IEEE Power & Energy Magazine - September/October 2017 - 67

Advanced storage modeling inevitably poses challenges to
the complexity and computational solve time of the security
constrained unit commitment process of ISOs/RTOs.
ten years, and can involve environmental impact hurdles. Other
storage technologies are getting less expensive, particularly batteries, but are still expensive solutions for many applications.
On one hand, affordable storage technology will be a
critical application for enabling higher amounts of renewable energy. On the other hand, properly compensating the
full benefits of storage is also critical to make storage economically viable by recovering their costs. FERC Order 755
allows energy storage to earn revenue by providing services
to the system based on their physical characteristics, e.g.,
fast response. Going forward, longer-term revenue streams
such as forward energy and capacity will be key to creating
a financial environment in which storage can be successful.
PJM is working to expand its market rules to allow for
additional opportunities for energy storage resources, including behind-the-meter resources, to participate in all markets
and provide all services which they are capable of providing, comparable to generation resources or DR resources.
Adding to this challenge is the ability to fully recognize the
reliability and resilience value that resources bring to the
market. Valuing these aspects of market resources may significantly benefit energy storage, which typically has very
high plant uptime and low risk of fuel supply disruption. In
addition, to the extent that ISOs/RTOs take on the role of
planning network upgrades to increase the resilience of the
system, the flexibility to site energy storage, build it quickly,
and geographically distribute its capacity across the system
as opposed to creating another centralized point of potential failure, could make its resilience value to the grid quite
high. Some of these resiliency features were recently put
into practice in California, where the risk of potential rolling
blackouts as a result of a major leak at the Aliso Canyon gas
storage facility was, in part, alleviated through the procurement of longer-duration energy storage resources.

be the operator. Should the resource be allowed to operate as a
market seller and thereby receive market payments? And if so,
how do those market revenues factor into the cost-effectiveness evaluation of the project for rate payers?
Recently, FERC issued a policy statement to clarify the regulatory treatment of such a "storage as transmission" scenario
and highlighted some key issues. FERC's policy statement
did solidify that there is no regulatory prohibition on providing multiple services from an energy storage device, be they
transmission related, market related, or both. PJM and others
believe that there is merit to exploring this concept in a field
trial (i.e., pilot) before federal rule makers decide the answers
on the multitude of complex regulatory questions at play.
Whatever FERC ultimately decides on storage as transmission or other regulatory aspects of integrating storage
into the wholesale electricity markets, PJM will continue to
embrace new power technology solutions, work with stakeholders on the evolution of market rules, and provide reliable
grid operation through efficient markets.

Regulatory Treatment

Hong Chen is with PJM Interconnection, Audubon, Pennsylvania.
Scott Baker is with PJM Interconnection, Audubon,
Pennsylvania.
Scott Benner is with PJM Interconnection, Audubon,
Pennsylvania.
Aaron Berner is with PJM Interconnection, Audubon,
Pennsylvania.
Jianwei Liu is with PJM Interconnection, Audubon,
Pennsylvania.

An emerging regulatory question for energy storage resources
is how they should be paid for and operated when the primary
function is to alleviate the need for a more traditional transmission upgrade. FERC has ruled in the Western Grid that storage
can be treated and, therefore, cost recovered as transmission;
however, there are no projects operating under this regulatory
paradigm (the Western Grid project was never built). In addition to simply acting as a transmission device that may provide voltage support or address thermal overload, there is a
question of how to operate the storage device when it is not
needed for these transmission functions, as well as who should
september/october 2017

For Further Reading
T. Boston and S. Baker, "Energy storage: Balancing the 21st
century power grid," IEEE Electrific. Mag., vol. 3, no. 3,
page 52-57, Sept. 2015.
"Electric storage participation in markets operated by regional transmission organizations and independent system operators," FERC Docket No. AD16-20-000, FERC, Nov. 2016.
"State of the market report for PJM: 2016," Monitoring
Analytics LLC, Eagleville, PA, Mar. 9, 2017.
PJM. (2017. Jan). Implementation and rationale for PJM's
conditional neutrality regulation signals. [Online]. Available: http://pjm.com/~/media/committees-groups/task-forces/
rmistf/postings/regulation-market-whitepaper.ashx

Biographies

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http://www.pjm.com/~/media/committees-groups/task-forces/

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - September/October 2017