COMMUNITY ENERGY STORAGE MAKES PROGRESS AT THE FERC
Written by James Greenberger on July 30th, 2010
Yesterday, I was proud to lead a delegation of ten NAATBatt member firms and supporting organizations to a meeting with Chairman Jon Wellinghoff of the Federal Energy Regulatory Commission (FERC). Representatives of General Motors Corporation, The Dow Chemical Company, EnerSys, EaglePicher Technologies, Altairnano, Applied Intellectual Capital/East Penn Manufacturing, A123 Systems, Saft America, American Electric Power, and CH2M Hill attended.
The purpose of the meeting was to call the FERC’s attention to the importance of community energy storage (CES) both to the grid and to vehicle electrification. CES systems consist of a series of relatively small (25-75 kW) stationary batteries serving a few homes or small commercial loads but networked together so as to provide a multi-megawatt power resource to the grid.
CES is the stationary energy storage application that offers something for everyone. For local distribution systems, it provides back up power to connected loads, flicker mitigation and a convenient way to integrate locally generated renewable energy (e.g., solar PV) onto the grid. As a generation resource, it provides a way to balance and better exploit variable renewable energy resources (e.g., wind). And at the grid level CES can reduce the need for investment in new transmission assets by mitigating transmission overload, addressing transmission line trips, and reacting to voltage dips. NAATBatt has been predicting for some time that CES might prove to be the first “killer app” for advanced batteries.
Delegation members were also interested that Chairman Wellinghoff understood the important role that CES can play in vehicle electrification. CES can help insure that recharging the first wave of EV’s and PHEV’s which will soon be sold into the mass market does not destabilize the grid (Murphy’s Law dictating, of course, that the owners of those first wave EV’s and PHEV’s will all seek to recharge them at the same time). Blackouts and brownouts attributed to EV and PHEV recharging would be disastrous for the future of electric drive. Also, because CES can use batteries similar to those that will be installed in EV’s and PHEV’s (or at least capable of being produced in the same factories), CES can provide battery makers with the volumes they need to reduce prices and make EV’s and PHEV’s more affordable for consumers. Finally, CES may provide a secondary market for retired EV and PHEV batteries, which could have profound implications for battery prices.
The challenge for CES is not technical but regulatory. The FERC and state regulators are already struggling with the question of whether energy storage should be treated as a generation or a transmission asset. How storage is classified will determine how and by whom storage facility owners are paid and who regulates them. CES comes with an additional complexity: By definition, all CES facilities interconnect to distribution systems. As a consequence, it is not clear that CES and other distributed storage technologies can ever qualify for FERC incentive transmission rates and other benefits which may be available to bulk storage facilities that are interconnected directly to the transmission system.
During our meeting on Thursday, Chairman Wellinghoff expressed strong support for storage technology and his commitment to making sure that storage facilities are fairly compensated for all of the services that they provide to the grid. This was reassuring to hear. The challenge to the industry is to help the FERC devise a system by which operators and regulators of storage facilities can define precisely what services a particular storage facility provides and a mechanism by which a single facility can be fairly compensated from different revenue streams for different services. We must ask FERC to confirm unambiguously that a single storage facility serving multiple functions can be compensated in multiple ways and, most importantly for CES, that it can be subject to different jurisdictions (including FERC jurisdiction) based on the functions the storage facility serves rather than based on the point to which the facility interconnects in the power system.
NAATBatt’s meeting with the FERC underscores NAATBatt’s strategy of concentrating on making solid progress in getting right the mundane but critical regulatory issues that will define the advanced battery industry in the years ahead. Unfortunately, as we learned this week, Congress may be deadlocked for the foreseeable future for reasons wholly unrelated to energy storage and electric drive. Big picture legislation may be on hold for a while. That is no excuse, however, not to keep moving forward. There is a lot of important work that still needs to be done.
