such as pumped-
hydro facilities or resources with less than a one-hour maximum run
time. Smaller electric storage resources are also generally restricted
to participating in the organized wholesale electric markets as demand
response, which can limit their ability to employ their full
operational range, prohibit them from injecting power onto the grid,
and preclude them from providing certain services that they are capable
of providing such as operating reserves.
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\28\ See, e.g., Midwest Indep. Trans. Sys. Operator, Inc., 129
FERC ] 61,303 at PP 40, 64 (Commission ``note[d] that the Midwest
ISO [SER] proposal is intended to implement a specific technology,
the fly-wheel technology developed by Beacon Power''; and SER
category was ``specifically designed for a specific technology that
provides short-term Stored Resources only in the regulating reserve
market''); MISO FERC Electric Tariff, section 1.S (Stored Energy
Resources); NYISO Services Tariff, section 2.12 (defining Limited
Energy Storage Resource as a ``Generator authorized to offer
Regulation Service only and characterized by limited Energy storage,
that is, the inability to sustain continuous operation at maximum
Energy withdrawal or maximum Energy injection for a minimum period
of one hour.''). NYISO limits Limited Energy Storage Resources to
providing regulation service only and Demand Side Resources and
Generators that can sustain operation for longer than one hour are
not eligible to be Limited Energy Storage Resources. NYISO Response
at 3-4.
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12. We take action in this NOPR so that electric storage resources
will be able to participate in the organized wholesale electric markets
to the extent they are technically capable of doing so based on rules
that take into account their unique characteristics and not based on
market rules designed for the unique characteristics of other types of
resources. Requiring electric storage resources to use participation
models designed for a different type of resource may fail to recognize
electric storage resources' physical and operational characteristics
and their capability to provide energy, capacity and ancillary services
in the organized wholesale electric markets. Current tariffs that do
not recognize the operational characteristics of electric storage
resources serve to limit the participation of electric storage
resources in the organized wholesale electric markets and result in
inefficient use of these resources (i.e., electric storage resources
may be dispatched to provide one service when they could, absent market
rule limitations, provide another service more economically). As a
result, resources, including electric storage resources, do not get
dispatched efficiently, thereby impacting the competitiveness of the
market outcomes. Limiting the services an electric storage resource is
eligible to provide and limiting the efficiency in which it is
dispatched to provide services may also inhibit developers' incentives
to design their electric storage resources to provide all capacity,
energy and ancillary services these resources could otherwise provide.
This further reduces competition for providing those services in the
organized wholesale electric markets. Effective integration of electric
storage resources into the organized wholesale electric markets would
enhance competition and, in turn, help to ensure that these markets
produce just and reasonable rates.
13. We are also concerned that existing RTO/ISO tariffs impede the
participation of distributed energy resources in the organized
wholesale electric markets by providing limited opportunities for
distributed energy resource aggregations. Distributed energy resources
include a variety of constantly evolving technologies (including, but
not limited to, electric storage resources, distributed generation,
thermal storage, and electric vehicles and their supply equipment) that
are connected to the power grid at distribution-level voltages. While
these distributed energy resources can at times effectively supply the
capacity, energy, and ancillary services that are exchanged in the
organized wholesale electric markets, they can at times be too small to
participate in these markets individually. In addition, responses to
the Data Requests and Request for Comments demonstrate that current
organized wholesale electric market rules often limit the services
distributed energy resources are eligible to provide, in many cases
only allowing these resources to be used as demand response or load-
side resources when they are located behind a customer
[[Page 86526]]
meter \29\ or by imposing prohibitively expensive or otherwise
burdensome requirements.\30\
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\29\ See, e.g., MISO Response at 15 (noting that electric
storage resources connected to the distribution system can
participate in its markets as Load Modifying Resources and Demand
Response Resources--Types I or II); PJM Response at 3-6 (stating
that, if an electric storage resource is located behind a customer
meter, then PJM considers it demand response, which is not studied
for deliverability and is not eligible to inject energy into the
distribution or PJM transmission system and noting that any
injection would subject it to generator interconnection
obligations).
\30\ See Energy Storage Association Comments at 29 (stating that
metering and telemetry requirements and interconnection processes
can pose prohibitively high transaction costs for the small project
sizes that characterize behind-the-meter storage, which creates
undue burdens on behind-the-meter storage participation in most
RTOs/ISOs and noting that the ability to bid aggregated distributed
resources into wholesale markets is not possible in some RTOs/ISOs
and is unclear in others (such as NYISO, which does not allow
aggregations to meet the 1 MW size for a Limited Energy Storage
Resource)). Energy Storage Association also asserts that at present
most RTOs/ISOs do not allow behind-the-meter storage to net inject
power to provide wholesale generator services. Id. See also NextEra
Comments at 11 (stating that every RTO/ISO prohibits behind-the-
meter resources from having net injections to the grid).
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14. As with electric storage resources, we preliminarily find that
the barriers to the participation of distributed energy resources
through distributed energy resource aggregations in the organized
wholesale electric markets may, in some cases, unnecessarily restrict
competition, which could lead to unjust and unreasonable rates.
Effective wholesale competition encourages entry and exit and promotes
innovation, incentivizes the efficient operation of resources, and
allocates risk appropriately between consumers and producers. Removing
these barriers will enhance the competitiveness, and in turn the
efficiency, of organized wholesale electric markets and thereby help to
ensure just and reasonable and not unduly discriminatory or
preferential rates for wholesale electric services. We also note that
participation of electric storage resources in the organized wholesale
electric markets allows for more efficient operation of large thermal
generators, enhances reliability, provides congestion relief, improves
integration of variable energy resources, and reduces the burden on the
transmission system.\31\
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\31\ Among the benefits cited by a recent report by the Lawrence
Berkeley National Laboratory are (1) a less costly, cleaner, and
more competitive bulk power system and (2) greater reliability
through consumer reliance upon distributed energy resources to
provide resilience from bulk power and system and distribution
service interruptions. Lawrence Berkeley National Laboratory,
Electric Industry Structure and Regulatory Responses in a High
Distributed Energy Resources Future, at 26-28 (Report 1, Nov. 2015),
https://emp.lbl.gov/sites/all/files/lbnl-1003823_0.pdf (Berkeley Lab
Report). See also DNV-GL, A Review of Distributed Energy Resources:
New York Independent System Operator, at 18 (Sept. 2014) (DNV-GL
Report), http://www.nyiso.com/public/webdocs/media_room/publications_presentations/Other_Reports/Other_Reports/A_Review_of_Distributed_Energy_Resources_September_2014 (``Benefit
streams commonly attributed to distributed energy resources include,
among others: Avoided expansion of generation, transmission, or
distribution facilities, power outage mitigation or critical power
support during power outages (resiliency) and power quality
improvement (enhanced reliability); U.S. Department of Energy, The
Potential Benefits of Distributed Generation and Rate-related Issues
that May Impede Their Expansion: A Study Pursuant to Section1817 of
the Energy Policy Act of 2005 (Feb. 2007), https://www.ferc.gov/legal/fed-sta/exp-study.pdf.; IEA, Re-powering Markets: Market
design and regulation during the transition to low-carbon power
systems, at 33 (2016) (``active management of renewable resources
connected to distribution networks can help reduce or delay
distribution network investments'').
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15. Distributed energy resource aggregations are often limited to
participating in organized wholesale electric markets as demand
response, which can limit the aggregations' design and operations, as
well as the services they may provide. However, advancements in
metering, telemetry, and communication technologies support the
aggregation of distributed energy resources, allowing these resources
to meet the minimum size requirements to participate in the organized
wholesale electric markets under participation models other than demand
response. Additionally, demand response models often prohibit
distributed energy resources from injecting power back onto the grid or
increasing consumption if there is an operational requirement for such
performance.\32\ By requiring RTOs/ISOs to allow the participation of
distributed energy resource aggregations, aggregators will be able to
bundle distributed energy resources to meet RTO/ISO qualification and
performance requirements, and the RTOs/ISOs will be able to capitalize
on the aggregation's full operational range. The recent proliferation
of, and technological advancements in, distributed energy technologies,
as well as their decreasing costs, create opportunities for distributed
energy resource aggregations to be eligible to provide a variety of
services to the organized wholesale electric markets.\33\
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\32\ See PJM Response at 5 (stating that, like other types of
resources that participate in PJM's markets only by providing load
reductions, demand-side electric storage resources are not studied
by PJM through the generation interconnection process and are not
allowed to inject energy beyond the customer's meter and onto the
distribution or transmission system, as applicable).
\33\ The Berkeley Lab Report notes that technological and
procedural innovation and advancements are leading to substantial
reduction in the cost of some of these resources, such as through a
continued long-term downward trend in the installed cost of solar
PV. Berkeley Lab Report at 50, App. A. It adds that there is a wide
range of forecasts of the potential for distributed energy resources
over the coming decades, some of which suggest that penetrations
could be significant. Estimated increases range from a current 11
percent distributed energy resource penetration rate to 19 percent
of required capacity (MW) in the Eastern Interconnection under a
base case analysis by 2030; and a projection of a 37.5 percent
penetration in the Western Interconnection by 2032. Id. at 51
(citing Western Electricity Coordinating Council, SPSC Study High
EE/DR/DG (Sept. 19, 2013), https://www.wecc.biz/_layouts/15/WopiFrame.aspx?sourcedoc=/Reliability/2032_HighEEDSMDG_StudyReport.docx&action=default&DefaultItemOpen=1;
Navigant Consulting, Inc., Assessment of Demand-Side Resources
Within the Eastern Interconnection, March 2013, http://bit.ly/EISPCdsr).
---------------------------------------------------------------------------
16. Accordingly, we propose to require the RTOs/ISOs to revise
their tariffs to: (1) Establish a participation model consisting of
market rules that, recognizing the physical and operational
characteristics of electric storage resources, accommodates their
participation in the organized wholesale electric markets and (2)
define distributed energy resource aggregators as a type of market
participant that can participate in the organized wholesale electric
markets under the participation model that best accommodates the
physical and operational characteristics of its distributed energy
resource aggregation. These proposed requirements will clarify how
electric storage resources and distributed energy resources of all
types and sizes may provide services in the organized wholesale
electric markets that they are technically capable of providing.
III. Discussion
A. Elimination of Barriers to Electric Storage Resource Participation
in Organized Wholesale Electric Markets
1. Creation of a Participation Model for Electric Storage Resources
i. Introduction
17. Resource participation in organized wholesale electric markets
is currently governed by (1) participation models consisting of market
rules designed for different types of resources and (2) the technical
requirements for market services that those resources are eligible to
provide. As noted above, in this NOPR, we define a participation model
as a set of tariff provisions that accommodate the participation of
resources with particular physical and operational characteristics in
the organized wholesale electric markets of the RTOs and ISOs.\34\
While these participation models are designed to
[[Page 86527]]
accommodate the unique characteristics of different resources, new
technologies may be required to fit into existing participation models
when market rules for their unique characteristics have not been
developed. Moreover, even where participation models for new
technologies, such as electric storage resources, do exist, they may
unnecessarily limit a resource's ability to qualify for the
participation model or to provide certain services using it, despite
the technical capabilities of the resource.
---------------------------------------------------------------------------
\34\ See supra note 5.
---------------------------------------------------------------------------
18. The Commission previously has allowed flexibility for each RTO/
ISO to approach the integration of electric storage resources in its
organized wholesale electric markets differently. RTOs/ISOs developed
most of their participation models before electric storage resources
achieved their current technical capability and commercial viability,
so some markets rely on these existing models for the participation of
electric storage resources. For example, ISO-NE indicates that, for an
electric storage resource to be eligible to provide all wholesale
services, it must register as a Generator Asset,\35\ which is a
participation model designed for traditional generation and which may
not reflect the distinct operational characteristics or capabilities of
electric storage resources. Alternatively, some RTOs/ISOs have created
participation models for electric storage resources that limit the
participation of those resources to the regulation market or are
designed for electric storage resources with very specific
characteristics, such as pumped-hydro facilities or resources with less
than a one-hour maximum run time.\36\ However, other RTOs/ISOs have
created participation models for electric storage resources to provide
a wider variety of services in the organized wholesale electric markets
(such as PJM's Energy Storage Resource model \37\ and CAISO's Non-
Generator Resource model \38\). Establishing a robust participation
model for electric storage resources will help remove barriers to the
participation of electric storage resources in the organized wholesale
electric markets and ensure that electric storage resources can provide
the services that they are technically capable of providing.
---------------------------------------------------------------------------
\35\ ISO-NE Response at 3-5.
\36\ MISO Response at 2 (stating that MISO's Stored Energy
Resource model is limited to regulation service); and NYISO Response
at 3-4 (stating that NYISO limits Limited Energy Storage Resources
to providing regulation service only).
\37\ An Energy Storage Resource is defined as a ``flywheel or
battery storage facility solely used for short term storage and
injection of energy at a later time to participate in the PJM energy
and/or Ancillary Services markets as a Market Seller.'' PJM Response
at 6 (citing PJM Tariff, Att. K, section 1.3.).
\38\ See supra note 7.
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ii. Current Rules
19. In their responses to the Data Requests, the RTOs/ISOs describe
opportunities for electric storage resources to provide various energy
and ancillary service market services. For example, in CAISO, electric
storage resources are eligible to participate in the energy and
ancillary service markets as Participating Generators, Non-Generator
Resources, Pumped Storage Hydro Units, or Demand Response Resources,
even as part of distributed energy resource aggregations.\39\ Under
ISO-NE's market rules, electric storage resources can provide all
services when they qualify as a generator, provide all services except
10-minute spinning and 10-minute non-spinning reserves when they
qualify as demand response, and provide regulation as an Alternative
Technology Regulation Resource.\40\
---------------------------------------------------------------------------
\39\ CAISO Response at 2-8. See California Indep. Sys. Operator
Corp., 155 FERC ] 61,229.
\40\ ISO-NE Response at 3-5.
---------------------------------------------------------------------------
20. In MISO, electric storage resources are eligible to participate
as a Stored Energy Resource (which is only eligible to provide
regulation), a Generation Resource, a Use-Limited Resource that is
unable to operate continuously on a daily basis, and several types of
demand response resources (some of which are limited in the products
that they are eligible to provide).\41\ NYISO allows electric storage
resources to qualify as Energy Limited Resources, Limited Energy
Storage Resources (which are eligible to provide regulation service
only), or demand response resources.\42\ PJM allows electric storage
resources to participate as generation resources or demand-side
resources (which are not eligible to provide non-synchronized
reserves).\43\ Finally, SPP allows electric storage resources to
qualify as Demand Response Resources, Dispatchable Resources, External
Resources, External Dynamic Resources, and Quick-Start Resources, if
they can sustain output for 60 minutes.\44\
---------------------------------------------------------------------------
\41\ MISO Response at 7-8.
\42\ NYISO Response at 1-6.
\43\ PJM Response at 4.
\44\ SPP Response at 3-4.
---------------------------------------------------------------------------
21. Some RTOs/ISOs concede that their existing participation models
may fail to address the characteristics of certain electric storage
resources.\45\ CAISO urges the Commission to preserve some flexibility
for the RTOs/ISOs to develop market rules and participation models that
respond to electric storage developments.\46\
---------------------------------------------------------------------------
\45\ MISO Response at 3; NYISO Response at 17.
\46\ CAISO Response at 1-2.
---------------------------------------------------------------------------
iii. Comments
22. Numerous commenters argue that the lack of a participation
model that accommodates the participation of electric storage resources
creates barriers to their participation in organized wholesale electric
markets. For example, Alevo asserts that the lack of a defined asset
class for electric storage resources poses a barrier to their
participation, limiting market efficiency and competition and
increasing costs.\47\ Advanced Energy Economy claims that the failure
to account for the unique attributes, characteristics, and benefits of
advanced energy technologies prevents projects from obtaining
financing.\48\ More specifically, Energy Storage Association asserts
that NYISO's Behind-the-Meter Net Generator design still effectively
excludes participation of electric storage resources because it does
not account for electric storage functionality.\49\
---------------------------------------------------------------------------
\47\ Alevo Comments at 4, 7-17 (pointing to its analyses of the
benefits that electric storage resource participation could provide
to energy, capacity, and ancillary service markets).
\48\ Advanced Energy Economy Comments at 7.
\49\ Energy Storage Association Comments at 29-30.
---------------------------------------------------------------------------
23. Many commenters request that the Commission require the RTOs/
ISOs to establish a participation model for electric storage resources
that allows them to provide all services.\50\ Alevo argues that such a
participation model should not limit duration of discharge or services
provided,\51\ while NY Battery and Energy Storage Consortium states
that it should utilize appropriate bidding parameters and resource
modeling for electric storage resources.\52\ California Energy Storage
Alliance asks the Commission to direct the RTOs/ISOs to develop a
market model specific to behind-the-meter electric storage resources,
which would allow them to respond to market signals to provide any
wholesale market service (e.g., frequency regulation, demand response,
spinning reserve) without restrictions, with its market participation
governed by minimum performance requirements.\53\ Electric Vehicle R&D
Group supports the creation of a separate participation model for
electric storage resources that
[[Page 86528]]
allows for bidirectional power flow.\54\ Duke Energy also encourages
modifications to market rules to facilitate electric storage resource
deployment, subject to reliability requirements and non-preferential
treatment.\55\
---------------------------------------------------------------------------
\50\ Id. at 8-9, 24; NY Battery and Energy Storage Consortium
Comments at 5; Ormat Comments at 2-3; Electric Vehicle R&D Group
Comments at 3.
\51\ Alevo Comments at 8.
\52\ NY Battery and Energy Storage Consortium Comments at 5.
\53\ California Energy Storage Alliance Comments at 4-5.
\54\ Electric Vehicle R&D Group Comments at 3.
\55\ Duke Energy Comments at 4.
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Other commenters explain how the existing participation models for
demand response resources, under which electric storage resources
sometimes participate in the organized wholesale electric markets, do
not adequately accommodate electric storage resource participation.
Advanced Microgrid Solutions asserts that the compensation methods
under demand response resource participation models should not be
applied to electric storage resources because, unlike the demand
reductions that demand response resources provide, the energy that
electric storage resources deliver is purchased in the form of energy
consumed during another time such that any net-benefit test is
unnecessary.\56\ Energy Storage Association, SolarCity, and California
Energy Storage Alliance contend that the baselines used to measure
demand response resource deliveries present a barrier to electric
storage resource participation under demand response participation
models and can limit the ability of behind-the-meter electric storage
resources to provide their full capability into wholesale markets.\57\
SolarCity further argues that requiring behind-the-meter electric
storage resources to participate as demand response creates a barrier
for these resources, as they are physically and economically capable of
providing electricity beyond the customer's load.\58\ Tesla contends
that customer-sited resources (such as electric storage resources) are
interactive grid resources that are often relegated to act as less
flexible demand response resources when participating in organized
wholesale electric markets.\59\ Energy Storage Association argues that
wholesale demand response constructs can prohibit behind-the-meter
electric storage resources from offering other services.\60\
---------------------------------------------------------------------------
\56\ Advanced Microgrid Solutions Comments at 5.
\57\ Energy Storage Association Comments at 28; SolarCity
Comments at 8; California Energy Storage Alliance Comments at 4.
\58\ SolarCity Comments at 4.
