SB 943 relates to the classification, use, and regulation of electric energy storage equipment or facilities when transacting in the wholesale market. The bill provides that when energy storage equipment or facilities are being used to transact in the wholesale market, it must register as a PGC (Power Generation Company) with the Public Utility Commission of Texas and clarifies that energy storage is afforded all the same interconnection rights as any other generation asset that is allowed to interconnect, obtain transmission service, and participate in electricity markets. The bill does not address the use of energy storage as a transmission asset.
The CPUC's Self-Generation Incentive Program (SGIP) provides incentives to support existing, new, and emerging distributed energy resources. The SGIP provides rebates for qualifying distributed energy systems installed on the customer's side of the utility meter. Qualifying technologies include wind turbines, waste heat to power technologies, pressure reduction turbines, internal combustion engines, microturbines, gas turbines, fuel cells, and advanced energy storage systems.
This bill extends the funding of the California Public Utility Commission's (CPUC's) Self-Generation Incentive Program (SGIP) by three years (through December 2014) at $83 million per year, and requires the commission to evaluate the program to achieve specified goals. In addition, the bill specifically states that energy storage is eligible in this program, whether standalone, or when coupled with PV. Existing law requires the CPUC to administer the program until January 1, 2016.
This order amends FERC regulations under the Federal Power Act to improve the operation of organized wholesale electric markets in the areas of: (1) demand response and market pricing during periods of operating reserve shortage; (2) long-term power
contracting; (3) market-monitoring policies; and (4) the responsiveness of regional transmission organizations (RTOs) and independent system perators (ISOs) to their customers and other stakeholders, and ultimately to the consumers who benefit from and pay for electricity services. Each RTO and ISO will be required to make certain filings that propose amendments to its tariff to comply with the requirements in each area, or that demonstrate that its existing tariff and market design already satisfy the requirements.
The Federal Energy Regulatory Commission is revising its regulations to remedy undue discrimination in the procurement of frequency regulation in the organized wholesale electric markets and ensure that providers of frequency regulation receive just and reasonable and not unduly discriminatory or preferential rates. Current compensation methods for regulation service in RTO and ISO markets fail to acknowledge the inherently greater amount of frequency regulation service being provided by faster-ramping resources. This Final Rule requires RTOs and ISOs to compensate frequency regulation resources based on the actual service provided, including a capacity payment that includes the marginal unit’s opportunity costs and a payment for performance that reflects the quantity of frequency regulation service provided by a resource when the resource is accurately following the dispatch signal.
The Commission opened three rules to address issues related to storage. The first project, Project Number 39657, was a rulemaking to Implement SB 943 relating to Electric Energy Storage Equipment or Facilities. In November 2011, the Commission adopted amendments to §25.5. The amendments added references to energy storage equipment and facilities as required by SB 943 of the 82nd Legislature, Regular Session in 2011 (SB 943). This rule included electric energy storage equipment or facilities under the definition of a power generation company providing clarity regarding the interconnection of energy storage equipment and facilities.
In the second project, Project Number 39917, the Commission opened a rulemaking on energy storage issues in response to issues raised in the October 2011 workshop. In March 2012 the Commission adopted amendments to §25.192 relating to transmission service rates, and §25.501, relating to wholesale market design for the ERCOT region. The Commission determined that energy used to charge a storage facility is a wholesale transaction. Certain ancillary services are for the benefit of retail load and their costs are allocated to entities serving retail load on a load-ratio-share or per megawatt-hour basis.
The ERCOT protocols provide that generators are compensated for energy on a nodal pricing basis while loads pay for energy on a zonal basis. The nodal price, or the price of energy for any specific location, will change based on grid congestion. The zonal price is the average price of the nodes within a particular zone. There are currently eight zones in ERCOT. While energy storage acts as a load when it withdraws energy, the
storage facility does not ultimately consume this energy, and uses it for regeneration at a later time. Therefore, the Commission sought to treat storage load at the nodal price instead of at the zonal price that is applied to end-use consumption. This difference between nodal and zonal pricing could have diminished the economic efficiency with regard to the location and operation of storage technologies. Applying the nodal price to storage load would offer a locational signal for the efficient siting and economical operation of storage facilities.
