FERC Tilts Electricity Storage Policies

By Published On: January 22, 2010

The Federal Energy Regulatory Commission embraced transmission-level battery storage for intermittent renewable energy supplies on the California Independent System Operator’s grid. The January 21 decision puts CAISO in an apparent defensive position. Federal regulators categorized as special “transmission facilities” a plan to build three sodium sulfur batteries between 10 MW and 50 MW of storage. Thus, the developer, Western Grid Development, would get financial incentives for building the substation-sized storage. In addition, on top of the rate of return, it is to reap an additional 1.95 percent return on investment equity. The classification qualifies all work in progress for rate base treatment, thus not requiring that payment wait until the project is operational. The state’s grid operator expressed concern about giving non-traditional transmission devices preferential financial treatment. CAISO does not want to operate the batteries after they are built, and it “doesn’t want them to affect [energy] commodities,” noted a grid operator filing at FERC. The grid operator’s squeamishness is a result of a similar situation with a company that wants to build a pumped storage plant on Lake Elisnore. Nevada Hydro also requests special financial treatment of its plan for the project as energy storage. CAISO has rebuffed Nevada Hydro’s plan for the last couple years. According to the grid operator’s FERC filing, it finds there’s “not a meaningful difference from pumped storage” and the Western Grid Development’s plan for battery storage. In a related move, FERC opened a docket to investigate storage for intermittent resources nationwide. “It’s to examine whether rules and practices may hinder integration” of renewable resources to the grid, said chair Jon Wellinghoff. While federal regulators are embracing changes required to move the nation toward more renewable energy, commissioner Marc Spitzer cautioned that the agency’s move should “not be misunderstood.” He explained, “Our endeavor here is not to create a preference” for technologies versus “just and reasonable rates.”

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