\59\ Tesla Comments at 4.
\60\ Energy Storage Association Comments at 28.
---------------------------------------------------------------------------
24. Many commenters also state that behind-the-meter electric
storage resources should be permitted to inject power beyond the retail
meter. Energy Storage Association and NextEra argue that no RTO/ISO
allows behind-the-meter storage to net inject power to provide
wholesale generator services.\61\ Similarly, Advanced Energy Economy
and Solar Grid Storage argue that PJM's restriction on the injection of
energy past a customer's retail meter during operations for providing
ancillary services in their markets is a barrier to storage.\62\ Solar
Grid Storage argues that PJM's ``no injection'' barrier effectively
excludes all residential customers with storage from participation in
the PJM ancillary service markets, despite the growing potential of
this customer segment to provide meaningful resources to that organized
market.\63\
---------------------------------------------------------------------------
\61\ Id. at 29; NextEra Comments at 11. NextEra explains that a
net injection is when the output of an electric storage resource
exceeds the customer's load that it is sited with and the electric
storage resource exports power back to the grid.
\62\ Advanced Energy Economy Comments at 16-17; Solar Grid
Storage Comments at 2.
\63\ Solar Grid Storage Comments at 3.
---------------------------------------------------------------------------
25. Some commenters call for the creation of a ``load increase''
participation model for electric storage resources that allows electric
storage resources to be dispatched to receive electricity from the
grid. For example, National Hydropower Association states that pumped-
storage projects are not adequately valued because they are regarded as
either a generator or a load, which results in the undervaluation of
these projects and no new major plants being built in the last 30
years.\64\ National Hydropower Association asks the Commission to
consider adding pumped-storage as a dispatchable ``load increase''
demand response resource.\65\
---------------------------------------------------------------------------
\64\ National Hydropower Association Comments at 5-6.
\65\ Id. at 6.
---------------------------------------------------------------------------
iv. Proposed Reforms
26. As numerous commenters state, existing RTO/ISO rules that
govern participation of electric storage resources in some organized
wholesale electric markets fail to ensure that electric storage
resources that are technically capable of providing specific services
are permitted to do so. Providing a participation model that recognizes
the unique characteristics of electric storage resources will help
eliminate barriers to their participation in the organized wholesale
electric markets and promote competition and economic efficiency. We
therefore propose to require each RTO/ISO to revise its tariff to
include a participation model consisting of market rules that,
recognizing the physical and operational characteristics of electric
storage resources, accommodates their participation in organized
wholesale electric markets.
27. As the costs of electric storage resources continue to decline
and their technical potential expands, the ability of these resources
to provide operational and economic benefits to the organized wholesale
electric markets will increase. We preliminarily find that it is
important to remove barriers to participation now so that the
competitive benefits are realized without delay.
28. We thus preliminarily find that it is necessary to take action
to remove barriers to the participation of electric storage resources
in organized wholesale electric markets by requiring that the RTOs/ISOs
revise their tariffs to establish a participation model consisting of
market rules that, recognizing the physical and operational
characteristics of electric storage resources, accommodates their
participation in the organized wholesale electric markets. In addition,
to accommodate the physical and operational characteristics of electric
storage resources, we propose to require that this participation model
satisfy each of the following requirements (as discussed in detail in
Section III.A.2 of this NOPR):
a. Electric storage resources must be eligible to provide all
capacity, energy and ancillary services that they are technically
capable of providing in the organized wholesale electric markets;
b. The bidding parameters incorporated in the participation
model must reflect and account for the physical and operational
characteristics of electric storage resources;
c. Electric storage resources can be dispatched and can set the
wholesale market clearing price as both a wholesale seller and a
wholesale buyer consistent with existing rules that govern when a
resource can set the wholesale price;
d. The minimum size requirement for electric storage resources
to participate in the organized wholesale electric markets must not
exceed 100 kW; and
e. The sale of energy from the organized wholesale electric
markets to an electric storage resource that the resource then
resells back to those markets must be at the wholesale LMP.
29. To further ensure that the proposed participation model for
electric storage resources will accommodate both existing and future
electric storage resource technologies, we propose that each RTO/ISO
define the criteria in its tariff that a resource must meet to qualify
to use this participation model based on the physical and operational
attributes of electric storage resources, namely their ability to both
charge and discharge energy. As such, the qualification
[[Page 86529]]
criteria for the proposed participation model must not limit
participation to any particular type of electric storage resource or
other technology. In addition, those qualification criteria should
ensure that the RTO/ISO is able to dispatch the resource in a way that
recognizes its physical constraints and optimizes its benefits to the
RTO/ISO. We do not at this time propose to define the qualification
criteria that each RTO/ISO use but rather propose to provide the RTOs/
ISOs with flexibility to propose qualification criteria that best suit
their proposed participation models. However, we invite comment on
whether the Commission should establish the qualification criteria and,
if so, what specific qualification criteria the Commission should
require.
30. We are not proposing to limit the use of this participation
model exclusively to electric storage resources as defined herein.
While the requirements for the proposed participation model set forth
here are designed to accommodate the physical and operational
characteristics of electric storage resources, we acknowledge that
there may be other types of resources whose physical or operational
characteristics could qualify under the proposed participation model.
This may be particularly true for the distributed energy resource
aggregations considered in Section III.B below.\66\
---------------------------------------------------------------------------
\66\ For example, resources such as thermal storage that can
both increase and decrease their energy consumption could aggregate
with other distributed energy resources with common physical or
operational characteristics and qualify as a market participant
using the participation model proposed here.
---------------------------------------------------------------------------
31. In addition to including a participation model for electric
storage resources in its tariff, we propose that each RTO/ISO propose
any necessary additions or modifications to its existing tariff
provisions to specify: (1) Whether resources that qualify to use the
participation model for electric storage resources will participate in
the organized wholesale electric markets through existing or new market
participation agreements; and (2) whether particular existing market
rules apply to resources participating under the electric storage
resource participation model. CAISO, for example, has adopted numerous
tariff revisions for its Non-Generator Resource participation
model.\67\
---------------------------------------------------------------------------
\67\ See, e.g., CAISO Tariff, sections 4.6 (Relationship Between
CAISO and supply resources), 4.7 (Relationship between CAISO and
participating loads), 8.4.1.2 (availability of Regulation Energy
Management to Scheduling Coordinators for Non-Generator Resources),
8.10.8.4 (Rescission of Ancillary Service Capacity Payments for Non-
Generator Resources), 8.10.8.6 (Rescission of Payments for
Regulation Up and Regulation Down Capacity), 11.8 (Bid cost recovery
for scheduling coordinators for Non-Generator Resources), 27.9 (MWh
Constraints for Non-Generator Resources), 30.5.6 (bid components of
Non-Generator Resource bids), 31.2 (Day-ahead market power
mitigation process), 34.1.5 (Mitigating of Bids in the real time
market), 40.10.3.2 Flexible Capacity Category--Base Ramping
Resources (addressing inclusion of Non-Generator Resources),
40.10.3.3 Flexible Capacity Category--Peak Ramping Resources
(addressing inclusion of Non-Generator Resources), 40.10.3.4
Flexible Capacity Category--Super-Peak Ramping Resources (addressing
inclusion of Non-Generator Resources), 40.10.6.1 (Day-Ahead and
Real-Time Availability providing for certain Non-Generator Resources
bidding requirements).
---------------------------------------------------------------------------
32. Finally, we recognize that there are implementation costs for
creating a new participation model for electric storage resources.
While we believe the participation model and its characteristics
described below will benefit the participation of electric storage
resources in the organized wholesale electric markets, we acknowledge
that the RTOs/ISOs will need to develop rules that govern the
participation model as well as make software changes to reflect how
these resources will be modeled and dispatched when they participate in
the markets. We therefore seek comment from the RTOs/ISOs on the
changes that would be required to implement the proposed participation
model for electric storage resources as well as the associated costs
and how those costs could be minimized.
2. Requirements for the Participation Model for Electric Storage
Resources
a. Eligibility To Participate in Organized Wholesale Electric Markets
i. Introduction
33. Electric storage resources have the potential to provide a
diverse array of services to the organized wholesale electric markets
and to be designed to meet various technical requirements. However, in
many cases, the existing participation models that electric storage
resources are eligible to use in the RTOs/ISOs preclude electric
storage resources from providing all of the services that they are
technically capable of providing. In other instances, barriers may
emerge as a result of the existing technical requirements for providing
certain services that may not be appropriate for fast and controllable
technologies such as electric storage resources. Market rules that were
designed for traditional generation technologies or that otherwise
prevent new technologies from providing services that they are
technically capable of providing can have detrimental impacts on the
competitiveness of the organized wholesale electric markets.
ii. Current Rules
34. Several of the RTOs/ISOs identify limitations on the services
that electric storage resources may provide, depending on the
participation model an electric storage resource elects to use. ISO-NE
states that the non-dispatchability of Settlement Only Resources and
non-dispatchable generators prohibits such resources from providing
operating reserves. In addition, resources that cannot provide energy
within 10 minutes cannot provide 10-minute spinning or 10-minute non-
spinning reserves.\68\ ISO-NE also states that demand response
resources with one or more controllable generators, including storage
resources, are not eligible to provide 10-minute spinning reserve. In
ISO-NE, electric storage resources can only provide regulation as an
Alternative Technology Regulation Resource.\69\
---------------------------------------------------------------------------
\68\ ISO-NE Response at 11.
\69\ Id. at 3-5.
---------------------------------------------------------------------------
35. MISO states that a Stored Energy Resource is not qualified for
capacity, energy, ramp capability and contingency reserves.\70\ MISO
states that Demand Response Resource--Type I is not eligible for
regulating reserve and ramp capability products and that Dispatchable
Intermittent Resources are a subset of Generation Resources that are
not eligible to provide regulating reserves and contingency reserves.
MISO states that the Load Modifying Resource category is designed to
provide energy in emergency conditions and is only intended for the
provision of capacity. MISO also states that Emergency Demand Response
can only provide emergency energy, on a voluntary basis.
---------------------------------------------------------------------------
\70\ MISO Response at 7-8.
---------------------------------------------------------------------------
36. NYISO states that Limited Energy Storage Resources are limited
to selling only regulation service in the ancillary service market.\71\
NYISO further states that Emergency Demand Response Program resources
are only eligible to provide energy, Special Case Resources are only
eligible to provide energy and capacity, and Demand Side Ancillary
Services Program Resources are only eligible to provide ancillary
services. PJM states that demand response resources, including electric
storage resources, are ineligible to provide non-synchronized reserves
because demand response resources are already synchronized to the grid
when consuming power, and so would always
[[Page 86530]]
be classified as sync reserves when curtailing.\72\
---------------------------------------------------------------------------
\71\ NYISO Response at 6-7.
\72\ PJM Response at 4.
---------------------------------------------------------------------------
iii. Comments
37. Many commenters point to organized wholesale electric markets
where electric storage resources cannot participate, or cannot
participate fully, because market rules are either designed for
traditional generation or they place unnecessary limitations on
electric storage resources. Both Advanced Energy Economy and NextEra
argue that a resource's eligibility to provide a particular service
should be based on whether it has the technical attributes necessary to
provide that service rather than on its participation model.\73\ EEI
argues that RTOs/ISOs may need to modify their tariffs to account for
electric storage resources because many existing market rules went into
place prior to the relatively recent advances in electric storage
technology.\74\ Likewise, Alevo contends that applying market rules to
electric storage resources that were designed for transmission,
generation, and demand assets unfairly disadvantages electric storage
resources.\75\ SolarCity claims that market rules that prevent the
participation of electric storage resources in multiple markets,
particularly for ancillary services, discriminate against behind-the-
meter electric storage resources that can provide multiple services
concurrently by preventing them from stacking multiple value
streams.\76\ SolarCity suggests that the provision of one wholesale
market product should not preclude provision of other wholesale market
products when resources are technically capable of providing multiple
services.
---------------------------------------------------------------------------
\73\ Advanced Energy Economy Comments at 10-11; NextEra Comments
at 5.
\74\ EEI Comments at 4.
\75\ Alevo Comments at 8.
\76\ SolarCity Comments at 5.
---------------------------------------------------------------------------
38. Some commenters note concerns with the eligibility of electric
storage resources to provide services in specific markets. According to
AES Companies, Indianapolis Power & Light Company's Harding Street
Battery Energy Storage System, a fully-developed grid-scale battery,
cannot participate in MISO's markets because of the limitations placed
on the services Stored Energy Resources are eligible to provide and the
way they are dispatched.\77\ AES Companies further note that MISO's
Stored Energy Resource definition specifically disallows capacity
accreditation, even though some electric storage resources have
sufficient discharge duration to provide capacity and ancillary
services.\78\ Similarly, Minnesota Energy Storage Alliance contends
that none of the participation models that allow electric storage
resources to participate in MISO's capacity, energy, and ancillary
service markets facilitate participation of battery storage
technologies and, in some cases, they limit the products an electric
storage resource can provide.\79\ In contrast, Manitoba Hydro, which
operates hydroelectric facilities with reservoir storage that
participate in the MISO market as Use-Limited Resources, states that
MISO's current market rules are not barriers to electric storage
resource participation.\80\
---------------------------------------------------------------------------
\77\ AES Companies Comments at 9-10 (citing MISO Response at 3).
\78\ Id. at 2, 14.
\79\ Minnesota Energy Storage Alliance Comments at 2, 4. For
example, Minnesota Energy Storage Alliance contends that MISO's
Demand Response Resource--Type I classification is inappropriate for
advanced electric storage resources because it is designed for
resources that respond as a single block, on or off, and cannot
provide regulating reserve and ramping products.
\80\ Manitoba Hydro Comments at 4.
---------------------------------------------------------------------------
39. NY Battery and Energy Storage Consortium asserts that NYISO's
market rules prevent electric storage resources from fully
participating in NYISO's markets, noting that electric storage
resources with less than 60 minutes of output duration can only
participate as Limited Energy Storage Resources and can only provide
regulation.\81\ NY Transmission Owners also argue that NYISO's rules do
not reflect the ability of certain electric storage resources to
provide their maximum output for regulation service over a multi-hour
period and do not allow them to participate in the energy and ancillary
service markets.\82\
---------------------------------------------------------------------------
\81\ NY Battery and Energy Storage Consortium Comments at 5.
\82\ NY Transmission Owners Comments at 3.
---------------------------------------------------------------------------
40. According to Energy Storage Association, resources that
participate under CAISO's Proxy Demand Response participation model are
prohibited from providing frequency regulation, even though they may be
technically capable of doing so.\83\ Finally, NextEra notes that ISO-
NE, NYISO, and MISO prohibit an electric storage resource offering
regulation from offering any other service, even though a longer-
duration electric storage resource could provide regulation from a
portion of its capacity while providing other reserve services or
energy from the remainder of its capacity.\84\
---------------------------------------------------------------------------
\83\ Energy Storage Association Comments at 28.
\84\ NextEra Comments at 5 (citing MISO Response at 7; ISO NE
Response at 3; NYISO Response at 7).
---------------------------------------------------------------------------
41. Other commenters focus on technical requirements that limit the
ability of electric storage resource to provide certain services. NRECA
states that minimum technical requirements should not create undue
barriers to resources capable of performing a service.\85\ Similarly,
APPA states that RTOs/ISOs should establish reasonable qualification
criteria on a resource-specific basis.\86\ NY Battery and Energy
Storage Consortium argues that distributed electric storage resources,
both grid-connected and customer-sited, face barriers to market
participation due to eligibility rules and qualification/performance
requirements that should be eliminated.\87\
---------------------------------------------------------------------------
\85\ NRECA Comments at 6-7.
\86\ APPA Comments at 10-11.
\87\ NY Battery and Energy Storage Consortium Comments at 6.
---------------------------------------------------------------------------
42. Some commenters focus on the technical requirements in the
regulation markets. Viridity explains that, while the rapid ramp rates
of electric storage resources allow them to provide regulation service,
their discharge is of limited duration, so RTOs/ISOs should utilize
these resources for short periods.\88\ According to Viridity, requiring
such resources to provide regulation service over longer periods is
inconsistent with the nature of frequency response and is detrimental
to the life span and effectiveness of these resources. NextEra contends
that, despite implementation of Order No. 755 (which removed certain
barriers to the ability of fast-acting resources to provide frequency
regulation service), MISO and SPP continue to rely on the slow ramping
automatic generation control signal developed for traditional
generation resources for regulation service.\89\ NextEra notes that
advanced electric storage technologies can respond faster than these
slower regulation signals allow. NextEra points out that, in contrast,
NYISO matches the dispatch of regulation resources to the specific
ramping capabilities of each resource.\90\
---------------------------------------------------------------------------
\88\ Viridity Comments at 3-4.
\89\ NextEra Comments at 9 (citing https://www.misoenergy.org/Library/Repository/Communication%20Material/Market%20Enhancements/Market%20Roadmap/Market%20Roadmap%20Priorities.pdf) (noting that
MISO is pursuing an automatic generation control enhancement that
would implement a faster signal similar to those used by other RTOs/
ISOs).
\90\ Id. at 9.
---------------------------------------------------------------------------
43. Other commenters contend that reliability standards may
preclude electric storage resources from providing certain ancillary
services. Specifically, Energy Storage Association states that NYISO
suggested that the Northeast Power Coordinating Council's (NPCC)
qualification criteria may prohibit grid-connected electric storage
[[Page 86531]]
resources from providing synchronized reserves because inverter-based
resources like electric storage cannot comply with the required
settings inherent to synchronous generators.\91\ Similarly, ISO-NE
states that demand response resources are precluded from providing 10-
minute spinning reserve per the ISO-NE tariff definition, which is
based on the NPCC requirement that loads cannot provide synchronized
reserve if the reduction in load is dependent on starting a
generator.\92\
---------------------------------------------------------------------------
\91\ Energy Storage Association Comments at 14, 27.
\92\ ISO-NE Response at 11.
---------------------------------------------------------------------------
44. National Electrical Manufacturers Association argues that, in
ancillary service markets, spinning reserves are limited to online,
synchronized spinning generation resources. According to National
Electrical Manufacturers Association, electric storage systems capable
of providing fast-reacting, synchronized electricity should be allowed
to compete fully to provide spinning reserves.\93\ Wellhead asks the
Commission to require changes to NERC definitions so that non-
synchronous resources are not categorically excluded from providing
reserves. Wellhead notes that, under the NERC definition of ``Spinning
Reserves,'' the phrase ``unloaded generation that is synchronized''
does not clearly allow electric storage resources to participate as
spinning reserves. Wellhead also notes that NERC's definition of
``Operating Reserves--Spinning'' also does not clearly allow for market
participation of electric storage resources because they are not
generation synchronized to the system.\94\
---------------------------------------------------------------------------
\93\ National Electrical Manufacturers Association Comments at
3.
\94\ Wellhead Comments at 3-4.
---------------------------------------------------------------------------
45. Commenters also note that the requirement in some RTOs and ISOs
to have an energy schedule to provide ancillary services is a barrier
to electric storage resource participation in ancillary service
markets. Commenting on MISO's market rules, Energy Storage Association
argues that electric storage resources should not have to offer energy
to participate in certain ancillary service markets because, unlike
traditional generators, electric storage resources are able to ramp
immediately to provide spinning reserve and ramping service without
having to provide energy to do so.\95\ Energy Storage Association
explains that requiring an electric storage resource to offer energy
greatly diminishes its capability to provide services in the ancillary
service markets because storage resources are energy-limited.
