New rule would allow advanced energy technologies to compete
on providing energy and reliability services
[Washington, D.C., February 14, 2016] —Today, Advanced Energy Economy (AEE) announced that the national business group has filed comments with the Federal Energy Regulatory Commission (FERC) applauding its efforts to begin opening up wholesale electricity markets to competition from storage and aggregated distributed energy resources (DERs). AEE’s comments are available here.
Last year, FERC responded to comments from AEE and others calling for the Commission to expand its initial inquiry into barriers facing energy storage to examine a wider array of advanced energy technologies that cannot fully compete under current market rules by including distributed energy resources like rooftop solar when they are aggregated for market participation. AEE supported this expansion of the rule to encompass aggregated DERs and encouraged FERC continue to pursue breaking down barriers to market competition in a comprehensive way.
Comments on FERC’s Notice of Proposed Rule (NOPR) were due yesterday, even as FERC awaits the appointment of commissioners to fill three open seats, one of which was vacated by former-Chairman Norman Bay earlier this month. Although FERC currently lacks the quorum necessary to take action on officials matters, the Commission and its staff can continue to review comments and make revisions so that the measure is ready for a vote when at least one of the vacant seats is filled, enabling a quorum.
In its comments, AEE expressed support for the general direction of the proposed rule, and offered suggestions for improvements to achieve the Commission’s objective of removing unjust, unreasonable, and unduly discriminatory barriers to participation in the wholesale markets.
FERC has sent clear signals that it intends to take up this issue in a variety of ways. Earlier this month, FERC ruled favorably on energy storage in a dispute between the Midcontinent Independent System Operator (MISO) and Indianapolis Power & Light (IPL). FERC ordered MISO to revise its tariffs within 60 days to allow for a battery storage facility owned by IPL to be permitted to participate in wholesale markets, even while the NOPR has yet to be finalized.
“We are entering a new era where advanced energy technologies can compete based on lower costs and increased reliability but are not allowed to do so because of market rules that were designed with incumbent technologies in mind,” said Arvin Ganesan, vice president of federal affairs at Advanced Energy Economy. “This rulemaking can remove some of the market barriers these technologies face, allowing advanced energy businesses to provide reliable energy at lower cost.”
While the proposed rule is an important step toward removing barriers advanced energy technologies face in the wholesale markets, AEE noted that certain details need to be modified or clarified so the Commission can achieve its stated goal of enhancing competition from these resources. In its comments, AEE identified three primary areas where the proposed rule may not adequately address existing barriers or could potentially create new barriers for advanced energy technologies:
- The Commission should modify its proposal to restrict aggregated DERs that are participating in retail compensation programs from also participating in wholesale markets. This attempt to avoid potential “double payment” is overly broad, not in line with how DERs are participating in wholesale and retail markets today, and would undermine the stated goal of the NOPR to allow increased participation by these resources.
- The Commission should revise and limit the broad “gatekeeper” role it has proposed to give distribution utilities regarding reliability risks. AEE fully supports the Commission’s goal of ensuring reliability and believes this goal can be accomplished without creating the potential for undue discrimination.
- The Commission should clarify that existing participation models must be reviewed to ensure that DER aggregators can utilize them to provide all services that they are technically capable of providing. The NOPR appears to assume that DER aggregators will utilize existing participation models without any modifications to account for the unique properties of DER aggregations.
About Advanced Energy Economy
Advanced Energy Economy is a national association of businesses that are making the energy we use secure, clean, and affordable. Advanced energy encompasses a broad range of products and services that constitute the best available technologies for meeting energy needs today and tomorrow. AEE’s mission is to transform public policy to enable rapid growth of advanced energy businesses. AEE and its State and Regional Partner organizations are active in 27 states across the country, representing more than 1,000 companies and organizations in the advanced energy industry. Visit AEE online at www.aee.net.