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FERC Votes to Encourage Electric Storage

On February 15, 2018, the Federal Energy Regulatory Commission (FERC) voted to require all Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) to revise its tariffs to establish a participation model for electric storage resources that consist of market rules that properly recognize the physical and operational characteristics of electric storage resources.

FERC’s goal is to remove barriers applicable to electric storage resources in the capacity, energy and ancillary services markets operated by RTOs and ISOs.

Market rules designed for traditional generation resources can create barriers to entry for emerging technologies, such as electric storage. FERC hopes to enhance competition and promote greater efficiency in the nation’s electric wholesale markets, and to support the resilience of the bulk power system by helping to remove such barriers.

The participation model, however, must ensure that a resource using the model is eligible to provide all capacity, energy and ancillary services that it is technically capable of providing, can be dispatched, and can set the wholesale market clearing price as both a seller and buyer consistent with existing market rules. The model also must account for the physical and operational characteristics of electric storage resources through bidding parameters or other means, and it must set a minimum size requirement that does not exceed 100 kilowatts.

With the improvement of battery technology, battery energy storage is starting to target peak demand hours. Peak demand in the U.S. usually happens on summer afternoons when people return home from work and turn on their air-conditioners to cool their homes. Normally, this peak demand is met with “peaker” natural gas or coal burning combustion engines, but FERC’s ruling should make it easier for storage to serve this demand. Theoretically and over time, this could help smooth out peak period wholesale prices, as storage units are designed to charge when prices are low and discharge when prices are higher.

FERC’s final rule will begin a process over the next two years during which individual RTOs and ISOs will develop, propose and eventually implement responsive tariff revisions. The order is available at: https://www.ferc.gov/whats-new/comm-meet/2018/021518/E-1.pdf

© 2019 Foley & Lardner LLP


About this Author

Jason W. Allen, Foley Lardner, Energy Industry Lawyer, Finance Attorney

Jason Allen is a partner and business lawyer with Foley & Lardner LLP, where he is a member and co-chair of the Energy Industry Team. He is a member of the Finance & Financial Institutions, Transactional & Securities, and Private Equity & Venture Capital Practices. Mr. Allen’s practice focuses in the areas of mergers and acquisitions, private equity, finance, and general corporate and commercial law, with a particular emphasis on transactions in the energy industry. 

Thomas Mullooly, Energy Attorney, Foley and Lardner, Renewable project develop
Of Counsel

Thomas Mullooly is an energy lawyer with Foley & Lardner LLP. He has in depth experience across all regulatory aspects of the energy industry and provides counsel on contracts, mergers and acquisitions, renewable project development, and state and federal and ISO compliance issues. He has led regulatory proceedings and litigation before FERC and in state commissions across the country. Mr. Mullooly is vice chair of the firm’s Energy Industry Team.

Larry Bonney Wisconsin Business Lawyer

Larry Bonney is a partner and business lawyer with Foley & Lardner LLP. His practice concentrates on representing owners, sponsors, developers, sellers, buyers, lenders and other parties in a wide array of energy matters, with a particular focus on real estate and development aspects. Mr. Bonney heads the real estate and project development group of the Energy Industry Team. He is also a member of the Finance & Financial Institutions and Real Estate Practices.

Justus Britt, Solar Energy Project Attorney, Foley Lardner Law Firm

Justus Britt is a business lawyer and special counsel with Foley & Lardner LLP. Mr. Britt focuses on the development and acquisition of solar energy projects. His project development experience includes advising clients on real estate, permitting, and construction matters, including negotiating supply, EPC, and O&M agreements. Mr. Britt’s acquisition experience includes leading due diligence efforts and assisting on stock and asset purchase agreements, as well as joint venture agreements. He is a member of the firm’s Energy Industry Team and the Transactional...