---------------------------------------------------------------------------
\95\ Energy Storage Association Comments at 13-14 (citing MISO
Response at 11, n.9 (referring to Business Practice Manual sections
that describe requirements for these products, which state
``Committed Generation Resources'' are eligible to provide these
products), 14, 27).
---------------------------------------------------------------------------
46. For the capacity markets, commenters ask the Commission to
clarify that an electric storage resource should be allowed to de-rate
its capacity (i.e., offer a quantity less than its nameplate capacity)
to ensure it can satisfy the minimum run-time requirement.\96\ Energy
Storage Association states, for example, that, in the NYISO and MISO
capacity markets, an electric storage resource with a run-time duration
of less than four hours relative to its nameplate capacity should be
able to qualify for capacity at a lower power level than it would be
able to sustain for four hours at nameplate output. More specifically,
NY Battery and Energy Storage Consortium states that a 10 MW/2-hour
storage resource should be able to qualify for 5 MW of capacity as long
as it can sustain 5 MW for 4 hours.
---------------------------------------------------------------------------
\96\ Id. at 22-23; NY Battery and Energy Storage Consortium
Comments at 6; RES Americas Comments at 4.
---------------------------------------------------------------------------
47. In contrast, some commenters, such as APPA, state that
eligibility is not a significant problem for electric storage
resources.\97\ Similarly, Electric Power Supply Association argues that
the RTO/ISO responses to the Data Requests show that electric storage
resources can fully participate in the organized wholesale electric
markets.\98\ The PJM Market Monitor also claims there are no market
rules that artificially preclude participation by electric storage
resources in any of PJM's markets.\99\ The PJM Market Monitor states
that electric storage resources can make offers directly into PJM's
wholesale markets to provide energy, capacity, and ancillary services
or can participate as demand response resources.
---------------------------------------------------------------------------
\97\ APPA Comments at 10.
\98\ Electric Power Supply Association Comments at 9.
\99\ PJM Market Monitor Comments at 4.
---------------------------------------------------------------------------
iv. Proposed Reforms
48. We propose to require RTOs/ISOs to modify their tariffs to
establish a participation model consisting of market rules for electric
storage resources under which a participating resource is eligible to
provide any capacity, energy, and ancillary service that it is
technically capable of providing in the organized wholesale electric
markets. In addition, we propose that electric storage resources should
be able, as part of the participation model, to be eligible to provide
services that the RTOs/ISOs do not procure through a market mechanism,
such as blackstart, primary frequency response, and reactive power, if
they are technically capable. Where compensation for these services
exists, electric storage resources should also receive such
compensation commensurate with the service provided.
49. We also propose to require each RTO/ISO to revise its tariff to
clarify that an electric storage resource may de-rate its capacity to
meet minimum run-time requirements to provide capacity or other
services. This proposed requirement will help ensure that electric
storage resources are able to provide all services that they are
technically capable of providing by accommodating their physical and
operational characteristics, while still maintaining the quality and
reliability of services they seek to provide. In RTOs/ISOs with
capacity markets, we propose that the de-rated capacity value for
electric storage resources be consistent with the quantity of energy
that must be offered into the day-ahead energy market for resources
with capacity obligations. We preliminarily find that this reform will
remove a barrier to the participation of electric storage resources in
the organized wholesale electric markets related to minimum run-time
requirements and help ensure that the resources that do de-rate their
capacity will be able to meet their capacity supply obligations if
called upon.
50. We preliminarily conclude that a market participant's
eligibility to provide a particular reserve service should not be
conditioned on requirements that were designed for synchronous
generators, specifically the requirement to be online and synchronized
to the grid to be eligible to provide ancillary services. Newer
technologies, particularly electric storage resources, tend to be
capable of faster start-up times and higher ramp rates than traditional
synchronous generators and are therefore able to provide ramping,
spinning, and regulating reserve services without already being online
and running. Therefore, we preliminarily find that participation in
ancillary service markets should be based on a resource's ability to
provide services when it is called upon rather than on the real-time
operating status of the resource.
51. However, we acknowledge that all of the RTOs/ISOs co-optimize
energy and ancillary services dispatch and pricing and therefore may
condition eligibility to provide ancillary services on having an energy
schedule. As a result, it is not clear whether
[[Page 86532]]
eliminating the requirement for a resource to be online and
synchronized to the grid would be impactful given the continued need to
have an energy schedule. Therefore we seek comment on whether the
requirement to have an energy schedule to provide ancillary services
could be adjusted so that electric storage resources and other
technically-capable resources could participate in the ancillary
service markets independent of offering energy to the RTO/ISO.
Specifically, we seek comment on whether dispatch and pricing of energy
and ancillary services would continue to be internally consistent if a
resource were not required to offer to provide energy in order to offer
to provide ancillary services. Further, we seek comment on whether the
capability of resources to provide an ancillary service absent an
energy schedule can be determined in the regular performance tests that
the RTO/ISO conducts and whether a resource's start-up time and ramp
capability are generally represented in bidding parameters and would
adequately guarantee the resource's ability to provide other services
absent energy market participation. Additionally, we seek comment on
the extent of software changes necessary to factor the elimination of
such an energy schedule requirement into the RTO/ISO co-optimization
models.
52. Several commenters also identified concerns with how
definitions in the Glossary of Terms used in NERC reliability standards
could potentially limit participation of electric storage resources and
other non-synchronous resources in the reserve markets. While it
appears that some of the Glossary of Terms definitions were created for
synchronous generation, it is unclear the extent to which these
definitions could potentially limit participation of non-synchronous
resources in the organized wholesale electric markets. Therefore, we
seek comment on whether and to what extent the Commission-approved NERC
Glossary of Terms and associated Reliability Standards or regional
reliability requirements may create barriers to the participation of
electric storage resources or other non-synchronous technologies in the
organized wholesale electric markets.
b. Bidding Parameters for Electric Storage Resources
i. Introduction
53. Bidding parameters allow resources participating in the
organized wholesale markets to identify their physical and operational
characteristics so that the RTO/ISO can model and dispatch the resource
consistent with its operational constraints. Due to an electric storage
resource's ability to both receive and provide electricity at varying
speeds and duration and to transition between operating modes, it may
be more efficient for the RTOs/ISOs to model, optimize, and dispatch
electric storage resources differently than they do traditional
generation. By requiring electric storage resources to use bidding
parameters developed for traditional generators or other supply
resources, RTOs/ISOs may fail to effectively utilize these resources,
possibly precluding electric storage resources from providing all of
the services that they are physically and technically capable of
providing in a way that optimizes their operational capabilities and
maximizes the benefits they provide. This barrier to electric storage
resource participation in organized wholesale electric markets could
lead to over-procurement of less efficient resources and increased cost
to load.
ii. Current Rules
54. Under current market rules, resource bidding parameters vary
greatly between the RTOs/ISOs. Some RTOs/ISOs require the same bidding
parameters from all resources offering into a specific market,
regardless of the participation model under which these resources
participate, while others tie bidding parameters to specific
participation models. For example, ISO-NE requires the same bidding
parameters from all resources, including electric storage resources,
participating in its capacity, forward reserve, and regulation
markets.\100\ In ISO-NE's energy market, bidding parameters reflect the
physical characteristics of each participation model such as maximum
daily starts, maximum consumption for dispatch asset related demand,
and minimum time between reduction for demand response resources.
Similarly, SPP requires all resources participating in its day-ahead
and real-time markets under any participation model to provide a
specific set of bidding parameters to validate their offers.\101\
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\100\ ISO-NE Response at 24-25.
\101\ SPP Response at 5-6.
---------------------------------------------------------------------------
55. CAISO's market rules also require a defined list of parameters
for all bids. In addition, however, CAISO requires supplemental
parameters depending on the participation model under which a resource
is participating in its market (i.e., Participating Generator,
Participating Load, or Non-Generator Resource).\102\ Specifically,
CAISO explains that bids for participating loads, which include pumping
load or Pumped-Storage Hydro Units, may include pumping level (in
megawatts (MW)), minimum load bid (generation mode of a pumped-storage
hydro unit), load distribution factor, ramp rate, energy limit, pumping
cost, and pump shut-down costs.\103\ CAISO notes that, unlike under the
generator resource model, these resources must submit lower and upper
charge limits. Moreover, the Commission recently accepted revisions to
CAISO's tariff to allow scheduling coordinators representing non-
generator resources to include state-of-charge as a bidding
parameter.\104\
---------------------------------------------------------------------------
\102\ CAISO Response at 13-14 (citing CAISO Tariff, section 30).
\103\ Id. at 13-14 (citing CAISO Tariff, section 30.5.2.3).
\104\ California Indep. Sys. Operator Corp., 156 FERC ] 61,110.
---------------------------------------------------------------------------
56. Electric storage resources participating in NYISO's markets
must generally submit the same bidding parameters as other resources,
with some exceptions.\105\ Limited Energy Storage Resources providing
regulation service exchange a ``state of charge management'' signal
with the NYISO to facilitate the efficient use of their capabilities.
NYISO does not require Limited Energy Storage Resources, unlike other
generators, to provide regulation capacity response rates, normal
response rates, or emergency response rates with their regulation
service bids. In addition, in NYISO, electric storage resources acting
as a component of a Demand Side Ancillary Services Program resource may
only submit one normal response rate equaling the electric storage
resource's emergency response rate, while traditional generators may
submit up to three normal response rates.
---------------------------------------------------------------------------
\105\ NYISO Response at 12 (citing NYISO's Market Participant
User's Guide (Dec. 2015)).
---------------------------------------------------------------------------
57. In MISO, bidding parameters vary between markets and
participation models. MISO's market rules allow common bidding
parameters for each participation model, with a few exceptions.\106\
For example, since MISO manages the state of charge for Stored Energy
Resources, it requires the following additional bidding parameters for
these resources: Hourly maximum energy storage level; hourly maximum
energy charge rate; hourly maximum energy discharge rate; hourly energy
[[Page 86533]]
storage loss rate; and hourly full charge energy withdrawal rate.
---------------------------------------------------------------------------
\106\ MISO Response at 14-15 (citing MISO FERC Electric Tariff,
section 4.2.6 (Stored Energy Resource Offer)).
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58. Bidding parameters in PJM also vary between markets and
participation models.\107\ Additionally, pumped storage resources
offering into the PJM energy markets may either self-schedule or have
PJM dispatch their unit pursuant to the pumped storage optimization
tool. In either case, the resource must submit the following
parameters: initial storage; final storage; maximum storage; minimum
storage; pumping efficiency factor; and min/max generating and pumping
limits.\108\
---------------------------------------------------------------------------
\107\ PJM Response at 18 (citing PJM Operating Agreement,
Schedule 1, section 6.6(f)).
\108\ Id. (citing PJM Manual 11, Attachment B).
---------------------------------------------------------------------------
iii. Comments
59. Some commenters focus on the current bidding parameters for
electric storage resources. NRECA states that the Commission should not
mandate bidding parameters for specific electric storage
resources.\109\ APPA states that, at this early stage of electric
storage resource development, the required bidding parameters should
not be so prescriptive as to determine the technologies allowed to
deploy, which may constrain the ability of load-serving entities to
adopt the least-cost solution.\110\
---------------------------------------------------------------------------
\109\ NRECA Comments at 7.
\110\ APPA Comments at 11.
---------------------------------------------------------------------------
60. In contrast, NextEra suggests that each RTO/ISO evaluate how
bidding parameters could allow electric storage resources to
participate fully in the energy, ancillary service, and capacity
markets.\111\ NextEra states that the specific bidding parameters
developed for pumped hydro are inadequate for batteries and other
advanced electric storage technologies. California Energy Storage
Alliance also urges evaluation of existing market bidding parameters to
identify revisions focused on the unique characteristics of electric
storage resources and their ability to act as both generation and
load.\112\ Energy Storage Association and NY Battery and Energy Storage
Consortium agree, recommending that RTOs/ISOs establish a participation
model that incorporates appropriate bidding parameters and resource
modeling for electric storage resources.\113\
---------------------------------------------------------------------------
\111\ NextEra Comments at 10-11.
\112\ California Energy Storage Alliance Comments at 1-2.
\113\ Energy Storage Association Comments at 8-12; NY Battery
and Energy Storage Consortium Comments at 5.
---------------------------------------------------------------------------
61. Some commenters address the physical and operational
characteristics of electric storage resources that create a need for
bidding parameters in a participation model for electric storage
resources that may differ from those required under participation
models for more traditional resources. For example, Alevo argues that
electric storage resources are not certain that they can participate in
RTO/ISO markets given modeling and bidding parameter limitations in the
current RTO/ISO market clearing and dispatch engines.\114\ Alevo and
Energy Storage Association state that the RTOs'/ISOs' market modeling,
which Alevo argues is based on traditional resource types that only
withdraw electricity from or inject electricity to the grid, does not
accommodate electric storage resources' charge and discharge
cycles.\115\ Alevo further contends that no current bidding parameters
offer charge and discharge signals that would allow electric storage
resources to provide peaking services.\116\ Similarly, RES Americas
contends that accounting for injections and withdrawals of energy to
and from the grid in bidding parameters would improve optimization and
dispatch across all asset classes.\117\
---------------------------------------------------------------------------
\114\ Alevo Comments at 20.
\115\ Id.; Energy Storage Association Comments at 9.
\116\ Alevo Comments at 20.
\117\ RES Americas Comments at 4.
---------------------------------------------------------------------------
62. A few commenters address bidding parameters in specific
organized wholesale electric markets. Energy Storage Association states
that MISO's Stored Energy Resource, ISO-NE's Alternative Technology
Regulation Resource, and NYISO's Limited Energy Storage Resource
participation models explicitly allow electric storage resource
participation.\118\ According to Energy Storage Association, these
participation models offer the bidding parameters and modeling
mechanisms (such as energy-neutral signal or state-of-charge
management) necessary for electric storage resource participation.
Minnesota Energy Storage Alliance and AES Companies, however, believe
that MISO's current dispatch algorithms do not effectively use electric
storage resources because they were designed for flywheels, while
advanced battery systems have the ability to continuously charge and
discharge.\119\
---------------------------------------------------------------------------
\118\ Energy Storage Association Comments at 9-10.
\119\ Minnesota Energy Storage Alliance Comments at 4; AES
Companies Comments at 21.
---------------------------------------------------------------------------
63. Other commenters discuss bidding parameters that relate to
specific services in the organized wholesale electric markets. National
Hydropower Association states that bidding parameters should reflect
electric storage resources' ability to respond to transients with
automatic voltage regulation, power system stability, and generator
droop.\120\ National Hydropower Association claims that the NERC
standards often require these services, but RTOs/ISOs do not include
them in any bid evaluation parameters.
---------------------------------------------------------------------------
\120\ National Hydropower Association Comments at 4.
---------------------------------------------------------------------------
64. Some commenters focus on state of charge as a bidding parameter
for electric storage resources. Alevo, NextEra, SolarCity, and Energy
Storage Association agree that bidding parameters need to reflect an
electric storage resource's state of charge.\121\ Alevo states that the
inability of the RTOs'/ISOs' dispatch and clearing engines to manage
hourly and sub-hourly dispatch and consider electric storage resources'
states of charge is a barrier to electric storage resource
participation.\122\ Alevo and Energy Storage Association recommend
including a state of charge bidding parameter in market engine
optimization and dispatch modeling because an electric storage
resource's energy level at any given moment affects the services it is
capable of providing in the subsequent interval.\123\ NextEra asserts
that, although some RTOs/ISOs manage batteries' state of charge when
providing regulation service, it is unclear how electric storage
resources (or the RTOs/ISOs) can reflect their state of charge in the
unit commitment and dispatch algorithms when providing other
services.\124\
---------------------------------------------------------------------------
\121\ Alevo Comments at 20; NextEra Comments at 10; SolarCity
Comments at 9; Energy Storage Association Comments at 11.
\122\ Alevo Comments at 20.
\123\ Id.; Energy Storage Association Comments at 11.
\124\ NextEra Comments at 10-11. NextEra points to CAISO's
proposal to allow energy storage resources to submit their state of
charge as a bid parameter in the day-ahead market. This proposal was
accepted by the Commission. See California Indep. Sys. Operator
Corp., 156 FERC ] 61,110 at P 10.
---------------------------------------------------------------------------
65. Some commenters focus on the ability of electric storage
resources to manage their own state of charge. SolarCity states that
RTOs/ISOs should allow electric storage resources to manage their state
of charge rather than relying on RTO/ISO accounting estimates of their
state of charge, which could lead to faulty dispatch instructions.\125\
Likewise, NextEra recommends that the RTOs/ISOs should allow electric
storage resources to choose between RTO/ISO-management and self-
management of state of charge.\126\ Energy Storage Association asks
that RTOs/ISOs clarify how they would model, optimize, dispatch, and
settle electric storage resources using
[[Page 86534]]
negative generation and state of charge parameters so that electric
storage resources understand how they will bid into the market, receive
dispatch signals, respond to those signals, and be compensated.\127\
AES Companies state that electric storage resources should be permitted
to optimize their own state of charge because MISO's operating software
ignores the benefits of constant charge and availability.\128\
---------------------------------------------------------------------------
\125\ SolarCity Comments at 9.
\126\ NextEra Comments at 10-11. See also Ormat Comments at 3.
\127\ Energy Storage Association Comments at 7.
\128\ AES Companies Comments at 21.
---------------------------------------------------------------------------
iv. Proposed Reforms
66. We propose to require each RTO/ISO to revise its tariff to
include a participation model for electric storage resources that
incorporates bidding parameters that reflect and account for the
physical and operational characteristics of electric storage resources.
The lack of a state-of-charge bidding parameter and the lack of ability
for electric storage resources to identify their maximum energy charge
rate and maximum energy discharge rate could result in electric storage
resources being dispatched in a manner that limits their operational
effectiveness. While some existing bidding parameters were developed
for older electric storage technologies (such as pumped-hydro
facilities), newer storage technologies (such as battery storage) have
greater flexibility to transition between charging and discharging.
Therefore, bidding parameters designed for slower storage technologies
or other types of generation resources that are not capable of charging
and discharging energy may limit the opportunity for faster electric
storage resources to participate in the organized wholesale electric
markets. Appropriate bidding parameters will allow electric storage
resources to provide all services they are technically capable of
providing and allow the RTOs/ISOs to procure these services more
efficiently.
67. Specifically, we propose that the RTOs/ISOs establish state of
charge, upper charge limit, lower charge limit, maximum energy charge
rate, and maximum energy discharge rate as bidding parameters for the
participation model for electric storage resources that participating
resources must submit, as applicable. The state of charge will allow
resources using the participation model for electric storage resources
to identify their forecasted state of charge at the end of a market
interval,\129\ as defined by the RTO/ISO, while the upper and lower
charge limits will prevent the operator from trying to give or take too
much energy from the resource. We expect that the state of charge would
be telemetered in real time when the RTO/ISO is managing the state of
charge, as discussed further below, so that the upper and lower charge
limits are not exceeded, but do not propose any specific telemetry
requirements. The maximum energy charge rate and maximum energy
discharge rate will be used to indicate how quickly the resource can
receive electricity from or inject it back to the grid. We
preliminarily find that these are the minimum bidding parameters
necessary for RTOs/ISOs to effectively dispatch electric storage
resources because they provide the RTOs/ISOs with the information about
the physical and operational characteristics of electric storage
resources that allow these resources to provide the services that they
are technically capable of providing.
