The Federal Energy Regulatory Commission (FERC) has completed a ruling that allows energy storage companies to directly compete against power plants in wholesale power markets. This means that technologies, like batteries and flywheel systems, could be used by grid operators in order to dispatch power and offer back-up. The decision could see a fall in energy prices.
The decision follows several years of lobbying by the technology and renewable energy companies to the FERC to require regional power markets to treat the electricity provided by storage devices in the same way that they treat energy generated from traditional power plants.
The outcome should facilitate an expansion of wind and solar energy, with the some of the energy collected through these natural processes captured by batteries for later use. One of the main uses for electricity storage is to collect power during periods of low demand and dispatch it when demand and prices are higher. Consequently, use of coal and natural gas should decline as suppliers to the U.S. power grids.
As quoted by Renewable Energy World, the commission said in a statement after its vote: “This order will enhance competition and promote greater efficiency in the nation’s electric wholesale markets, and will help support the resilience of the bulk power system.”
FERC is composed of five commissioners who are nominated by the U.S. President and confirmed by the U.S. Senate. The vote (3 Republicans, 2 Democrats) was unanimous. This means each U.S. regional transmission organization and independent system operator will need to present a plan for revising their tariffs so they establish a participation mode for energy storage.
Even after the long awaited decision, there remains some work to be done, according to Yayoi Sekine, an analyst with Bloomberg New Energy Finance: “Market rules are only the first step…It doesn’t necessarily make it easier to finance since economics are entirely dependent on how much money it can make in the markets, and there is a lot of volatility there.” Here the integration of distributed energy resources into power markets did not form part of the FERC decision.
