Bringing Energy Storage to Energy Markets

October 29, 2018
Mike Jacobs, Union of Concerned Scientists

Mike Jacob's original post is available on UCS's website.

Excitement over storing electricity, and expectations for new market rules in the US, promise great changes in energy. Instead of hype and speculation, this blog offers a preview of those market changes. For those who are waiting for FERC Order 841 to sort things out, ISO-New England has published something you might want to see.

Anticipation has been building since mid-February, when the Federal Energy Regulatory Commission’s Order 841 required the organized electricity markets in the US (i.e. RTOs and ISOs) to make changes to facilitate the use of energy storage. At the time, New England hinted that work was already begun to sort out the changes that would make the market software and rules consistent for charging and discharging large-scale batteries. Now, two months ahead of the deadline set of the market operators to file, ISO-NE has revealed what this is all about.

Energy storage is only kind of new

Energy storage is new—and it’s not new. Colonial-era scientist and political leader Benjamin Franklin ran experiments with the storage devices of his time, and was the first person to use the terms charging and discharging while describing the transfer of electricity. Utilities built pumped water storage facilities, what we call pumped hydro plants, in the 1890’s in Europe and the 1930’s in the United States.

There was a boom in 1970’s for these kind of plants to help manage the inflexible additions of nuclear power. This experience provides a starting place for grid operators making changes for new storage technology.

New England has significant pumped hydro, as well as activity on new storage technology. New proposals made in last couple of years to build battery storage projects in New England now total over 800 MWs, and there are approximately 170 MWs of battery storage proposals co-located with wind and solar projects.

Beginning in 2016, ISO-New England began working on the changes that would enable batteries and other similar technologies to participate more fully in the wholesale markets. Many people anticipate these changes will unleash a new technology because of the constraints contained in the present market software and rules. There certainly is evidence that battery storage can replace conventional power plants, and that the obstacles addressed by these regulatory and software changes will bring us closer to the routine adoption of storage plants instead of new fuel-burning capacity.

Details, details

Part of this change reveals how grid operators have multiple layers for understanding an energy source. As ISO-NE makes clear, storage plants aren’t single-purpose; they have a range of functions that need to be understood and modeled for. For example, pumped storage hydro may register and be modeled as a Generator Asset and, if it also has the capability to consume, a Load Asset. But not just any load asset: a “Dispatchable Asset Related Demand,” or DARD.

In fact, the market rules that get written out and filed at FERC will have new definitions, including: Electric Storage Facility, Binary Storage Facility, Continuous Storage Facility, Continuous Storage Generator Asset, Continuous Storage DARD, and Continuous Storage ATRR.  The market rules in New England already have 35 pages of definitions.

The existing  market software makes decisions for pumped hydro more slowly than desirable for batteries. The large pumped hydro equipment can stop and reverse direction in minutes, so the decision to switch from a load to a generator is not made in the same run of the software: they are made in sequential runs. Batteries with their power electronics can change direction much more quickly (i.e. milliseconds, which offers additional benefits if used for contingencies). (Let’s not even get into how the transmission system folks model the physical battery.)

Headed in the right direction

The goal with the rule changes for ISO-NE and its governing body NEPOOL was to provide a means for batteries (and other storage technologies capable of continuously and rapidly transitioning between charging and discharging) to participate simultaneously in the energy, reserves, and regulation markets. The design goals included the following:

  • Storage facilities should be dispatched to generate and consume based on economics;
  • Storage facilities should not be dispatched to generate when empty, nor dispatched to charge when full;
  • Storage facilities should be able to set real-time Locational Marginal Prices when generating or consuming;
  • Storage facilities should be able to provide regulation while maintaining their state of charge, allowing simultaneous regulation market and energy market participation;
  • Storage facilities should be designated for reserves (even when regulating);
  • Storage facilities should be able to save energy for a future interval;
  • Storage facilities should receive compensation if dispatched out-of-place from its economics; and
  • The ISO control room should be able to direct storage facilities to increase storage, or save available energy, for a future hour.

I could give you more detail on how all this is done, but remember you are reading a blog. If you are excited to get a look at how Order 841 reforms are going to work, take a look at the ISO-NE filing. You might be able to see if there are truly gold bars buried in these changes. Certainly, you should see the start of the future grid, and how storage is going to be a lot more important than it has been.