---------------------------------------------------------------------------
\129\ See, e.g., CAISO Tariff, Att. A, section 30.5.6 (stating
that scheduling coordinators representing Non-Generator Resources
may submit bids including the state of charge for the day-ahead
market to indicate the forecasted starting physical position of the
Non-Generator Resource.).
---------------------------------------------------------------------------
68. We also propose to require that the participation models for
electric storage resources include the following bidding parameters
that market participants may submit, at their discretion, for their
resource based on its physical constraints or desired operation:
minimum charge time, maximum charge time, minimum run time, and maximum
run time.\130\ We preliminarily conclude that these optional bidding
parameters are necessary to reflect the wide range of physical and
operational characteristics of existing and future electric storage
technologies. Specifically, electric storage technologies such as
pumped-hydro facilities that seek to provide energy in the organized
wholesale electric markets have some physical and operational
characteristics that are closer to those of traditional generation than
those of small electric storage resources designed primarily to provide
regulation service. The optional bidding parameters that we propose
here would allow electric storage resources to indicate their
operational constraints to the RTO/ISO and would help these resources
to manage any costs or operational constraints that they incur when
transitioning between charging and discharging electricity. For
example, the opportunity to submit these optional bidding parameters
could allow an electric storage resource to prevent excessive
variability in its operations to help optimize the services that it is
available to provide and to preserve the life of the electric storage
resource.
---------------------------------------------------------------------------
\130\ We acknowledge that some of these optional bidding
parameters may not be necessary for resources participating under
the proposed participation model for electric storage resources that
provide certain information to the RTO/ISO through telemetry.
---------------------------------------------------------------------------
69. Also, where the RTO/ISO has reserved for itself the right to
manage the state of charge of an electric storage resource, we propose
to require that the RTOs/ISOs allow electric storage resources to self-
manage their state of charge and upper and lower charge limits. An
electric storage resource that opts to self-manage its state of charge
and upper and lower charge limits would keep its state of charge at an
optimal level through its own bidding strategy, rather than the RTO/ISO
market processes ensuring that dispatch does not violate its physical
constraints. The Commission recently accepted revisions to the CAISO
tariff that allow non-generator resources to self-manage their energy
limits and state-of-charge in real-time.\131\
---------------------------------------------------------------------------
\131\ California Indep. Sys. Operator, Corp., 156 FERC ] 61,110
at P 10.
---------------------------------------------------------------------------
70. Of course, an electric storage resource that self-manages its
state of charge is subject to any penalties for deviating from a
dispatch schedule to the extent the resource manages its state of
charge by deviating from the dispatch schedule. While RTOs/ISOs may be
in a better position to effectively manage the state of charge for an
electric storage resource that, for example, exclusively provides
regulation service in the organized wholesale electric markets, some
electric storage resources may be interested in providing multiple
service or providing services to another party, such as to a load with
which it is co-located. Affording electric storage resources the option
to manage their state of charge would allow these resources to optimize
their operations to provide all of the services that they are
technically capable of providing, similar to the operational
flexibility that traditional generators have to manage the wholesale
services that they offer. However, we seek comment on whether there are
conditions under which an RTO/ISO should not allow an electric storage
resource to manage its state of charge and upper and lower charge
limits.
71. While the inclusion of these bidding parameters would allow for
more efficient use of electric storage resources, their implementation
also requires the RTOs/ISOs to program these bidding parameters into
their modeling and dispatch software. The difficulty of implementing
these bidding parameters would likely vary from RTO/ISO to RTO/ISO.
Therefore, we seek
[[Page 86535]]
comment on the time and resources that would be necessary for the RTOs/
ISOs to incorporate these bidding parameters, including the optional
bidding parameters, into their modeling and dispatch software.
c. Eligibility To Participate as a Wholesale Seller and Wholesale Buyer
i. Introduction
72. The ability of electric storage resources to receive and
provide electricity positions them to be both buyers and sellers in the
organized wholesale electric markets. As the Commission has previously
recognized, a market functions effectively only when both supply and
demand can meaningfully participate.\132\ Improving electric storage
resources' opportunity to participate as both wholesale sellers of
services and wholesale buyers of energy could improve market efficiency
by allowing the RTO/ISO to dispatch these resources in accordance with
their most economically efficient use (i.e., as supply when the market
clearing price for energy is higher than their offer and as demand when
the market clearing price is lower than their bid). Moreover, allowing
electric storage resources to participate in the organized wholesale
electric markets as dispatchable load would allow these resources,
under certain circumstances, to set the price in these markets, better
reflecting the value of the marginal resource and ensuring that
electric storage resources are dispatched in accordance with the
highest value service that they are capable of providing during a set
market interval.
---------------------------------------------------------------------------
\132\ Demand Response Compensation in Organized Wholesale Energy
Markets, Order No. 745, FERC Stats. & Regs. ] 31,322, at P 1, order
on reh'g, Order No. 745-A, 137 FERC ] 61,215 (2011).
---------------------------------------------------------------------------
ii. Current Rules
73. Each RTO's/ISO's market rules that govern the eligibility of
electric storage resources to participate in the organized wholesale
electric markets as a demand resource are different. For example, CAISO
explains that an electric storage resource interconnected to the CAISO
grid with a participating generator agreement and participating load
agreement can submit offers to sell and bids to buy energy in the
wholesale market.\133\ According to SPP, submitting bids to purchase
energy in its market is within the resource owner's discretion.\134\
SPP notes that electric storage resources may submit virtual bids in
the day-ahead market at any location and a fixed or price-sensitive bid
at their registered load. In contrast, PJM explains that electric
storage resources do not submit wholesale bids to buy electricity.\135\
---------------------------------------------------------------------------
\133\ CAISO Response at 16.
\134\ SPP Response at 7.
\135\ PJM Response at 22.
---------------------------------------------------------------------------
74. ISO-NE states that, because it is dispatchable, an electric
storage resource participating as a Dispatchable Asset Related Demand
resource may submit bids to buy energy in both the day-ahead and real-
time energy markets; however, if it is participating as a load asset or
an Asset Related Demand, it may submit bids to buy energy in the day-
ahead market but would be a price taker in real-time.\136\
---------------------------------------------------------------------------
\136\ ISO-NE Response at 28 (citing ISO-NE Tariff, section
I.2.2).
---------------------------------------------------------------------------
75. MISO explains that, in the day-ahead market, electric storage
resources may submit bids to buy energy at the LMP when they need to
recharge as dispatchable demand or may submit virtual bids.\137\ MISO
further explains that in the real-time market, most load buys energy as
fixed demand and only Demand Response Resources--Type II can submit
demand response offers to buy energy.
---------------------------------------------------------------------------
\137\ MISO Response at 16.
---------------------------------------------------------------------------
76. NYISO states that Energy Limited Resources obtain charging
energy through negative MW value generation offers, rather than a bid
to buy energy.\138\ NYISO explains that demand-side resources
participating in the Special Case Resource Program, Emergency Demand
Response Program, Demand Side Ancillary Services Program, or Day-Ahead
Demand Response Program do not submit bids to buy energy in the
wholesale markets unless the resource is a load-serving entity, in
which case it purchases its entire load. NYISO states that a demand-
side resource may submit price-responsive load bids to take advantage
of off-peak prices to charge its electric storage resource. NYISO adds
that electric storage resources are not required to bid to buy
electricity from the NYISO market, but, like any load, may bid into the
day-ahead market as a price cap load bid.\139\
---------------------------------------------------------------------------
\138\ NYISO Response at 14-15.
\139\ Id. at 15 (citing NYISO Services Tariff, section 21.1).
---------------------------------------------------------------------------
77. The eligibility for an electric storage resource to set the
price in the organized wholesale electric markets also varies among the
RTOs/ISOs. For example, CAISO states that an electric storage resource
that is the marginal resource may set the price of energy and ancillary
services in CAISO's markets based on its economic bid.\140\ PJM states
that, with the exception of demand-side resources in the non-
synchronized reserve market, electric storage resources may set the
price as either a generation or as a demand-side resource in the
capacity, energy, and ancillary service markets.\141\ SPP states that
any resource, including an electric storage resource, qualified to
participate in an SPP market may set the price for the relevant
market.\142\
---------------------------------------------------------------------------
\140\ CAISO Response at 10.
\141\ PJM Response at 10.
\142\ SPP Response at 4.
---------------------------------------------------------------------------
78. ISO-NE states that, in each of its markets, electric storage
resources may be able to set the clearing price, depending on the
participation model that they are using to participate.\143\ ISO-NE
explains that only dispatchable resources (i.e., dispatchable generator
assets and dispatchable asset related demand) may set the clearing
price in the real-time energy market. ISO-NE explains that, in the day-
ahead energy market, an electric storage resource may set the price by
offering into the market as a generator resource, Asset Related Demand,
or Dispatchable Asset Related Demand. ISO-NE adds that, by qualifying
as a new generator resource or as a demand resource, an electric
storage resource may bid its qualified MWs into the capacity market and
set the clearing price. ISO-NE notes that an electric storage resource
or aggregation of electric storage resources may set the regulation
market clearing prices by offering as an Alternative Technology
Regulation Resource. ISO-NE states that an electric storage resource
may also set the market-clearing regulation price by offering into the
regulation market as a generator resource or Dispatchable Asset Related
Demand.
---------------------------------------------------------------------------
\143\ ISO-NE Response at 12-13. ISO-NE explains that, today,
Real-Time Demand Response assets are price-takers in the real-time
energy market but that, with the full integration of demand response
into the energy market scheduled for June 1, 2018, demand response
resources will have the potential to set market clearing prices.
---------------------------------------------------------------------------
79. MISO states that electric storage resources may set prices for
products in the market(s) in which they are eligible to participate.
MISO explains that, for example, an electric storage resource
registered as a Load Modifying Resource may set the price in the
capacity market. MISO states that an electric storage resource
registered as a Stored Energy Resource may set the price for regulating
reserve.\144\
---------------------------------------------------------------------------
\144\ MISO Response at 10.
---------------------------------------------------------------------------
80. NYISO explains that supply offers of electric storage resources
that participate as Energy Limited Resources may set the price for
capacity, energy, and ancillary services; Limited Energy Storage
Resources may set the price for regulation service. NYISO explains that
Special Case Resources and Emergency
[[Page 86536]]
Demand Response Program resource energy offers do not directly set the
price; rather, when these resources are dispatched, the NYISO's
scarcity pricing rules are triggered in the zone(s) in which they are
activated and may alter energy and certain ancillary services
prices.\145\
---------------------------------------------------------------------------
\145\ NYISO Response at 8.
---------------------------------------------------------------------------
iii. Proposed Reforms
81. We propose to require each RTO/ISO to revise its tariff to
ensure that electric storage resources can be dispatched and can set
the wholesale market clearing price as both a wholesale seller and
wholesale buyer consistent with existing rules that govern when a
resource can set the wholesale price. This proposal includes the
requirements that the RTOs/ISOs accept wholesale bids from electric
storage resources to buy energy so that the economic preferences of the
electric storage resources are fully integrated into the market, the
electric storage resource can set the price as a load resource where
market rules allow, and the electric storage resource can be available
to the RTO/ISO as a dispatchable demand asset. However, we note that
these requirements must not prohibit electric storage resources from
participating in organized wholesale electric markets as price takers,
consistent with the existing rules for self-scheduled load resources.
We also clarify that, while resources are not dispatched when they
clear the capacity markets, we are proposing that resources using the
participation model for electric storage resources be able to set the
price in the capacity markets, where applicable.
82. To optimize the capabilities of electric storage resources and
for the RTOs/ISOs to use them efficiently, it is important for the
RTOs/ISOs to be able to symmetrically utilize the capabilities of these
resources to both receive electricity from the grid and inject it back
to the grid. In other words, they must be able to dispatch electric
storage resources as supply when the market clearing price exceeds
their offers to sell and to dispatch electric storage resources as
demand when their bids to buy exceed the market clearing price. The
bidirectional capabilities of electric storage resources are what make
them unique, and allowing electric storage resources to participate in
the organized wholesale electric markets as both wholesale sellers and
wholesale buyers will help optimize the value that they provide and
enhance price formation, as they will be dispatched in accordance with
their most economic use.
83. We preliminarily conclude that the proposed requirement to
participate as a supply and demand resource simultaneously (i.e.,
submit bids to buy and offers to sell during the same market interval)
is necessary to maximize the value that electric storage resources can
provide in the organized wholesale electric markets, allowing the
markets to identify whether it is more economic to dispatch an electric
storage resource as supply or demand during a given market interval. We
expect that, through its bidding strategy, a resource using the
electric storage resource participation model would be able to prevent
any conflicting dispatch signals to itself. However, we seek comment on
whether there should be a mechanism that identifies bids and offers
coming from the same resource that ensures the price for the offer to
sell is not lower than the price for the bid to buy during the same
market interval so that an RTO/ISO does not accept both the offer and
bid of a resource using the electric storage resource participation
model for that interval.
84. Generally, in the organized wholesale electric markets,
resources that cannot be dispatched by the RTO/ISO do not set wholesale
prices. This is because the marginal clearing prices are based on the
shadow price of the next unit of incremental production, and a resource
that cannot be dispatched by the RTO/ISO cannot provide that
incremental unit of production. Therefore, we propose that, for a
resource using the proposed participation model for electric storage
resources to be able to set prices in the organized wholesale electric
markets as either a wholesale seller or a wholesale buyer, it must be
available to the RTO/ISO as a dispatchable resource. We believe this
proposal is consistent with RTO/ISO rules on price setting and are
further proposing that the ability for resources using the
participation model for electric storage resources to set the price be
consistent with existing rules that govern when a resource can set the
wholesale price. However, we seek comment on whether any existing RTO/
ISO rules may unnecessarily limit the ability of resources using the
participation model for electric storage resources to set prices in the
organized wholesale electric markets.
85. We note that resources using the proposed participation model
for electric storage resources that elect to submit economic bids as a
wholesale buyer and participate as dispatchable demand resources would
still be able to self-schedule their charging and be price takers.
However, it is also possible that the RTO/ISO could dispatch an
electric storage resource as load when the wholesale price for energy
is above the price of their bid to buy (a circumstance under which they
would lose the opportunity to earn greater revenues as a supply
resource). Therefore, to help alleviate any potential financial risk to
these resources when being dispatched as a demand resource, we seek
comments on whether the proposed participation model for electric
storage resources should allow make-whole payments when a resource
participating under this participation model is dispatched as load and
the price of energy is higher than the resource's bid price.
d. Minimum Size Requirement
i. Introduction
86. Depending on the technology, electric storage resources range
in size from 1 kW to 1 GW,\146\ and most of them tend to be under 1
MW.\147\ RTO/ISO market rules may restrict electric storage resources
from participating in the organized wholesale electric markets based on
minimum size requirements \148\ that may have been designed for
different types of resources. This is particularly true for smaller
electric storage resources, which may be limited to participating in
the organized wholesale electric markets as demand response resources.
Such restrictions can limit these resources' ability to employ their
full operational range because they are prohibited from injecting
electricity into the grid in excess of their host load and preclude
them from providing services such as reserves.
---------------------------------------------------------------------------
\146\ Sandia Report at 29, Figure 19 (Positioning of Energy
Storage Technologies).
\147\ U.S. Department of Energy, Grid Energy Storage at 12 (Dec.
2013) (stating that most storage systems are in the 10 kW to 10 MW
range, with the largest proportion of those resources in the 100 kW
to 1 MW range).
\148\ We use the term ``minimum size requirement'' to
collectively describe minimum capacity requirements to qualify to
use a given participation model, ``minimum offer requirements'' for
offers to sell services in the organized wholesale electric markets,
and ``minimum bid requirements'' for bids to buy energy in these
markets. When we are referring to a specific category of minimum
size requirement, we will use that specific term.
---------------------------------------------------------------------------
ii. Current Rules
87. Under existing market rules, minimum capacity, minimum offer
and minimum bid requirements for electric storage resources to
participate in the organized wholesale electric markets vary across the
RTOs/ISOs, with minimum size requirements ranging from 100 kW to 5 MW.
PJM and SPP have minimum offer requirements of 100 kW for all
resources, with other
[[Page 86537]]
RTO/ISO minimum size requirements varying across participation models
and markets.\149\
---------------------------------------------------------------------------
\149\ PJM Response at 10 (citing PJM Tariff, Att. DD, section
5.6); SPP Response at 5 (citing SPP Tariff, Att. AE section 1.1
(definition of ``Offer'')).
---------------------------------------------------------------------------
88. CAISO states that the minimum capacity requirement for demand
response resources is 100 kW and that all resources other than demand
response have minimum capacity requirements of 500 kW. Resources can
meet these minimum capacity requirements through aggregation.\150\
Alternatively, ISO-NE minimum capacity requirements range from 100 kW
for demand response resources, to 1 MW for Alternative Technology
Regulation Resources, to 5 MW for generators seeking to provide demand
response in the regulation market.\151\ Under MISO tariff rules,
minimum capacity requirements vary from 100 kW for Load Modifying
Resources, to 1 MW for demand response resources, to 5 MW for
generators.\152\ MISO states that it has not determined a minimum size
for Stored Energy Resources but believes a minimum of 1 MW is
appropriate.\153\ In NYISO, the minimum size requirement is 100 kW for
demand response resources and 1 MW for Energy Limited Resources and
Limited Energy Storage Resources.\154\
---------------------------------------------------------------------------
\150\ CAISO Response at 10-11 (citing CAISO Tariff, App. K, Part
A 1.1.1; Part B1.1; Part C1.1).
\151\ ISO-NE Response at 13-14 (citing ISO-NE Tariff, App. E2,
section I-III).
\152\ MISO Response at 10.
\153\ Id. at 16-17.
\154\ NYISO Response at 9.
---------------------------------------------------------------------------
89. The RTOs/ISOs also define minimum bid requirements for load
resources to buy energy from the organized wholesale electric markets.
In CAISO, the minimum bid requirement is 10 kW, the same as for
traditional generators.\155\ In MISO and SPP, the minimum bid
requirements are 100 kW.\156\ In ISO-NE, energy market bids cannot be
smaller than 100 kW.\157\ In NYISO, the minimum bid requirement is 1
MW, with the option to aggregate to meet that requirement.\158\
Electric storage resources do not submit bids to buy energy in the PJM
wholesale markets.\159\
---------------------------------------------------------------------------
\155\ CAISO Response at 16.
\156\ MISO Response at 17; SPP Response at 8.
\157\ ISO-NE Response at 29.
\158\ NYISO Response at 15.
\159\ PJM Response at 22.
---------------------------------------------------------------------------
iii. Comments
90. Several commenters address the minimum size requirements to
participate in the RTO/ISO markets, questioning whether the RTOs/ISOs
based those standards on technological requirements and system needs.
