A California Independent System Operator representative stated recently that grid operators and stakeholders are trying to build a pricing model for energy storage as a transmission asset, which is gaining attention as one approach to increasing electricity supply.
CAISO storage sector manager Gabe Murtaugh said on February 15 during a panel discussion at the Intersolar North America and Energy Storage North America conference in Long Beach, California, that stakeholders in California are exploring standards for energy storage and transmission assets, or SATA.
“And I think where we’ve kind of come up with the most headwinds are how do you pay for these things?” On certain days the ISO will need resources not immediately discharged. Although no revenue will be available, utilities will be “offering this important function to the system,” he said, raising concerns about compensation. “Does the ISO need to pay for that? Does the utility need to pay for that? Do we need to split this up somehow?”
California is one of the largest energy storage markets in the world. Energy storage often generates revenue streams similar to those available to traditional generation resources, such as energy and resource adequacy payments, and transmission is typically rate-based.
The Federal Electricity Regulatory Commission has separated generating and transmission, and Justin Boose, renewable energy partner at Holland & Knight, suggested that one solution would be to treat a storage resource as a transmission asset and rate-base it to get a return. But still, he claims that this technique “leaves value on the table” because the resource might also act as a generation asset. Furthermore, “structural impediments” bar transmission owners from operating in a merchant function, Boose said, citing anti-competition policies.
Around 500 MW of lithium-ion battery storage on CAISO’s grid two years ago has grown to more than 5,200 MW of storage now available for market dispatch. Murtaugh expects it to reach more than 6,000 MW later this year. He said that the state’s goal is to have more over 10,000 MW of storage on the grid by summer 2024.
Energy storage as a transmission asset is considered as saving consumers money while also minimizing the impact on land resources and the environment. Storage resources produce electricity when the system requires it the most, such as when solar and wind power are unavailable.
Storage resources are now qualified to participate in energy and operating reserve markets, according to the Midcontinent Independent System Operator. In December, ISO-New England sought FERC to approve a rule change that would make energy storage a transmission-only asset.
Murtaugh stated in a blog post published in December 2021 that compensation for storage resources when the grid operator may require the resources to hold state of charge is not set up in energy markets because market rules are geared toward more traditional sources of power, such as natural gas, solar, wind, and other renewables.
“This is very different from traditional markets, where price formation is typically based solely on current market supply and demand situations,” he explained.
Source: utilitydive
2023-04-09 22:07:42