The Commission recognized that a distinction of wholesale electrical load for storage devices was reasonable where a storage device, regardless of the specific technology, takes power from the grid, converts it to potential energy, and at a more opportune time transforms this potential energy back into electric energy, which is returned to the grid (less conversion losses). Storage devices thus differ fundamentally from other loads because the power taken from the grid is not consumed in the manufacturing of goods or the provision of services. In this respect, there is a clear distinction between storage assets and other types of load when taking energy from the grid. During the rulemaking it became evident that the concept of an ERCOT pilot project should be investigated.
To address energy storage issues, the Commission opened Project Number 39764 to examine regulatory issues that the Commission may need to address and the actions that the Commission should take to facilitate the appropriate deployment and use of energy storage facilities and other emerging technologies in ERCOT. The Commission held a workshop on electric energy storage facilities in ERCOT in October 2011 where participants presented information on energy storage technologies and discussed policies and procedures that could facilitate the deployment and use of energy storage facilities in ERCOT.
In May 2012, in Project No. 40150, the Commission adopted amendments to §25.361 which added a new subsection (k) that gave ERCOT the authority to conduct pilot projects and allow ERCOT to grant temporary exceptions from ERCOT rules, as necessary to effectuate the purposes of the pilot projects. The rule on pilot projects is intended to provide ERCOT with better knowledge, understanding, and experience with new technologies and services. ERCOT can use the results of the pilot projects to make changes to its protocols and rules to allow for new technologies and services in ERCOT.
This CPUC rule-making is part of the state's long-term procurement planning (LTPP), which authorizes the state's investor owned utilities (IOUs) to procure certain amounts of electricity capacity and directs those utilities to purchase at least a certain amount of various listed capacity resources. At the broad scale, this rulemaking "authorizes Southern California Edison (SCE) to procure between 1,400 and 1,800 megawatts (MW) of electrical capacity in the West Los Angeles sub-area of the Los Angeles (LA) base and local reliability area to meet long-term local capacity requirements (LCRs) by 2021. SCE is also authorized to procure between 215 and 290 MW of the Moorpark sub-area of the Big Creek/Ventura local reliability area."
This was a landmark ruling because it was the first state decision directing an IOU to procure a certain amount of energy storage capacity (in this case, 50 MW). It also states that “energy storage resources should be considered along with preferred resources,” and that the two categories may be procured up to 800 MW total capacity. Regarding this, the rulemaking states that “at least 50 MW [of capacity] must be procured from energy storage resources. At least 150 MW of capacity must be procured through preferred resources consistent with the Loading Order in the Energy Action Plan, or energy storage resources. SCE is also authorized to procure up to an additional 600 MW of capacity from preferred resources and/or energy storage resources.” In this case, SCE is directed to procure 50 MW of energy storage capacity, but is authorized to procure up to 800 MW if it so chooses (assuming no other preferred resources are procured).
SCE is directed to begin a procurement process and have applications for the CPUC ready by late 2013 or early 2014.
"The Energy Storage Technology Advancement Partnership (ESTAP) is a new, cooperative funding and information-sharing partnership between the U.S. Department of Energy (DOE) and interested states that aims to accelerate the commercialization and deployment of energy storage technologies in the United States via joint funding and coordination. Facilitated by the Clean Energy States Alliance, ESTAP is funded by Sandia National Laboratories and implemented in cooperation with the DOE Office of Electricity Delivery and Energy Reliability (OE).
ESTAP engages in a variety activities to promote energy storage technologies, including:
• Creating a State Energy Storage Network
• Conducting surveys on state energy storage activities
• Working with stakeholders to initiate and develop energy storage projects
• Hosting webinars on various energy storage topics to educate stakeholders"
"The Smart Grid Investment Grant (SGIG) program is authorized by the Energy Independence and Security Act of 2007, Section 1306, as amended by the Recovery Act. The purpose of the grant program is to accelerate the modernization of the nation’s electric transmission and distribution systems and promote investments in smart grid technologies, tools, and techniques that increase flexibility, functionality, interoperability, cybersecurity, situational awareness, and operational efficiency. The SGIG projects were selected through a merit-based, competitive solicitation by which successful projects were eligible to receive federal financial assistance for up to 50% of eligible costs. Additional details about the original Funding Opportunity Announcement are available in the SGIG Funding Opportunity Announcement."