For example, NY Battery and Energy Storage Consortium argues that the
minimum size requirement for participation in organized wholesale
electric markets should be lowered.\160\ Public Interest Organizations
claim that minimum size requirements for electric storage resources to
participate in the organized wholesale electric markets may be a
barrier to distributed electric storage resources, especially those
that are small. Public Interest Organizations contend that, while the
opportunity to offer distributed energy resource aggregations into the
markets could help mitigate this concern, that opportunity is lacking
or unclear in some RTOs/ISOs.\161\
---------------------------------------------------------------------------
\160\ NY Battery and Energy Storage Consortium Comments at 6.
\161\ Public Interest Organizations Comments at 5.
---------------------------------------------------------------------------
91. Several commenters specifically cite the variability in the
minimum size requirements of the various RTO/ISO market participation
models as a barrier to electric storage resource participation. Energy
Storage Association contends that minimum size requirements for
electric storage resources may prohibit storage participation and lead
to inconsistencies across regions.\162\ Advanced Energy Economy argues
that it is not clear why the minimum size requirements for providing
services should vary from RTO/ISO to RTO/ISO and that these market rule
variations are a barrier to electric storage resource participation in
the organized wholesale electric markets.\163\ Public Interest
Organizations assert that disparate requirements in the RTO/ISO reports
indicate that some of these minimum limits may be arbitrary.\164\
---------------------------------------------------------------------------
\162\ Energy Storage Association Comments at 29.
\163\ Advanced Energy Economy Comments at 10-11.
\164\ Public Interest Organizations Comments at 5.
---------------------------------------------------------------------------
92. Other commenters identify specific minimum size requirements in
certain RTO/ISO markets as barriers to the participation of electric
storage resources in those markets. Minnesota Energy Storage Alliance
claims that MISO's 1 MW minimum size requirement for demand response
resources is not appropriate due to the lower minimum size requirements
in other RTOs/ISOs.\165\ Minnesota Energy Storage Alliance further
states that removing this requirement would allow electric storage
resources to more readily participate, providing economic justification
for project development and increasing MISO's operational flexibility.
NY Battery and Energy Storage Consortium asserts that NYISO's 1 MW size
requirement limits behind-the-meter electric storage resources from
participating in NYISO's day-ahead market, despite having the technical
capability to perform.\166\
---------------------------------------------------------------------------
\165\ Minnesota Energy Storage Alliance notes that size
restrictions do not apply to the load-modifying resource
classification, but such resources are only eligible to provide
capacity for MISO-declared emergency events and cannot provide
energy or ancillary services. Minnesota Energy Storage Alliance
Comments at 3-4.
\166\ NY Battery and Energy Storage Consortium Comments at 5-6.
---------------------------------------------------------------------------
93. Solar City and Viridity ask the Commission to consider
requiring all RTOs/ISOs to set a minimum requirement of 100 kW for
electric storage resource participation in their markets.\167\ Solar
City argues that a 100 kW minimum size requirement will ensure that
electric storage resources can provide value to markets at relatively
modest levels of penetration and participate in organized wholesale
energy markets even when locational requirements reduce the area over
which resources can be aggregated.\168\
---------------------------------------------------------------------------
\167\ SolarCity Comments at 9; Viridity Comments at 3.
\168\ SolarCity Comments at 9.
---------------------------------------------------------------------------
iv. Proposed Reforms
94. We propose that the minimum size requirement to participate in
the organized wholesale electric markets under the proposed electric
storage resource participation model must not exceed 100 kW. While we
acknowledge that minimum size requirements may be necessary to ensure
that the RTOs/ISOs can effectively model and dispatch the resources
participating in their markets, large minimum size requirements create
a barrier to the participation of smaller electric storage resources.
We preliminarily conclude that requiring that the minimum size
requirement not exceed 100 kW balances the benefits of increased
competition with the ability of RTO/ISO market clearing software to
effectively model and dispatch smaller resources often located on the
distribution system. Thus, we propose to require each RTO/ISO to revise
its tariffs to include a participation model for electric storage
resources that establishes a minimum size requirement for participation
in the organized wholesale electric markets that does not exceed 100
kW. This would include any minimum capacity requirements, minimum offer
requirements, and minimum bid requirements for resources participating
in these markets under the electric storage resource participation
model.
[[Page 86538]]
e. Energy Used To Charge Electric Storage Resources
i. Introduction
95. Electric storage resources must absorb electricity (i.e.,
charge) to sell that electricity, net of losses, back to an RTO/ISO as
energy or ancillary services. The manner in which an electric storage
resource charges (consumes) energy and discharges (produces) energy
will determine whether the electric storage resource is engaging in a
sale for resale subject to our jurisdiction.
ii. Current Rules
96. For the most part, the RTOs/ISOs indicate that electric storage
resources that are charging to later provide wholesale services in
their markets already pay LMP for that electricity. CAISO states that
all electric storage resources participating in its wholesale markets
pay LMP for their charging energy.\169\ ISO-NE states that electric
storage resources purchasing energy directly from the wholesale market
pay the LMP for the electricity they receive.\170\ MISO states that any
resources eligible to participate in MISO's capacity, energy, and
ancillary service markets pay LMP for the electricity they
receive.\171\ NYISO states that Energy Limited Resources using electric
storage resource technology and Limited Energy Storage Resources will
pay the wholesale price for the electricity they consume to meet a
regulation service schedule or to charge the resource if the resource
is either in front-of-the-meter (a generator) or a direct NYISO
customer (a load-serving entity). NYISO notes that, if the resource is
behind-the-meter and served by a separate load-serving entity, then it
would pay the load-serving entity's retail rate.\172\ PJM states that
an electric storage resource would pay wholesale LMP if the resource is
taking power off the system solely to inject into the energy or
ancillary service markets at a later time.\173\ SPP states that, in its
real-time market, electric storage resources pay the real-time LMP for
their load consumption, although they may also be subject to retail
rules for electric consumption.\174\
---------------------------------------------------------------------------
\169\ CAISO Response at 17.
\170\ ISO-NE Response at 29-30.
\171\ MISO Response at 17.
\172\ NYISO Response at 16.
\173\ PJM Response at 23.
\174\ SPP Response at 7.
---------------------------------------------------------------------------
iii. Comments
97. Several commenters address the issue of the price that electric
storage resources should pay for charging electricity when that
electricity is for later use in the organized wholesale electric
markets. For example, Alevo argues that it is not clear whether an
electric storage resource connected at the distribution level will pay
the LMP for its charging electricity, even if it is charging to provide
a wholesale service.\175\ Electric Vehicle R&D Group and NextEra
contend that current RTO/ISO tariffs do not provide enough clarity on
the price that storage pays for electricity,\176\ and that the RTOs/
ISOs should revise their tariffs to settle discharging and recharging
resources at LMP.\177\ Similarly, Tesla asks the Commission to clarify
that electricity stored for resale is not a retail sale and thus should
be settled at the wholesale LMP.\178\
---------------------------------------------------------------------------
\175\ Alevo Comments at 29.
\176\ Electric Vehicle R&D Group Comments at 13.
\177\ NextEra Comments at 13.
\178\ Tesla Comments at 5-6.
---------------------------------------------------------------------------
98. In contrast, Manitoba Hydro asserts that dispatchable electric
storage resources should either pay a lower LMP than non-dispatchable
resources or should receive a storage capacity credit for their
services because a MWh received by a storage resource for later
injection is different than a MWh consumed by traditional load.\179\
Minnesota Energy Storage Alliance similarly requests that dispatchable
electric storage resources pay a lower LMP or be compensated for the
service.\180\ AES Companies contend that it is inappropriate for an
electric storage resource to pay LMP when it is directed to charge and
that such a payment is a disincentive to new storage installation.\181\
---------------------------------------------------------------------------
\179\ Manitoba Hydro Comments at 10-12.
\180\ Minnesota Energy Storage Alliance Comments at 5.
\181\ AES Companies Comments at 23.
---------------------------------------------------------------------------
99. SoCal Edison argues that behind-the-meter electric storage
resources should not be allowed to charge at a wholesale rate and
discharge to serve a retail customer to allow the retail customer to
avoid paying the retail rate for its consumption.\182\ Addressing this
concern, some commenters suggest that metering and accounting practices
can be designed to delineate between wholesale and retail
activities.\183\
---------------------------------------------------------------------------
\182\ SoCal Edison Comments at 8.
\183\ Independent Energy Producers Association Comments, Att. at
7; Minnesota Energy Storage Alliance Comments at 5.
---------------------------------------------------------------------------
iv. Proposed Reforms
100. The Commission has found that the sale of energy from the grid
that is used to charge electric storage resources for later resale into
the energy or ancillary service markets constitutes a sale for
resale.\184\ As such, the just and reasonable rate for that wholesale
sale of energy used to charge the electric storage resource is the RTO/
ISO market's wholesale price for energy or LMP. We thus propose to
require each RTO/ISO to revise its tariff to specify that the sale of
energy from the organized wholesale electric markets to an electric
storage resource that the resource then resells back to those markets
must be at the wholesale LMP.
---------------------------------------------------------------------------
\184\ See Norton Energy Storage, L.L.C., 95 FERC ] 61,476, at
62,701-02 (2001) (citations omitted) (``[T]he use of compressed air
as a medium for the storage of energy in an energy storage facility
is a new technology. However, we find that a compressed air energy
storage facility is analogous to a pumped storage hydroelectric
facility, in that compressed air is used in a conversion/storage
cycle just as water is used in a pumped storage hydroelectric
facility in the conversion/storage cycle. . . . [T]he Commission
views the pumping energy not as being consumed, but rather as being
converted and stored, as water in the upper reservoir, for later re-
conversion . . . back to electric energy. It is this conversion/
storage cycle that distinguishes energy storage facilities, whether
pumped storage hydroelectric facilities or compressed air energy
storage facilities, from facilities that consume electricity (in the
form of station power or otherwise). The fact that pumping energy or
compression energy is not consumed means that the provision of such
energy is not a sale for end use that this Commission cannot
regulate. Rather, based on Norton's representations in its petition,
we find that deliveries of compression energy to the Norton energy
storage facility as part of energy exchange transactions employing
the conversion/storage cycle are wholesale transactions subject to
our exclusive authority under the FPA.''). See also PJM
Interconnection, L.L.C., 132 FERC at 62,053 (``Like pumping energy
and compression energy, the energy used to charge Energy Storage
Resources will be stored for later delivery and not used for
operating the electric equipment on the site of a generation
facility or associated buildings as Station Power is used.'').
---------------------------------------------------------------------------
101. The proposed clarification also provides developers and
operators of electric storage resources certainty about the price that
they will be charged for purchasing charging electricity in the
organized wholesale electric markets when they will use that
electricity to provide wholesale services. We note that this proposed
clarification is consistent with most current RTO/ISO practices as
reflected in their responses.
102. We recognize SoCal Edison's concern that behind-the-meter
electric storage resources should not be allowed to charge at a
wholesale rate and discharge to serve a retail customer as a means for
the retail customer to avoid paying the retail rate. This situation
could be even more complex if the retail customer in question also uses
a behind-the-meter generator in conjunction with its storage device.
Given the comments in the record indicating that metering and
accounting practices can be designed to delineate between
[[Page 86539]]
wholesale and retail activities,\185\ we seek comment on whether such
metering and accounting practices would need to be established in the
RTO/ISO tariffs to facilitate compliance with this proposal or whether
it is possible to determine the end use for energy used to charge an
electric storage resource under existing requirements.
---------------------------------------------------------------------------
\185\ Independent Energy Producers Association Comments, Att. at
7; Minnesota Energy Storage Alliance Comments at 5.
---------------------------------------------------------------------------
B. Participation of Distributed Energy Resource Aggregators in the
Organized Wholesale Electric Markets
1. Introduction
103. There has been significant industry attention paid to the
development of distributed energy resources and the potential for such
resources to contribute to grid services. More recently, the discussion
has focused on new distributed energy resources that are smaller,
interconnected to lower voltage networks, and geographically dispersed.
These new distributed energy resources are enabled by increasing
deployment of and improvements in metering, telemetry, and
communication technologies. With such advances, more localized power
and energy services and more supply resources and potential market
participants have emerged. We are interested in removing barriers in
current RTO/ISO market rules that would prevent these new, smaller
distributed energy resources that are technically capable of
participating in the organized wholesale electric markets from doing
so.
104. As noted above, in this NOPR, we define distributed energy
resources as a source or sink of power that is located on the
distribution system, any subsystem thereof, or behind a customer
meter.\186\ These resources may include, but are not limited to,
electric storage resources, distributed generation, thermal storage,
and electric vehicles and their supply equipment.\187\
---------------------------------------------------------------------------
\186\ See supra note 2.
\187\ Id.
---------------------------------------------------------------------------
105. As a general matter, distributed energy resources tend to be
too small to participate directly in the organized wholesale electric
markets on a stand-alone basis. First, they often do not meet the
minimum size requirements to participate in these markets under
existing participation models. Second, they may have difficulty
satisfying all of the operational performance requirements of the
various participation models due to their small size. Allowing these
resources to participate in the organized wholesale electric markets
through distributed energy resource aggregations can help to remove
these barriers to their participation, providing a means for these
resources to, in the aggregate, satisfy minimum size and performance
requirements that they could not meet on a stand-alone basis.
106. The Commission recently accepted CAISO's proposal \188\ to
allow distributed energy resource aggregations in its markets. In
addition, the RTOs/ISOs have implemented some models for aggregated
resources to participate in their organized wholesale electric markets.
These are described in more detail below but are generally for demand
response resources, with a few exceptions. As a result, the majority of
distribution-connected electric storage and other distributed energy
resources that seek to access the organized wholesale electric markets
must do so by participating as behind-the-meter demand response. While
these demand response programs have helped reduce barriers to load
curtailment resources, they often limit the operations of other types
of distributed energy resources, such as electric storage or
distributed generation, as well as the services that they are eligible
to provide.
---------------------------------------------------------------------------
\188\ See California Indep. Sys. Operator Corp., 155 FERC ]
61,229.
---------------------------------------------------------------------------
2. Current Rules
107. The RTOs/ISOs describe the opportunities for electric storage
resources connected to the distribution system and electric storage
resource aggregations to participate in their capacity, energy, and
ancillary service markets. CAISO supports the aggregation of
distributed energy resources, including storage, seeking to participate
in the CAISO markets.\189\ In addition, CAISO states that electric
storage resources that wish to aggregate into a resource that can
participate in the wholesale markets can participate by providing load
curtailment as Proxy Demand Resources or Reliability Demand Response
Resources.\190\
---------------------------------------------------------------------------
\189\ CAISO Response at 2-3. See also California Indep. Sys.
Operator Corp., 155 FERC ] 61,229.
\190\ CAISO Response at 7.
---------------------------------------------------------------------------
108. ISO-NE explains that, under each participation model, a single
resource may be composed of multiple resources if those resources are
either physically in the same location or require coordinated
control.\191\ ISO-NE explains that Alternative Technology Regulation
Resources may include aggregations of multiple end-use customers, each
with less than 1 MW of regulation capacity.\192\ ISO-NE adds that Asset
Related Demands may be aggregated if they are served by the same point
of electrical connection and meet a 1 MW threshold.\193\
---------------------------------------------------------------------------
\191\ ISO-NE Response at 26 (citing ISO-NE Operating Procedure
14, section II.A).
\192\ Id. (citing ISO-NE Tariff, section III.14.2(c)).
\193\ Id. at 27 (citing ISO-NE Operating Procedure 14, section
I.2.2).
---------------------------------------------------------------------------
109. ISO-NE states that electric storage resources that meet its
definition of Distributed Generation (i.e., behind-the-meter resources
with an aggregate nameplate capacity of less than 5 MW or the demand of
the end-use customer, whichever is greater) may qualify as Real-Time
Demand Response Assets, which allows for participation in the forward
capacity market, the transitional price-responsive demand program, and
the regulation market if it is also registered as an Alternative
Technology Regulation Resource.\194\ ISO-NE explains that, for the
capacity market, demand resources may consist of an aggregation of
multiple end-use customers, though they must be at least 100 kW and
located within a dispatch zone or load zone as required under the
participation model through which they are participating.\195\ ISO-NE
further explains that for the energy and reserve markets, demand
response resources may also be aggregated as long as they are
individually at least 10 kW, have an expected maximum interruptible
capacity of 5 MW or less, and are located within a dispatch zone and
reserve zone.\196\
---------------------------------------------------------------------------
\194\ Id. at 6-7.
\195\ Id. at 27 (citing ISO-NE Operating Procedure 14, section
III.13.1.4.1).
\196\ Id. (citing ISO-NE Operating Procedure 14, section
III.E2.1.1).
---------------------------------------------------------------------------
110. MISO states that Stored Energy Resources and Demand Response
Resources--Type II are allowed to aggregate under a single elemental
pricing node. MISO adds that Demand Response Resources--Type I and Load
Modifying Resources are allowed to aggregate within one local balancing
authority.\197\
---------------------------------------------------------------------------
\197\ MISO Response at 15.
---------------------------------------------------------------------------
111. NYISO states that aggregated resources can participate in the
Emergency Demand Response Program, Day-Ahead Demand Response Program,
Demand Side Ancillary Services Program, and Special Case Resource
Programs. NYISO notes that aggregated electric storage resources may be
used to generate demand reductions in any of those programs.\198\
---------------------------------------------------------------------------
\198\ NYISO Response at 13.
---------------------------------------------------------------------------
112. PJM states that aggregated electric storage resources can
participate in the capacity, energy, and ancillary service markets. In
the capacity market, PJM states that demand-side resources
[[Page 86540]]
can be aggregated to provide load reductions.\199\ Under PJM's capacity
performance proposal, electric storage resources are eligible to
aggregate with other electric storage resources, Intermittent
Resources, Demand Resources, Energy Efficiency Resources, and
Environmentally-Limited Resources to provide capacity.\200\ In the PJM
regulation market, PJM states that all resources, including electric
storage resources, may elect to be part of a performance group for the
purpose of improving their overall performance score.\201\ In the PJM
energy market, PJM adds that multiple batteries located behind a single
node and owned by the same entity would be eligible to offer into the
energy market as one resource.\202\
---------------------------------------------------------------------------
\199\ PJM Response at 20 (citing PJM Tariff, Attachment DD,
sections 11, 11A).
\200\ Id. (citing PJM Tariff, Attachment DD, section 5.6.1(h)).
\201\ Id. at 20-21 (citing PJM Manual 12, section 4.5.7).
\202\ Id. at 21.
---------------------------------------------------------------------------
113. SPP states that resources at the same point of injection may
register at the unit or plant level and electric storage resources may
be aggregated if the resources are electrically equivalent from the
transmission system perspective (i.e., use the same point of
injection).\203\
---------------------------------------------------------------------------
\203\ SPP Response at 7.
---------------------------------------------------------------------------
3. Comments
114. Many commenters note that it is important for distributed
energy resources to be allowed to fully participate in organized
wholesale electric markets. For example, Advanced Energy Economy
contends that, absent legitimate technical needs, distributed energy
resources should be allowed to fully participate in organized wholesale
electric markets.\204\ Advanced Energy Economy claims that certain
RTOs/ISOs have excluded these resources through artificial
classifications (e.g., the inability of multiple behind-the-meter
generation and electric storage resources to provide frequency
regulation in PJM). Similarly, SolarCity asks the Commission to require
RTOs/ISOs to revise or implement rules to ensure that behind-the-meter
resources, including electric storage resources, have a clear path for
participation in all wholesale energy markets.\205\
---------------------------------------------------------------------------
\204\ Advanced Energy Economy Comments at 16-18.
