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US research institute proposes compensation for storage

Pacific Northwest National Lab (PNNL) researchers have developed a new framework to compensate energy storage as a dual-use asset.

From pv magazine USA

PNNL researchers have investigated how energy storage used as a transmission asset could also be operated and compensated as a market participant, primarily in energy markets.

As an example of storage used as transmission, Jeremy Twitchell, a senior energy analyst at PNNL, said in a recent webinar that Midwest grid operator MISO selected a $12 million storage project as a transmission asset in Wisconsin, instead of a $13 million transmission project. MISO’s storage-as-transmission project will recover its cost through MISO’s transmission system rates, approved by the Federal Energy Regulatory Commission (FERC), he said, and will not participate in energy markets.

The opportunity for dual use of such a project arises because “even on fully contracted, heavily used transmission lines, there is unused capacity most of the time,” Twitchell said. “We build the grid based on peak needs plus reserve margins, but we’re only at that peak a few hours a year.”

That means storage, when it’s not being used as transmission, “can go do other things,” he said. FERC “recognized this in 2017,” Twitchell said, and issued a policy statement saying that storage deployed as a transmission asset can also provide market services.

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“FERC was doing this to reduce system costs,” he said, adding that FERC cautioned that a storage asset cannot recover all its costs as a transmission asset, and also recover all its costs as a generation asset, “and keep it all,” because in that case there’s no cost reduction.

The California Independent System Operator (CAISO) and MISO began exploring how to respond to FERC’s nonbinding policy statement, Twitchell said, with CAISO considering how market revenues could be shared with customers, but both closed their proceedings without resolving the complexities of market participation and compensation for dual-use storage.

Without clear compensation mechanisms to enable developers to recover the costs of energy storage investments, the investments “will not go forward,” said Charlie Vartanian, a senior technical at PNNL who moderated the webinar.

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Source: pv magazine