On July 9, the FERC published a Notice of Proposed Rulemaking (NOPR) which seeks to revise, among other things, certain aspects of the FERC’s current market-based rate regulations as those regulations apply to the provision of ancillary services by third parties using electricity storage technology.  The FERC’s continuing interest in electricity storage is gratifying, not just for the help it provides to the storage community, but because it demonstrates the FERC’s vision of electricity storage playing an important future role on the grid.  If this is the vision of the regulators, who deal with grid every day, the market cannot be far behind.

The rules that emerge from the current NOPR will play an important role in determining how the market for electricity storage on the grid evolves.  NAATBatt is, of course, interested in electricity storage provided by advanced battery systems designed to operate in weight and volume constrained environments.  Grid operators will likely use these types of systems on the distribution portion of the grid, where space for utility infrastructure is at a premium.  Some of these devices will be deployed on the consumer side of the meter.  But the large majority are likely to be deployed by regulated load serving utilities at substations, in residential communities, below city streets and in commercial buildings.

One of the great opportunities of distributed energy storage (DES) technology—and perhaps critical to its economic viability—is the ability of owners of DES systems to aggregate the electricity stored by tens or hundreds of individual DES systems and to wheel that power to customers outside the owner’s service area.  The FERC’s current NOPR will deal in part with rules governing how and at what price owners of DES systems can sell stored electricity to customers in interstate transactions that are subject to FERC jurisdiction.

It is important that the FERC use the current NOPR to set the right groundwork for emerging DES technology.  An important and somewhat novel feature of DES technology is that it will involve the regulation of assets located on the distribution portion of the grid--which lies outside of FERC jurisdiction--selling electricity in interstate transactions subject to FERC jurisdiction.
An important consideration in setting the groundwork for those future transactions is making sure that the owners of DES assets are not subject to unduly burdensome regulatory requirements imposed by multiple state and federal regulators.  FERC rules must also ensure that state-regulated owners of DES assets are not disadvantaged in the sale of storage-based ancillary services relative to owners of merchant generation or merchant storage assets located on the transmission portion of the grid.
NAATBatt looks forward to working with the FERC to get the groundwork for future DES technology properly laid.  Ensuring that regulated utilities which invest in DES technology can recoup their investments and monetize fully and completely the multiple benefit streams that networked DES systems can produce is essential to the future of electricity storage on the grid.
Get the groundwork right and there will be a major DES market soon.  Get it wrong, and we will be waiting for quite a while.

http://theenergycollective.com/jim-greenberger/97746/ferc-rules-need-accommodate-aggregated-distributed-electricity-storage