\205\ SolarCity Comments at 4.
---------------------------------------------------------------------------
115. Energy Storage Association agrees that distribution-connected
electric storage resources, including aggregation across multiple
storage assets and sites, should be able to participate in the
organized wholesale electric markets to enhance competition needed for
just and reasonable rates.\206\ Energy Storage Association asks the
Commission to consider extending the best practices learned in CAISO to
all organized wholesale electric markets to address common barriers in
metering, telemetry, and resource eligibility. RES Americas supports
Energy Storage Association's comments and encourages the Commission to
investigate the barriers to the participation of distributed energy
resources in organized wholesale electric markets.\207\ NY Battery and
Energy Storage Consortium argues that behind-the-meter energy storage
resources should be able to participate in organized wholesale electric
markets directly or in aggregate form, and points out that behind-the-
meter storage participating in NYISO as a demand side ancillary
services program resource is not allowed to bid into the day-ahead
demand response market, even though it is technically capable of doing
so.\208\
---------------------------------------------------------------------------
\206\ Energy Storage Association Comments at 30 (citing
California Indep. Sys. Operator Corp., 155 FERC ] 61,229).
\207\ RES Americas Comments at 4-5.
\208\ NY Battery and Energy Storage Consortium Comments at 6.
---------------------------------------------------------------------------
116. Some commenters cite the inability for distributed energy
resources to inject energy when participating as demand response as a
barrier to distributed energy resources. SolarCity states that this
inability hinders the ability of behind-the-meter resources to provide
energy services and limits their capacity.\209\ Advanced Energy Economy
and Solar Grid Storage argue that PJM's restriction on the injection of
energy past a customer's retail meter during operations for providing
ancillary services in its markets is a barrier to electric storage
resources.\210\ Energy Storage Association and NextEra argue that no
RTO/ISO allows behind-the-meter storage to net inject power to provide
wholesale generator services.\211\ NextEra agrees that this prohibition
effectively limits the size of electric storage resources designed for
customer applications. Energy Storage Association notes that NYISO
recently received the Commission's conditional acceptance of its
behind-the-meter net generator enhancement, but Energy Storage
Association asserts that it still effectively excludes participation of
electric storage resources because it does not include electric storage
functionality (e.g., state of charge management).\212\
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\209\ SolarCity Comments at 4.
\210\ Advanced Energy Economy Comments at 16-17; Solar Grid
Storage Comments at 2.
\211\ Energy Storage Association Comments at 29; NextEra
Comments at 12.
\212\ Energy Storage Association Comments at 29-30.
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117. Other comments focus on the benefits of allowing distributed
energy resources to participate in the organized wholesale markets as
aggregations. RES Americas contends that aggregation of electric
storage resources, either within the asset class or across other
resources that can be limited in their ability to offer a breadth of
market products (i.e., renewables or demand response), could be a means
to realize market efficiencies and other policy objectives without
creating entirely new market products or otherwise disrupting grid
operations.\213\ Electric Vehicle R&D Group states that third-party
aggregators are the most practical approach to utilizing distributed
electric storage resources connected to the low- and medium-voltage
system.\214\ Electric Vehicle R&D Group argues that, given the value
that distributed electric storage resources provide to both
transmission and distribution system operators and the lack of
technical abilities of a distribution system operator to-date to build,
qualify, and cost-effectively operate a distributed storage system
aggregator, rules should not prohibit third-party aggregators or
require distribution operators to manage them. Electric Vehicle R&D
Group adds that the Commission should allow third-party aggregators to
provide service to both RTOs and distribution system operators.
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\213\ RES Americas Comments at 5.
\214\ Electric Vehicle R&D Group Comments at 2.
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118. National Electrical Manufacturers Association states that
organized wholesale electric markets should accommodate aggregated
electric storage resources, including electric storage resources
installed behind-the-meter, without imposing excessive requirements
that would preclude the participation of smaller resources (e.g.,
arduous study processes and/or expensive data telemetry
requirements).\215\ Similarly, NY Battery and Energy Storage Consortium
argues that NYISO should avoid creating metering and telemetry
requirements with prohibitively high transaction costs and imposing
undue burdens on behind-the-meter storage participation.\216\ Energy
Storage Association agrees that metering and telemetry requirements and
[[Page 86541]]
interconnection processes can pose prohibitively high transaction costs
for the small project sizes that characterize behind-the-meter electric
storage resources, creating undue burdens on their participation in
most RTOs/ISOs.\217\
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\215\ National Electrical Manufacturers Association Comments at
5.
\216\ NY Battery and Energy Storage Consortium Comments at 6.
\217\ Energy Storage Association Comments at 29.
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119. Similarly, California Energy Storage Alliance claims that the
overhead costs of registering individual resources within an
aggregation can be burdensome and costly.\218\ Specifically, California
Energy Storage Alliance argues that the registration of individual
customer sites with load-serving entities, the California Public
Utilities Commission, and CAISO can impose significant costs that
discourage participation as proxy demand response and other wholesale
market resources. California Energy Storage Alliance asserts that a
separate administrative process under a behind-the-meter electric
storage resource-specific model, or a streamlined version under
existing constructs, could reduce these administrative costs by
standardizing forms and processes across all individual resources and
allowing the submission of a single application.
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\218\ California Energy Storage Alliance Comments at 7.
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120. Some commenters identify problems with opportunities for
aggregations in the RTOs/ISOs. Energy Storage Association is concerned
that aggregated distributed energy resources are not permitted to offer
into some RTO/ISO markets, while it is not clear how they can offer
into others.\219\ Energy Storage Association claims that market rules
present barriers to aggregation (particularly minimum size
requirements) because they are often designed around individual sites
as a resource, rather than the capabilities of an aggregated set of
sites.\220\ NextEra asserts that, to enable aggregators to participate
effectively in the organized wholesale electric markets, more work is
needed by the RTOs/ISOs, like the recent CAISO initiative that led to
new aggregation opportunities for small distributed resources.\221\
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\219\ Energy Storage Association Comments at 29 (citing ISO-NE
Response at 26; NYISO Response at 13).
\220\ Id. at 27-28.
\221\ NextEra Comments at 12-13 (citing California Indep. Sys.
Operator Corp., 155 FERC ] 61,229 at P 60).
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121. Public Interest Organizations agree that the opportunity to
aggregate distributed energy resources could help mitigate minimum size
or duration requirements, but state that this opportunity is lacking or
unclear in some RTOs/ISOs.\222\ NY Battery and Energy Storage
Consortium and NY Transmission Owners point out that NYISO rules do not
allow smaller resources with a capacity less than 1 MW to aggregate and
provide generation above their host loads, though they can participate
as an aggregated demand response resource.\223\ Similarly, Minnesota
Energy Storage Alliance states that MISO's market rules prevent robust
participation of distributed electric storage resources in its energy
and ancillary service markets because they do not permit the
aggregation of these resources to meet the 5 MW minimum capacity
requirement for a Demand Response Resource.\224\
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\222\ Public Interest Organizations Comments at 5.
\223\ NY Battery and Energy Storage Consortium Comments at 6; NY
Transmission Owners Comments at 3 (citing NYISO Installed Capacity
Manual at 108, 110).
\224\ Minnesota Energy Storage Alliance Comments at 4.
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122. Solar Grid Storage states that, while PJM's 100 kW minimum
size requirement to participate in its ancillary service markets allows
electric storage resources to aggregate their dispatch, aggregated
resources must be part of a ``performance group'' in the same
location.\225\ Solar Grid Storage asserts that, because some ancillary
services like frequency regulation are not site specific and can be
provided with equal value to PJM over vastly different areas within the
ISO, this locational restriction is unreasonable.
---------------------------------------------------------------------------
\225\ Solar Grid Storage Comments at 4.
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123. Some commenters stress the need to ensure that grid
reliability concerns are addressed in rules governing behind-the-meter
resources, including aggregations of such resources. EEI states that,
because behind-the-meter resources are interconnected to the
distribution grid and ultimately impact the transmission system, EEI
members are interested in ensuring that any actions the RTOs/ISOs take
to allow these resources, including aggregated resources, to
participate in the organized wholesale electric markets do not
negatively affect the electric distribution company's ability to
maintain the reliability of the distribution system.\226\ EEI claims
that electric distribution utilities need to have visibility and input/
control of the resources that are integrated to the distribution system
for planning and operating purposes. SoCal Edison states that safety
and reliability needs must take precedence over wholesale market
dispatch and asks the Commission to consider the safe and reliable
operation of the distribution system as a key principle when addressing
the participation of distribution system-connected electric storage
resources in the organized wholesale electric markets.\227\
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\226\ EEI Comments at 5.
\227\ SoCal Edison Comments at 2, 5-6.
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4. Proposed Reforms
124. We are interested in removing barriers in current RTO/ISO
market rules that would prevent these new, smaller distributed energy
resources that are technically capable of participating in the
organized wholesale electric markets from doing so. It is clear from
the comments that the ability to meaningfully participate in the
organized wholesale electric markets for these smaller distributed
energy resources is through aggregations. Thus, we propose to require
each RTO/ISO to revise its tariff as necessary to allow distributed
energy resource aggregators to offer to sell capacity, energy, and
ancillary services in the organized wholesale electric markets.
Specifically, we propose to require each RTO/ISO to revise its tariff
to define distributed energy resource aggregators as a type of market
participant that can participate in the organized wholesale electric
markets under the participation model that best accommodates the
physical and operational characteristics of its distributed energy
resource aggregation. This proposal is similar to CAISO's market rules
that establish a distributed energy resource provider as a new type of
market participant.\228\ Our proposal would expand the types of
resources that are eligible to participate in the organized wholesale
electric markets through aggregators and require the RTOs/ISOs to
remove any unnecessary limitations on how the distributed energy
resources that participate in such aggregations must be operated.
---------------------------------------------------------------------------
\228\ See, e.g., California Indep. Sys. Operator Corp., 155 FERC
] 61,229 at PP 3-7.
---------------------------------------------------------------------------
125. Distributed energy resources may be unable or unwilling to
participate in the organized wholesale electric markets absent the
opportunity to participate as part of a distributed energy resource
aggregation. Distributed energy resources are generally smaller than
other resources connected to the grid and therefore may be unable to
meet all of the qualification or performance requirements for
participation in the organized wholesale electric markets.
Specifically, they may be too small to satisfy minimum size
requirements on a stand-alone basis and, as small resources, may face
operational constraints that prevent them from satisfying minimum
performance
[[Page 86542]]
requirements.\229\ However, if these distributed energy resources were
permitted to aggregate with other distributed energy resources to
participate in the organized wholesale electric markets, they may be
able to, in the aggregate, meet any minimum size and performance
requirements, particularly if the operational characteristics of
different distributed energy resources in a given distributed energy
resource aggregation complement each other.
---------------------------------------------------------------------------
\229\ For example, combining the discharge times of multiple
electric storage resources and/or combining them with distributed
generation resources could allow aggregated resources to meet
minimum run-time requirements that individual electric storage
resources may not be able to meet.
---------------------------------------------------------------------------
126. Distributed energy resource aggregations will also help to
address the commercial and transactional barriers to distributed energy
resource participation in the organized wholesale electric markets.
Owners and operators of individual distributed energy resources may be
reluctant to incur the significant costs of participating in the
organized wholesale electric markets, such as the costs of the
necessary metering, telemetry and communication equipment. The smaller
a resource is, the more likely the transaction costs to sell services
into the organized wholesale electric markets outweigh the benefits
that the prospective market participant may realize from selling
wholesale services. However, some of these costs can be reduced by
participating in the organized wholesale electric markets through a
distributed energy resource aggregation, for example the time and
resources necessary to learn the market rules and actively submit bids
and/or offers into the organized wholesale electric markets.
127. We also believe that some of the restrictions placed on
aggregators in the RTOs/ISOs, such as the types of resources that can
participate in those aggregations and the inability to inject energy
onto the grid, may limit the operation and effectiveness of existing
RTO/ISO programs for aggregations. Therefore, as discussed further
below, we propose to expand the types of distributed energy resources
that are eligible to participate in the organized wholesale electric
markets through aggregators and require RTOs/ISOs to remove any
unnecessary limitations on how the distributed energy resources that
participate in such aggregations must be operated.
128. Our proposal requires the RTOs/ISOs to define distributed
energy resource aggregators as a type of market participant that can
participate in the organized wholesale electric markets under the
participation model that best accommodates the physical and operational
characteristics of its distributed energy resource aggregation. This
proposed requirement means that the distributed energy resource
aggregator would register as, for example, a generation asset if that
is the participation model that best reflects its physical
characteristics. While we expect efficiencies to be gained by allowing
distributed energy resources aggregations to participate under existing
participation models, we also acknowledge that the use of existing
participation models may not be possible in every RTO/ISO based on how
market participation is structured. However, where this is possible, we
emphasize that the distributed energy resource aggregation must still
satisfy any eligibility requirements of the applicable participation
model before it can participate in the organized wholesale electric
markets under that participation model. Therefore, to accommodate the
participation of distributed energy resource aggregations under the
various participation models, we propose that each RTO/ISO modify the
eligibility requirements for existing participation models as necessary
to allow for the participation of distributed energy resource
aggregators.
129. The costs of distributed energy resources have decreased
significantly,\230\ which when paired with alternative revenue streams
and innovative financing solutions, is increasing these resources'
potential to compete in and deliver value to the organized wholesale
electric markets. Moreover, integrating these resources' capabilities
into the organized wholesale electric markets will help the RTOs/ISOs
to account for their impacts on installed capacity requirements and
day-ahead energy demand, thereby reducing uncertainty in load forecasts
and reducing the risk of over procurement of resources and the
associated costs.
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\230\ See, e.g., Revolution . . . No, The Future Arrives for
Five Clean Energy Technologies, 2016 Update, at 1; and Tracking the
Sun VIII, Lawrence Berkeley National Lab, at 15 (Aug. 2015).
---------------------------------------------------------------------------
130. We believe that our proposal will provide numerous
supplementary benefits to the RTO/ISO systems. For example, by removing
barriers to the participation of distributed energy resources in
organized wholesale electric markets through aggregators, these
resources may locate where price signals indicate that new capacity is
most needed, potentially helping to alleviate congestion and congestion
costs during peak load conditions and to reduce transmission investment
costs for transmitting energy into persistently high-priced load
pockets. Moreover, unlike larger fossil fuel generators that often are
not able to locate in load pockets due to environmental or other citing
concerns, distributed energy resources are more able to co-locate with
load and provide associated benefits. We also believe that the shorter
lead time to develop many forms of distributed energy resources
compared to traditional generators or transmission lines allows them to
rapidly respond to near-term generation or transmission reliability-
related requirements, further improving their ability to enhance
reliability and reduce system costs.
131. Additionally, we agree with the comments of Advanced Energy
Economy and Public Interest Organizations that electric storage
resources and other resources connected to the distribution system
should be able to participate in all of the organized wholesale
electric markets in which they are technically capable of participating
and that barriers that unnecessarily prevent distributed energy
resources from providing certain services may be caused by market rules
that are unduly discriminatory. The most commonly cited example of
these barriers to participation in the comments we received are market
rules that relegate electric storage resources, particularly behind-
the-meter electric storage resources, to market participation using
demand response programs. We agree with commenters that existing RTO/
ISO demand response programs may restrict the ability of electric
storage and other distributed energy resources from providing the full
suite of services that they are capable of providing, and therefore
propose this alternative path for distributed energy resources to
access the organized wholesale electric markets.
132. As such, we propose to require each RTO/ISO to revise its
tariff to allow distributed energy resource aggregators to participate
directly in the organized wholesale electric markets and to establish
market rules to accommodate the participation of distributed energy
resource aggregations, consistent with the following:
a. Eligibility to participate in the organized wholesale electric
markets through a distributed energy resource aggregator;
b. Locational requirements for distributed energy resource
aggregations;
c. Distribution factors and bidding parameters for distributed
energy resource aggregations;
[[Page 86543]]
d. Information and data requirements for distributed energy
resource aggregations;
e. Modifications to the list of resources in a distributed energy
resource aggregation;
f. Metering and telemetry system requirements for distributed
energy resource aggregations;
g. Coordination between the RTO/ISO, the distributed energy
resource aggregator, and the distribution utility; and
h. Market participation agreements for distributed energy resource
aggregators.
a. Eligibility To Participate in the Organized Wholesale Electric
Markets Through a Distributed Energy Resource Aggregator
133. We preliminarily find that limiting the types of technologies
that are allowed to participate in the organized wholesale electric
markets through distributed energy resource aggregator would create a
barrier to entry for emerging or future technologies, potentially
precluding them from being eligible to provide all of the capacity,
energy and ancillary services that they are technically capable of
providing. While some individual resources or certain technologies may
not be able to meet the qualification or performance requirements to
provide services to the organized wholesale electric markets on their
own, they may satisfy such requirements as part of a distributed energy
resource aggregation where resources complement one another's
capabilities.\231\ To help ensure that the market rules that the RTOs/
ISOs develop to comply with any Final Rule issued in this proceeding
are sufficiently flexible to accommodate the participation of new
distributed energy resources as technology continues to evolve and to
acknowledge the potential for distributed energy resources to satisfy
qualification or performance requirements through a distributed energy
resource aggregator, we propose that each RTO/ISO revise its tariff so
that it does not prohibit the participation of any particular type of
technology in the organized wholesale electric markets through a
distributed energy resource aggregator. However, to the extent existing
rules or regulations explicitly prohibit certain technologies from
participating in the organized wholesale electric markets, we do not
intend to overturn those rules or regulations.
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\231\ Combining electric storage resources with distributed
generation could allow the aggregate resource to achieve performance
requirements (such as minimum run times) that an electric storage
resource could not meet on its own and provide services (such as
regulation) that distributed generation may not be able to provide
on its own.
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134. We also propose that it is appropriate for each RTO/ISO to
limit the participation of resources in the organized wholesale
electric markets through a distributed energy resource aggregator that
are receiving compensation for the same services as part of another
program. Since resources able to register as part of a distributed
energy resources aggregation will be located on the distribution
system, they may also be eligible to participate in retail compensation
programs, such as net metering, or other wholesale programs, such as
demand response programs. Therefore, to ensure that there is no
duplication of compensation, we propose that distributed energy
resources that are participating in one or more retail compensation
programs such as net metering or another wholesale market participation
program will not be eligible to participate in the organized wholesale
electric markets as part of a distributed energy resource aggregation.
135. With respect to the capacity of the individual distributed
energy resources that can participate in the wholesale electric markets
through a distributed energy resource aggregator, we propose not to
establish a minimum or maximum capacity requirement. We believe
participation in the organized wholesale electric markets through a
distributed energy resource aggregator should not be conditioned on the
size of the resource, but we recognize that existing organized
wholesale electric market rules may require resources to meet certain
minimum or maximum capacity requirements under certain participation
models. Therefore, we seek comment on whether we should establish a
minimum or maximum capacity limit for individual resources seeking to
participate in the organized wholesale electric markets through a
distributed energy resource aggregator, or whether we should allow each
RTO/ISO to propose such a minimum or maximum capacity requirement on
compliance with any Final Rule issued in this rulemaking proceeding. To
the extent that commenters think that we should adopt a minimum or
maximum capacity requirement for individual distributed energy
resources participating in the organized wholesale markets through a
distributed energy resource aggregator, we seek comment on what that
requirement should be.
