IEEE Electrification Magazine - September 2015 - 44

rates can be structured to encourage customers with energy
storage to offer the greatest benefit to the system as a whole
while also reducing customer bills.

Open Markets for Ancillary Services
and Demand Response
Creating opportunities for storage customers to stack services is critical to achieving economic viability in organized energy markets and may also help ensure that customers are incentivized to operate their systems in a
manner that benefits the grid more broadly. For stacking
to occur, however, there need to be markets in place for
the needed and desired grid services, and these markets
should be transparent and accessible to distributed
energy-storage customers.
One important potential value stream for energy-storage customers can come from participation in ancillary
services and demand-response markets. Ancillary services
can include regulation, voltage support, spinning and nonspinning reserves, and black start, among others, though
the existence and structure of markets for the provision of
these services will vary across the country. As referred to
here, demand response refers to a program under which
customers reduce their electricity use in response to economic signals, either through wholesale markets or special rates, to help utilities manage peak demands.
In the case of both ancillary services and demand
response, allowing or improving the opportunities for
these services to be aggregated at the distribution level
will ensure that energy-storage providers are able to assist
utilities and grid managers in providing beneficial grid services. Aggregation can also reduce the risks of any one
customer failing to curtail load, and it can be particularly
helpful in enabling residential customers with storage
systems to participate successfully in demand-response
programs (thereby contributing to the system-wide reduction of peak loads and the associated reduction in the
need for utilities to build and operate peaking plants).

A Clear Path to Interconnection
One of the most critical pieces of developing any grid-tied
energy project is ensuring that permission to interconnect
to the utility-owned electrical grid can be obtained fairly
and efficiently. Although the existing screens and technical standards in place in most state interconnection procedures are already being used in some states to enable
review of storage systems, there are some useful modifications to those processes and standards that will facilitate the interconnection of storage systems both more
quickly and at a lower cost than is the case today, while
still ensuring the safety and reliability of the grid.
In Order 792, issued in late 2013, the U.S. Federal Energy Regulatory Commission (FERC) took the first modest
step of amending the definition of a small generating facility
in the federal Small Generator Interconnection Procedures (SGIP) to explicitly include storage systems within

44

I E E E E l e c t r i f i cati o n M agaz ine / SEPTEMBER 2015

that definition. The FERC conceded that the earlier definition was probably broad enough to already include storage systems, but it found that it was important to update
this definition to improve the transparency of the SGIP.
Similarly, at a minimum, state utility regulators should
consider adding a similar definition or clarification to
existing state interconnection standards to specify
whether and how such standards will apply to energystorage systems. Once the applicability of the standards is
clear, a few additional issues may need to be clarified to
ensure fair treatment of storage systems and to avoid disputes in the interconnection process.
First, when evaluating a storage system through the
interconnection process, the utility will need to determine
the size or the generating capacity of the system to determine its impacts on the electric system. The FERC examined this issue and determined that in evaluating a storage system, utilities "should generally assume that the
capacity of the storage device is equal to the maximum
capacity that the particular device is capable of injecting"
on the system. It was also found, however, that in the case
of storage systems installed with other on-site generators
(i.e., solar PV), the utility is to use the capacity specified in
the interconnection request, even if it is lower than the
maximum capacity, so long as the utility is satisfied that
the manner in which the applicant proposes to limit the
output of the facility "will not adversely affect the safety
and reliability" of the utility's system. Regulators may also
want to consider further clarifying what methods would
be acceptable for limiting output of energy-storage systems in their interconnection standards, to avoid potential
disputes in the process.
Another issue requiring clarification is the extent, if any,
to which nonexporting storage systems should be required
to undergo interconnection review. The use of energy-management software and/or relays could significantly reduce
interconnection costs for such nonexporting storage systems. However, utilities will need to have sufficient assurance that such systems will not export electricity to ensure
system safety and reliability. Because this is an issue that
will require a thoughtful and balanced resolution, it can
and should be addressed proactively in a state regulatory
proceeding that will facilitate dialog among storage customers, the storage industry, storage advocates, and utilities
regarding the right technical and policy solution. Similarly,
while the Fast Track screens used in most state procedures
and in the federal SGIP are capable of screening storage systems, there may be ways to further streamline the interconnection process by creating storage-specific screens.
With all these reviews, system integrity should be the paramount consideration, but regulators should remain open to
allowing new technical solutions where there is sufficient
evidence of their effective performance.
Finally, energy-storage systems pose something of a
conundrum when it comes to the traditional way that
states regulate the review of new load and generation.



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