Per the SGIG 2012 report (http://www.smartgrid.gov/sites/default/files/doc/files/sgig-progress-report-final-submitted-07-16-12.pdf), at least one funded project explicitly identifies storage as being a factor of the smart grid itself. More may include energy storage but do not list it explicitly.
"The Smart Grid Demonstration Program (SGDP) is authorized by the Energy Independence and Security Act of 2007, Section 1304, as amended by the Recovery Act, to demonstrate how a suite of existing and emerging smart grid concepts can be innovatively applied and integrated to prove technical, operational, and business-model feasibility. The aim is to demonstrate new and more cost-effective smart grid technologies, tools, techniques, and system configurations that significantly improve on the ones commonly used today.
SGDP projects were selected through a merit-based solicitation in which the U.S. Department of Energy (DOE) provides financial assistance of up to 50% of the project’s cost. Note that SGDP projects are cooperative agreements, whereas the Smart Grid Investment Grant projects are grants. Additional information about the original Funding Opportunity Announcement can be found in the SGDP Funding Opportunity Announcement.
Two types of smart grid projects were selected for the SGDP. One includes regional smart grid demonstrations to verify smart grid viability, quantify smart grid costs and benefits, and validate new smart grid business models at scales that can be readily replicated across the country. The second includes energy storage technologies such as batteries, flywheels, and compressed air energy storage systems for load shifting, ramping control, frequency regulation services, distributed applications, and the grid integration of renewable resources such as wind and solar power.
The program consists of 32 projects in the two areas: Smart Grid Regional Demonstrations (16 projects) and Energy Storage Demonstrations (16 projects). The total budget for the 32 projects is about $1.6 billion; the federal share is about $600 million."
"A bill to amend the Internal Revenue Code of 1986 to extend the publicly traded partnership ownership structure to energy power generation projects and transportation fuels, and for other purposes."
A Master Limited Partnership (MLP) "is a business structure that is taxed as a partnership, but whose ownership interests are traded like corporate stock on a market." This allows for lower levels of taxation, as taxes are imposed at the shareholder level but not at the larger corporate structure. Historically, MLPs have only encompassed fossil fuel-based energy partnerships within the internal revenue code. The MLP Parity Act expands MLP eligibility to an array of renewable energy sources, including "electricity storage devices." If enacted, it will allow for more equitable taxation methods across all energy sectors, and will allow for new ownership and taxation models for energy storage device partnerships specifically.
The MLP Parity Act was originally introduced in 2012 and did not make it through both houses of Congress. It was reintroduced with expanded qualifying sources on April 24, 2013 by Sen. Christopher Coons (D-DE).
"In December 2010, the CPUC opened Rulemaking R.10-12-007 to set policy for California utilities and load-serving entities (LSEs) to consider the procurement of viable and cost-effective energy storage systems.
Under terms of state law embodied in AB 2514 (Skinner), by October 1, 2013, the CPUC shall adopt an energy storage procurement target, if determined to be appropriate, to be achieved by each LSE by December 15, 2015, and a 2nd target to be achieved by December 31, 2020.
In addition, the CPUC should consider a variety of possible policies to encourage the cost-effective deployment of energy storage systems, including refinement of existing procurement methods to properly value energy storage systems." - CPUC Website
The Storage OIR includes a series of workshops and related proceedings to establish appropriate valuation, grid need identification, and procurement goal-setting methodologies for energy storage. Workshops include a diverse group of stakeholders, including utilities, storage industry groups, technology providers, ratepayer advocates, green-grid and environmental interests, and others. As of May 2013, workshops and feedback are still ongoing. A final ruling on procurement goals and other related policy changes is expected by October 2013.