136. With respect to the size of the distributed energy resource
aggregations themselves, we propose that these aggregations meet any
minimum size requirements of the participation model under which they
elect to participate in the organized wholesale electric markets. For
example, if a distributed energy resource aggregator decides to
register using the participation model for electric storage resources
proposed above given the cumulative physical and operational
characteristics of the distributed energy resources in its aggregation,
then its distributed energy resource aggregation would be required to
meet the 100 kW minimum size requirement we propose for that
participation model. Alternatively, if the distributed energy resource
aggregator decides to register as a generator, then its aggregation
would be required to meet the minimum size requirement for the
generator participation model in the relevant RTO/ISO market. We seek
comment on this proposal to require distributed energy resource
aggregations to meet the minimum size requirements of the participation
model that they use to participate in the organized wholesale electric
markets.
137. Consistent with Order No. 719, we also propose that each RTO/
ISO revise its tariff to allow a single qualifying distributed energy
resource to avail itself of the proposed distributed energy resource
aggregation rules by serving as its own distributed energy resource
aggregator.\232\
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\232\ See Order No. 719, FERC Stats. & Regs. ] 31,281 at P
158(d) (``An [aggregator of retail customers] can bid demand
response either on behalf of only one retail customer or multiple
retail customers.'').
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b. Locational Requirements for Distributed Energy Resource Aggregations
138. Some RTO/ISO market rules permit only those resources that are
located behind the same point of interconnection or at a single pricing
node to aggregate. These limitations could be the result of several
concerns. For instance, an RTO/ISO may be concerned that geographically
dispersed resources participating in the organized wholesale electric
markets through a distributed energy resource aggregation may
exacerbate a transmission constraint or otherwise cause a reliability
concern if dispatched as a single resource by the RTO/ISO. Similarly,
an RTO/ISO may be concerned about price formation for services with
geographically specific prices if geographically dispersed resources
participating in the organized wholesale electric markets through a
distributed energy resource aggregation were dispatched as a single
resource by the RTO/ISO. That said, we are concerned that some existing
[[Page 86544]]
requirements for aggregations to be located behind a single point of
interconnection or pricing node may be overly stringent and may
unnecessarily restrict the opportunities for distributed energy
resources to participate in the organized wholesale electric markets
through a distributed energy resource aggregator. We also note that
recent improvements in metering, telemetry, and communication
technology should facilitate better situational awareness and enable
management of geographically disperse distributed energy resource
aggregations, potentially rendering such restrictive locational
requirements unnecessary.
139. Therefore, we propose to require each RTO/ISO to revise its
tariff to establish locational requirements for distributed energy
resources to participate in a distributed energy resource aggregation
that are as geographically broad as technically feasible. Our proposal
would give each RTO/ISO flexibility to adopt locational requirements
that both allow for the participation of geographically disperse
distributed energy resources in the organized wholesale electric
markets through a distributed energy resource aggregation, where
technically feasible, and account for the modeling and dispatch of the
RTO's/ISO's transmission system. We further acknowledge that the
appropriate locational requirements may differ based on the services
that a distributed energy resource aggregator seeks to provide (e.g.,
the locational requirements for participation in the day-ahead energy
market may differ from those for participation in the ancillary service
markets).
140. To the extent that commenters would prefer that we require the
RTOs/ISOs to adopt consistent locational requirements, we seek further
comment on what locational requirements we could require each RTO/ISO
to adopt that would allow distributed energy resources to be aggregated
as widely as possible without threatening the reliability of the
transmission grid or the efficiency of the organized wholesale electric
markets. We note that, in some RTOs/ISOs and for some services, the
only geographic limitations imposed on distributed energy resource
aggregations are by zone or due to modeled transmission
constraints.\233\
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\233\ See, e.g., CAISO Tariff, Att. A, section 4.17.3 (e)
(``Each Distributed Energy Resource Aggregation must be located in a
single Sub-LAP.''). CAISO defines a sub-LAP as a subset of pricing
nodes within a default load aggregation point. See CAISO Tariff,
Appendix A, Master Definitions and Supplement. See also NYISO Market
Administration and Control Area Service Tariff, section 2.4
(Definitions-D) (``Demand Side Ancillary Service Program Resource
(DSASP Resource): A Demand Side Resource or an aggregation of Demand
Side Resources located in the [New York Control Area (NYCA)] with at
least 1 MW of load reduction that is represented by a point
identifier (PTID) and is assigned to a Load Zone or Subzone by the
ISO . . . .''); NYISO Day-Ahead Demand Response Program Manual at
2.16.4 (``A process and procedures will be drawn to . . . set limits
to aggregation projects by zone, provider, program, or any other
category.'').
---------------------------------------------------------------------------
141. We seek comment on potential concerns about dispatch, pricing,
or settlement that the RTOs/ISOs must address if the distributed energy
resources in a particular distributed energy resource aggregation are
not limited to the same pricing node or behind the same point of
interconnection. We also note that, as discussed in Section III.B.4.g,
we propose to allow the relevant distribution utility or utilities to
review the list of distributed energy resources in a distributed energy
resource aggregation, which will also help ensure that dispatch of the
aggregated distributed energy resources as a single resource will not
cause any reliability concerns.
c. Distribution Factors and Bidding Parameters for Distributed Energy
Resource Aggregations
142. RTOs/ISOs need to know which resources in a distributed energy
resource aggregation will be responding to their dispatch signals and
where those resources are located. This information is particularly
important if the resources in a distributed energy resource aggregation
are located across multiple points of interconnection, multiple
transmission or distribution lines, or multiples nodes on the grid.
143. We, therefore, propose that the market rules governing
distributed energy resource aggregations allow the RTOs/ISOs to require
sufficient information from the resources in a distributed energy
resource aggregation to reliably operate their systems. Specifically,
we propose to require each RTO/ISO to revise its tariff to include the
requirement that distributed energy resource aggregators (1) provide
default distribution factors \234\ when they register their distributed
energy resource aggregation and (2) update those distribution factors
if necessary when they submit offers to sell or bids to buy into the
organized wholesale electric markets. In turn, we propose to require
each RTO/ISO to revise the bidding parameters for each participation
model in its tariff to allow distributed energy resource aggregators to
update their distribution factors when participating in the organized
wholesale electric markets. In addition to comments on this proposal,
we seek comment on alternative approaches that may provide the RTOs/
ISOs with the information from geographically or electrically disperse
resources in a distributed energy resource aggregation necessary to
reliably operate their systems.
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\234\ For purposes of this NOPR, distribution factors indicate
how much of the total response from a distributed energy resource
aggregation would be coming from each pricing node at which one or
more resources participating in the aggregation are located.
---------------------------------------------------------------------------
144. Moreover, we preliminarily find that the bidding parameters
for each participation model in the RTO/ISO tariffs may have to account
for the physical and operational characteristics of distributed energy
resource aggregations. Therefore, we seek comment on whether bidding
parameters in addition to those already incorporated into existing
participation models may be necessary to adequately characterize the
physical or operational characteristics of distributed energy resource
aggregations.
d. Information and Data Requirements for Distributed Energy Resource
Aggregations
145. The RTOs/ISOs need sufficient information about the
distributed energy resource aggregation and the individual resources in
a distributed energy resource aggregation to effectively model,
dispatch, and settle the aggregation. We preliminarily find that the
information and data requirements that apply to distributed energy
resource aggregations must not pose barriers to the participation of
small distributed energy resources or distributed energy resources
relying on any specific technology in the organized wholesale electric
markets through a distributed energy resource aggregator. We refer to
information and data requirements as the information that the
distributed energy resource aggregator is required to provide to the
RTO/ISO when the distributed energy resource aggregator and its list of
resources register as a market participant as well as the information
and data necessary for settlement and auditing purposes. In this NOPR,
we seek to balance the information needs of RTOs/ISOs with information
requirements so burdensome that they could limit the benefit of these
proposed changes. The RTO/ISO will require certain information for the
distributed energy resource aggregation as a whole, as well as the
individual resources in the aggregation. While some of this information
may be replicated in bidding parameters, we propose that the
distributed energy resource aggregator
[[Page 86545]]
initially provide to the RTO/ISO a description of the physical
parameters of the distributed energy resource aggregation, including
(1) the total capacity; (2) the minimum and maximum operating limits;
(3) the ramp rate; (4) the minimum run time; and (5) the default
distribution factors, if applicable. We propose to require each RTO/ISO
to revise its tariff to require distributed energy resource aggregators
to provide the RTO/ISO with a list of the distributed energy resources
in the distributed energy resource aggregation that includes
information about each of those distributed energy resources, including
each resource's capacity, location on the distribution system, and its
operating limits.
146. Electric Vehicle R&D Group identifies PJM's requirement for
resources in a distributed energy resource aggregation to provide a
one-line diagram of the resource as too cumbersome, especially for
small resources at residential locations.\235\ Additionally, in CAISO's
distributed energy resource provider filing, CAISO declined to require
renewable generation resources in an aggregation to provide the same
meteorological data that standalone intermittent generators are
required to provide because they believed the requirement would create
an undue burden on individual distributed energy resources.\236\ We
agree that certain information requirements may be so burdensome for
individual distributed energy resources that they pose a barrier to the
participation of these distributed energy resources in the organized
wholesale electric markets through aggregations. We therefore seek
comment on whether there are information and data requirements imposed
by RTOs/ISOs that apply to other market participants that should not
apply to individual distributed energy resources participating in the
organized wholesale electric markets through a distributed energy
resource aggregation.
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\235\ Electric Vehicle R&D Group Comments at 8-9.
\236\ See CAISO Transmittal Letter, Docket No ER16-1085-000, at
22. (Mar. 4, 2016).
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147. We also propose to require each RTO/ISO to revise its tariff
to require distributed energy resource aggregators to maintain
aggregate settlement data for the distributed energy resource
aggregation so that the RTO/ISO can regularly settle with the
distributed energy resource aggregator for its market participation.
Finally, we propose to require distributed energy resource aggregators
to maintain data for a length of time consistent with the RTO's/ISO's
auditing requirements, for each individual resource in its distributed
energy resource aggregation so that each resource can verify its
performance if audited. We seek comment on these proposed data
requirements and on whether distributed energy resource aggregators
should be required to provide additional data to the RTO/ISO.
e. Modifications to the List of Resources in a Distributed Energy
Resource Aggregation
148. The requirements for a distributed energy resource aggregator
associated with modifications to the list of resources in a distributed
energy resource aggregation can present a barrier to the participation
of distributed energy resource aggregations in the organized wholesale
electric markets. Electric Vehicle R&D Group notes that, to modify its
distributed energy resource aggregation in PJM, it has to un-register
all resources in its aggregation and then re-run the testing protocol
for the revised aggregation to re-qualify to participate in the PJM
markets.\237\ Electric Vehicle R&D Group argues that testing every
incremental addition to an aggregation is unnecessary because they are
required to continuously report their available capacity and meter
their aggregate power response. Because the incremental impacts on the
organized wholesale electric markets of the addition or removal of
individual distributed energy resources from a distributed energy
resource aggregation will likely be minimal, and they are short lead
time resources that can be developed and built quickly, we
preliminarily conclude that they should be able to enter and exit
distributed energy resource aggregations participating in the organized
wholesale electric markets without undue burden.
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\237\ Electric Vehicle R&D Group Comments at 9.
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149. We therefore propose that each RTO/ISO revise its tariff to
allow a distributed energy resource aggregator to modify the list of
resources in its distributed energy resource aggregation without
reregistering all of the resources if the modification will not result
in any safety or reliability concerns. We emphasize, however, pursuant
to the proposed requirements in Section III.B.4.g below, that the
relevant distribution utility or utilities must have the opportunity to
review the list of individual resources that are located on their
distribution system in a distributed energy resource aggregation before
those resources may participate in the organized wholesale electric
markets through the aggregation, so that they can assess whether the
resources would be able to respond to RTO/ISO dispatch instructions
without posing any significant risk to the distribution system.
f. Metering and Telemetry System Requirements for Distributed Energy
Resource Aggregations
150. While the distributed energy resources in an aggregation will
need to be directly metered, the metering and telemetry system, i.e.,
hardware and software, requirements RTOs/ISOs impose on distributed
energy resource aggregators and individual resources in distributed
energy resource aggregations can pose a barrier to the participation of
these aggregations in organized wholesale electric markets. We
recognize that RTOs/ISOs need metering data for settlement purposes,
and telemetry data to determine a resource's real-time operational
capabilities so that they can efficiently dispatch resources. However,
metering and telemetry systems are often expensive potentially creating
a burden for small distributed energy resources. While telemetry data
about a distributed energy resource aggregation as a whole is necessary
for the RTO/ISO to efficiently dispatch the aggregation, telemetry data
for each individual resource in the aggregation may not be.
151. While we are not proposing to prescribe specific metering and
telemetry systems for distributed energy resource aggregators, we
propose to require each RTO/ISO to revise its tariff to identify any
necessary metering and telemetry hardware and software requirements for
distributed energy resource aggregators and the individual resources in
a distributed energy resource aggregation. These requirements must
ensure that the distributed energy resource aggregator will be able to
provide the necessary information and data to the RTO/ISO discussed in
Section III.B.4.d but also not impose unnecessarily burdensome costs on
the distributed energy resource aggregators and individual resources in
a distributed energy resource aggregation that may create a barrier to
their participation in the organized wholesale electric markets. We
also note that there may be different types of resources in these
aggregations, some in front of the meter, some behind the meter with
the ability to inject energy back to the grid, and some behind the
meter without the ability to inject energy to the grid. We therefore
seek comment on whether the RTOs/ISOs need to establish metering and
telemetry hardware and software requirements for each of the different
types of distributed energy resources that participate in the
[[Page 86546]]
organized wholesale electric markets through distributed energy
resource aggregations, as well as whether we should establish specific
metering and telemetry system requirements and, if so, what
requirements would be appropriate.
152. With respect to telemetry, we believe that the distributed
energy resource aggregator should be able to provide to the RTO/ISO the
real-time capability of its resource in a manner similar to the
requirements for generators, so the RTO/ISO knows the operating level
of the resource and how much that resource can ramp up or ramp down
over its full range of capability, including its charging capability
for distributed energy resource aggregations that include electric
storage resources. These telemetry system requirements may also need to
be in place at different locations for geographically dispersed
distributed energy resource aggregations that have to provide
distribution factors or other similar factors, as discussed above. With
respect to metering, we recognize that distributed energy resources may
be subject to metering system requirements established by the
distribution utility or local regulatory authority. Therefore, we
propose that each RTO/ISO should rely on meter data obtained through
compliance with these distribution utility or local regulatory
authority metering system requirements whenever possible for settlement
and auditing purposes, only applying additional metering system
requirements for distributed energy resource aggregations when this
data is insufficient.
g. Coordination Between the RTO/ISO, the Distributed Energy Resource
Aggregator, and the Distribution Utility
153. The market rules that each RTO/ISO adopts to facilitate the
participation of distributed energy resource aggregations must address
coordination between the RTO/ISO, the distributed energy resource
aggregator, and the distribution utility to ensure that the
participation of these resources in the organized wholesale electric
markets does not present reliability or safety concerns for the
distribution or transmission system. Thus, we propose to require each
RTO/ISO to revise its tariff to provide for coordination among the RTO/
ISO, a distributed energy resource aggregator, and the relevant
distribution utilities with respect to (1) the registration of new
distributed energy resource aggregations and (2) ongoing coordination,
including operational coordination, between the RTO/ISO, a distributed
energy resource aggregator, and the relevant distribution utility or
utilities. We seek comment on the detailed proposals described below.
154. First, we propose that each RTO/ISO revise its tariff to
provide for coordination among itself, a distributed energy resource
aggregator, and the relevant distribution utility or utilities when a
distributed energy resource aggregator registers a new distributed
energy resource aggregation or modifies an existing distributed energy
resource aggregation to include new resources. The purpose of this
coordination would be to ensure that all of the individual resources in
the distributed energy resource aggregation are technically capable of
providing services to the RTO/ISO through the aggregator and are
eligible to be part of the aggregation (i.e., are not participating in
another retail or wholesale compensation program, as discussed in
Section III.B.4.a above). In addition, we propose that this
coordination provide the relevant distribution utility or utilities
with the opportunity to review the list of individual resources that
are located on their distribution system that enroll in a distributed
energy resource aggregation before those resources may participate in
the organized wholesale electric markets through the aggregation. The
opportunity for the relevant distribution utility or utilities to
review the list of these resources would allow them to assess whether
the resources would be able to respond to RTO/ISO dispatch instructions
without posing any significant risk to the distribution system and to
ensure these resources are not participating in any other retail
compensation programs. Finally, we propose that this coordination
provide the relevant distribution utility or utilities the opportunity
to report such information to the RTO/ISO for its consideration prior
to the RTO/ISO allowing the new or modified distributed energy resource
aggregation to participate in the organized wholesale electric market.
We seek comment on whether the RTO/ISO tariffs should provide for any
additional review by or coordination with other parties prior to a new
or existing distributed energy resource aggregation participating in
the organized wholesale electric markets.
155. Second, we acknowledge that ongoing coordination between the
RTO/ISO, a distributed energy resource aggregator, and the relevant
distribution utility or utilities may be necessary to ensure that the
distributed energy resource aggregator is disaggregating dispatch
signals from the RTO/ISO and dispatching individual resources in a
distributed energy resource aggregation consistent with the limitations
of the distribution system. Thus, we propose that each RTO/ISO revise
its tariff to establish a process for ongoing coordination, including
operational coordination, among itself, the distributed energy resource
aggregator, and the distribution utility to maximize the availability
of the distributed energy resource aggregation consistent with the safe
and reliable operation of the distribution system. To account for the
possibility that distribution facilities may be out of service and
impair the operation of certain individual resources in a distributed
energy resource aggregation, we also propose to require each RTO/ISO to
revise its tariff to require the distributed energy resource aggregator
to report to the RTO/ISO any changes to its offered quantity and
related distribution factors that result from distribution line faults
or outages. We seek comment on the level of detail necessary in the
RTO/ISO tariffs to establish a framework for ongoing coordination
between the RTO/ISO, a distributed energy resource aggregator, and the
relevant distribution utility or utilities. We also seek comment on any
related reliability, safety, and operational concerns and how they may
be effectively addressed.
156. Further, we seek comment on the appropriate lines of
communication to require. While it may be commercially efficient for
the distributed energy resource aggregator to have the burden of
communicating with both the RTO/ISO and the distribution utility, and
acknowledging the assumption that the distributed energy resource
aggregator will be the single point of contact with the RTO/ISO, are
there reasons (e.g., distribution operations or a distributed energy
resource aggregator's commercial interest) why this would be
insufficient communication? Does a distribution utility that serves
distributed energy resources need real-time direct communication with
the RTO/ISO, such as in the form of operating procedures or software-
enabled communications, in order to operate its distribution system, or
can that communication be organized through the distributed energy
resource aggregator? Finally, we welcome comments on how the
distributed energy resource aggregator model proposed herein would
interact with or complement the distribution system operator (DSO)
model being discussed in some states, and whether a DSO model might add
value to the distributed energy resource aggregator model in terms of
facilitating communication among affected entities?
[[Page 86547]]
h. Market Participation Agreements for Distributed Energy Resource
Aggregators
157. To ensure that a distributed energy resource aggregator
complies with all relevant provisions of the RTO/ISO tariffs, it must
execute an agreement with the RTO/ISO that defines its roles and
responsibilities and its relationship with the RTO/ISO before it can
participate in the organized wholesale electric markets. Since the
individual resources in these distributed energy resource aggregations
will likely fall under the purview of multiple organizations (e.g., the
RTO/ISO, state regulatory commissions, relevant distribution utilities,
and local regulatory authorities), these agreements must also require
that the distributed energy resource aggregator attests that its
distributed energy resource aggregation is compliant with the tariffs
and operating procedures of the distribution utilities and the rules
and regulations of any other relevant regulatory authority.\238\ We
therefore propose that each RTO/ISO revise its tariff to include a
market participation agreement for distributed energy resource
aggregators. We do not propose specific requirements for such
agreements at this time, but instead seek comment on the information
these agreements should contain.
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\238\ This may include any laws or regulations of the relevant
retail regulatory authority that do not permit demand response
resources to participate in the RTO/ISO markets as the Commission
considered in Order No. 719. See Order No. 719, FERC Stats. & Regs.
] 31,281 at P 154.
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158. While these agreements will define the roles and
responsibilities of the distributed energy resource aggregator, they
should not limit the business models under which distributed energy
resource aggregators can operate. Therefore, we propose that the market
participation agreement for distributed energy resource aggregators
that each RTO/ISO must include in its tariff does not restrict the
business models that distributed energy resource aggregators may adopt.
For example, while the third-party aggregator is a common business
model, the market participation agreement for distributed energy
resource aggregators should not preclude distribution utilities,
cooperatives, or municipalities from aggregating distributed energy
resources on their systems or even microgrids from participating in the
organized wholesale electric markets as a distributed energy resource
aggregation.
IV. Compliance
159. We propose to require each RTO/ISO to submit a compliance
filing to demonstrate that it satisfies the proposed requirements set
forth in the Final Rule within six months of the date the Final Rule in
this proceeding is published in the Federal Register. While we believe
that six months is sufficient for each RTO/ISO to develop and submit
its compliance filing, we recognize that implementation of the reforms
proposed herein could take more time due to the changes that may be
necessary to each RTO's/ISO's modeling and dispatch software.
Therefore, we propose to allow twelve months from the date of the
compliance filing for implementation of the proposed reforms to become
effective.
160. We seek comment on the proposed deadline for each RTO/ISO to
submit its compliance filing, as well as the proposed deadline for each
RTO's/ISO's implementation of the proposed reforms to become effective.
Specifically, we seek comment on whether the proposed compliance and
implementation timeline would allow sufficient time for each RTO/ISO to
implement changes to its technological systems and business processes
in response to a Final Rule. We also seek comment on whether the RTOs/
ISOs will require more or less time to implement certain reforms versus
others.
161. To the extent that any RTO/ISO believes that it already
complies with any of the requirements adopted in a Final Rule in this
proceeding, the RTO/ISO would be required to demonstrate how it
complies in the filing due within six months of the date any Final Rule
in this proceeding is published in the Federal Register. The proposed
implementation deadline would apply only to the extent that an RTO/ISO
does not already comply with the reforms proposed in this NOPR.
V. Information Collection Statement
162. The Paperwork Reduction Act (PRA) \239\ requires each federal
agency to seek and obtain Office of Management and Budget (OMB)
approval before undertaking a collection of information directed to ten
or more persons or contained in a rule of general applicability. OMB's
regulations,\240\ in turn, require approval of certain information
collection requirements imposed by agency rules. Upon approval of a
collection(s) of information, OMB will assign an OMB control number and
an expiration date. Respondents subject to the filing requirements of a
rule will not be penalized for failing to respond to these
collection(s) of information unless the collection(s) of information
display a valid OMB control number.
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\239\ 44 U.S.C. 3501-3520.
\240\ 5 CFR 1320 (2016).
---------------------------------------------------------------------------
163. In this NOPR, we are proposing to amend the Commission's
regulations under Part 35 to require each RTO/ISO to propose revisions
to its tariff to (1) establish a participation model consisting of
market rules that, recognizing the physical and operational
characteristics of electric storage resources, accommodates their
participation in the organized wholesale electric markets and (2)
define distributed energy resource aggregators as a type of market
participant that can participate in the organized wholesale electric
markets under the participation model that best accommodates the
physical and operational characteristics of its distributed energy
resource aggregation. Accordingly, we encourage comments regarding the
time burden expected to be required to comply with the proposed rule
regarding the requirement for the RTOs/ISOs to change their tariffs to
conform to the proposed rule. Specifically, this NOPR seeks comment on
the additional burden and cost (human, hardware, and software)
associated with implementation, operation, and maintenance of these new
provisions in RTO/ISO tariffs. The Commission will provide estimates
for these costs in any future Final Rule, as appropriate.
Burden Estimate and Information Collection Costs: We believe that
the burden estimates below are representative of the average burden on
respondents. The estimated burden and cost for the requirements
contained in this NOPR follow.
[[Page 86548]]
FERC-516, as Modified by the NOPR in Docket RM16-23-000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual number Average burden Total annual burden
Number of of responses Total number of (hours) & cost per hours & total Cost per
respondents per respondent responses response annual cost respondent ($)
(1) (2) (1) x (2) = (3) (4)................. (3) x (4) = (5)..... (5) / (1)
--------------------------------------------------------------------------------------------------------------------------------------------------------
One-Time Tariff Filings (Year 1).. \241\ 6 1 6 1,040 hrs; $76,960 6,240 hrs; $461,760. $76,960
\242\.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title: FERC-516, Electric Rate Schedules and Tariff Filings.
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\241\ Respondent entities are either RTOs or ISOs.
\242\ The estimated hourly cost (salary plus benefits) provided
in this section is based on the salary figures for May 2015 posted
by the Bureau of Labor Statistics for the Utilities sector (http://www.bls.gov/oes/current/naics2_22.htm#13-0000) and scaled to reflect
benefits using the relative importance of employer costs in employee
compensation from June 2016 (http://www.bls.gov/news.release/ecec.nr0.htm). The hourly estimates for salary plus benefits are:
Legal (code 23-0000), $128.94
Computer and mathematical (code 15-0000), $60.54
Information systems manager (code 11-3021), $91.63
IT security analyst (code 15-1122), $63.55
Auditing and accounting (code 13-2011), $53.78
Information and record clerk (code 43-4199), $37.69
Electrical Engineer (code 17-2071), $64.20
Economist (code 19-3011), $74.43
Management (code 11-0000), $88.94
The average hourly cost (salary plus benefits), weighting all of
these skill sets evenly, is $73.74. The Commission rounds it to $74
per hour.
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Action: Proposed revisions to an information collection.
OMB Control No.: 1902-0096.
Respondents for this Rulemaking: RTOs and ISOs.
Frequency of Information: One-time during Year One.
Necessity of Information: The Commission implements this rule to
eliminate barriers to electric storage resource participation in the
organized wholesale electric markets and allow for participation of
aggregated distributed energy resources in the organized wholesale
electric markets.
Internal Review: The Commission has reviewed the changes and has
determined that such changes are necessary. These requirements conform
to the Commission's need for efficient information collection,
communication, and management within the energy industry. The
Commission has specific, objective support for the burden estimates
associated with the information collection requirements.
Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street NE., Washington, DC 20426 [Attention:
Ellen Brown, Office of the Executive Director] Email:
DataClearance@ferc.gov Phone: (202) 502-8663; fax: (202) 273-0873.
Comments concerning the collection of information and the associated
burden estimate(s) may also be sent to: Office of Information and
Regulatory Affairs, Office of Management and Budget, 725 17th Street
NW., Washington, DC 20503 [Attention: Desk Officer for the Federal
Energy Regulatory Commission]. Due to security concerns, comments
should be sent electronically to the following email address:
oira_submission@omb.eop.gov. Comments submitted to OMB should refer to
FERC-516 and OMB Control No. 1902-0096.
VI. Regulatory Flexibility Act Certification
164. The Regulatory Flexibility Act of 1980 (RFA) \243\ generally
requires a description and analysis of proposed rules that will have
significant economic impact on a substantial number of small entities.
The RFA mandates consideration of regulatory alternatives that
accomplish the stated objectives of a rule and that minimize any
significant economic impact on a substantial number of small entities.
The Small Business Administration's (SBA) Office of Size Standards
develops the numerical definition of a small business.\244\ These
standards are provided on the SBA Web site.\245\
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\243\ 5 U.S.C. 601-12.
\244\ 13 CFR 121.101.
\245\ U.S. Small Business Administration, Table of Small
Business Size Standards Matched to North American Industry
Classification System Codes (effective Feb. 26, 2016), https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.
---------------------------------------------------------------------------
165. The SBA classifies an entity as an electric utility if it is
primarily engaged in the transmission, generation and/or distribution
of electric energy for sale. Under this definition, the six RTOs/ISOs
are considered electric utilities, specifically focused on electric
bulk power and control. The size criterion for a small electric utility
is 500 or fewer employees.\246\ Since every RTO/ISO has more than 500
employees, none are considered small entities.
---------------------------------------------------------------------------
\246\ 13 CFR 121.201 (Sector 22, Utilities).
---------------------------------------------------------------------------
166. Furthermore, because of their pivotal roles in wholesale
electric power markets in their regions, none of the RTOs/ISOs meet the
last criterion of the two-part RFA definition of a small entity: ``Not
dominant in its field of operation.'' \247\ As a result, we certify
that the reforms required by this NOPR would not have a significant
economic impact on a substantial number of small entities.
---------------------------------------------------------------------------
\247\ The RFA definition of ``small entity'' refers to the
definition provided in the Small Business Act, which defines a
``small business concern'' as a business that is independently owned
and operated and that is not dominant in its field of operation. The
Small Business Administration's regulations at 13 CFR 121.201 define
the threshold for a small Electric Bulk Power Transmission and
Control entity (NAICS code 221121) to be 500 employees. See 5 U.S.C.
601(3) (citing to section 3 of the Small Business Act, 15 U.S.C.
632).
---------------------------------------------------------------------------
VII. Environmental Analysis
167. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\248\ We
conclude that neither an Environmental Assessment nor an Environmental
Impact Statement is required for this NOPR under section 380.4(a)(15)
of the Commission's regulations, which provides a categorical exemption
for approval of actions under sections 205 and 206 of the FPA relating
to the filing of schedules containing all rates and charges for the
transmission or sale of electric energy subject to the Commission's
jurisdiction, plus the classification, practices, contracts and
regulations that affect rates, charges, classifications, and
services.\249\
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\248\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, 52 FR 47,897 (Dec. 17, 1987), FERC
Stats. & Regs., ] 30,783 (1987).
\249\ 18 CFR 380.4(a)(15).
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VIII. Comment Procedures
168. The Commission invites interested persons to submit comments
on all matters and issues proposed in this Proposal to be adopted,
including any related matters or alternative proposals that commenters
may wish to discuss. Comments are due January 30, 2017. Comments must
refer to Docket No. RM16-23-000 and must include the commenter's name,
the organization they represent, if applicable, and their address.
169. The Commission encourages comments to be filed electronically
via
[[Page 86549]]
the eFiling link on the Commission's Web site at http://www.ferc.gov.
The Commission accepts most standard word processing formats. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not in a scanned
format. Commenters filing electronically do not need to make a paper
filing.
Commenters that are not able to file comments electronically must
send an original of their comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
170. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this Proposal are
not required to serve copies of their comments on other commenters.
IX. Document Availability
171. In addition to publishing the full text of this document in
the Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through the Commission's Home Page (http://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A,
Washington, DC 20426.
172. From the Commission's Home Page on the Internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number of this document, excluding the last three digits, in
the docket number field.
173. User assistance is available for eLibrary and the Commission's
Web site during normal business hours from the Commission's Online
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
public.referenceroom@ferc.gov.
List of Subjects in 18 CFR Part 35
Electric power rates; Electric utilities.
By direction of the Commission.
Issued: November 17, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
In consideration of the foregoing, the Commission proposes to amend
Part 35 Chapter 1, Title 18 of the Code of Federal Regulations as
follows:
PART 35--FILING OF RATE SCHEDULES AND TARIFFS
0
1. The authority citation continues to read as follows:
Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.
0
2. Amend Sec. 35.28 by adding new paragraphs (b)(9) through (12), (g)
(9), and (g)(10).
Sec. 35.28 Non-discriminatory open access transmission tariff.
* * * * *
(b) * * *
(9) Electric storage resource as used in this section means a
resource capable of receiving electric energy from the grid and
storing it for later injection of electricity back to the grid
regardless of where the resource is located on the electrical
system.
(10) Distributed energy resource as used in this section means a
source or sink of power that is located on the distribution system,
any subsystem thereof, or behind a customer meter.
(11) Distributed energy resource aggregator as used in this
section means the entity that aggregates one or more distributed
energy resources for purposes of participation in the capacity,
energy and ancillary service markets of the regional transmission
organizations and independent system operators.
(12) Organized wholesale electric markets as used in this
section means the capacity, energy, and ancillary service markets
operated by regional transmission organizations and independent
system operators.
* * * * *
(g) * * *
(9) Electric Storage Resources. (i) Each Commission-approved
independent system operator and regional transmission organization
must have tariff provisions providing a participation model for
electric storage resources that
(A) Ensures that electric storage resources are eligible to
provide all capacity, energy and ancillary services that they are
technically capable of providing in the organized wholesale electric
markets;
(B) Incorporates bidding parameters that reflect and account for
the physical and operational characteristics of electric storage
resources;
(C) Ensures that electric storage resources can be dispatched
and can set the wholesale market clearing price as both a wholesale
seller and wholesale buyer consistent with existing rules that
govern when a resource can set the wholesale price;
(D) Establishes a minimum size requirement for participation in
the organized wholesale electric markets that does not exceed 100
kW; and
(E) Specifies that the sale of energy from the organized
wholesale electric markets to an electric storage resource that the
resource then resells back to those markets must be at the wholesale
locational marginal price.
(ii) [Reserved]
(10) Distributed Energy Resource Aggregators. (i) Each
independent system operator and regional transmission organization
must have tariff provisions that allow distributed energy resource
aggregations to participate directly in the organized wholesale
electric markets. Each regional transmission organization and
independent system operator must establish distributed energy
resource aggregators as a type of market participant and must allow
the distributed energy resource aggregators to register distributed
energy resource aggregations under the participation model in the
regional transmission operator or the independent system operator's
tariff that best accommodates the physical and operational
characteristics of the distributed energy resource aggregation.
(ii) Each regional transmission operator and independent system
operator, to accommodate the participation of distributed energy
resource aggregations, must establish market rules on:
(A) Eligibility to participate in the organized wholesale
electric markets through a distributed energy resource aggregation;
(B) Locational requirements for distributed energy resource
aggregations;
(C) Distribution factors and bidding parameters for distributed
energy resource aggregations;
(D) Information and data requirements for distributed energy
resource aggregations;
(E) Modification to the list of resources in a distributed
energy resource aggregation;
(F) Metering and telemetry system requirements for distributed
energy resource aggregations;
(G) Coordination between the regional transmission organization
or independent system operator, the distributed energy resource
aggregator, and the distribution utility;
(H) Market participation agreements for distributed energy
resource aggregators.
Note: The following appendix will not appear in the Code of Federal
Regulations
Appendix A: Abbreviated Names of Commenters
The following table contains the abbreviated names of the
commenters that are used in this Notice of Proposed Rulemaking.
------------------------------------------------------------------------
Abbreviation Commenters
------------------------------------------------------------------------
Advanced Energy Economy........... Advanced Energy Economy
AEP............................... American Electric Power Service
Corporation
[[Page 86550]]
AES Companies..................... Indianapolis Power & Light Company,
The Dayton Power and Light Company,
AES Energy Storage LLC, AES ES Tait
LLC and all other AES U.S.
operating companies that own
generation and storage
Alevo............................. Alevo Analytics
Advanced Microgrid Solutions...... Advanced Microgrid Solutions, Inc.
APPA.............................. American Public Power Association
Advanced Rail Energy Storage...... Advanced Rail Energy Storage, LLC
Brookfield Renewable.............. Brookfield Renewable
California Department of Water California Department of Water
Resources. Resources
California Energy Storage Alliance California Energy Storage Alliance
Delaware Commission............... Delaware Public Service Commission
Duke Energy....................... Duke Energy Corporation
EEI............................... Edison Electric Institute
Enel Green Power.................. Enel Green Power North America, Inc.
Electric Power Supply Association. Electric Power Supply Association
Electric Vehicle R&D Group........ University of Delaware Electric
Vehicle R&D Group
Energy Storage Association........ Energy Storage Association
FirstLight........................ FirstLight Power Resources
Management LLC
Golden Spread..................... Golden Spread Electric Cooperative,
Inc.
Ice Energy........................ Ice Energy
Independent Energy Producers Independent Energy Producers
Association. Association
Manitoba Hydro.................... Manitoba Hydro
Minnesota Energy Storage Alliance. Minnesota Energy Storage Alliance
National Electrical Manufacturers National Electrical Manufacturers
Association. Association
National Hydropower Association... National Hydropower Association
New York Battery and Energy New York Battery and Energy Storage
Storage Consortium. Technology Consortium
NextEra........................... NextEra Energy Resources, LLC
NRECA............................. National Rural Electric Cooperative
Association
NY Transmission Owners............ Central Hudson Gas & Electric
Corporation, Consolidated Edison
Company of New York, Inc., New York
Power Authority, New York State
Electric & Gas Corporation, Niagara
Mohawk Power Corporation, Orange
and Rockland Utilities, Inc., Power
Supply Long Island, and Rochester
Gas and Electric Corporation
Ormat............................. Ormat Nevada Inc.
Pacific Gas & Electric............ Pacific Gas and Electric Company
Public Interest Organizations..... Sustainable FERC Project on behalf
of Natural Resources Defense
Council and Union of Concerned
Scientists
PJM Market Monitor................ Independent Market Monitor For PJM
Quanta............................ Ralph Masiello, Quanta Technologies,
LLC
RES Americas...................... Renewable Energy Systems Americas
Inc.
SoCal Edison...................... Southern California Edison Company
Schulte Associates................ Schulte Associates LLC
Solar Grid Storage................ Solar Grid Storage, LLC
SolarCity......................... SolarCity Corporation
Steffes........................... Steffes
Tesla............................. Tesla Motors, Inc.
Viridity.......................... Viridity Energy, Inc.
Wellhead.......................... Wellhead Electric Company
Xcel Energy Services.............. Xcel Energy Services, Inc., on
behalf of its operating company
affiliates, Northern States Power
and Southwestern Public Service
Company
------------------------------------------------------------------------
[FR Doc. 2016-28194 Filed 11-29-16; 8:45 am]
BILLING CODE 6717-01-P