Key Regulatory Changes Affecting Utility-Scale Energy Storage
1. FERC Order 841 and Market Access
- FERC Order 841 mandates regional transmission organizations (RTOs) and independent system operators (ISOs) to provide non-discriminatory market access for electric storage resources. This requires the revision of tariffs to create participation models that consider the unique physical and operational characteristics of storage, enabling them to compete fairly in energy and ancillary service markets.
- Compliance approaches have varied by ISO/RTO, with gradual implementation. Though this order is designed to facilitate storage market participation, significant capacity growth driven solely by these market rule changes remains limited and full effects are expected to take years.
2. State-Level Policies and Legislation
- In Texas (ERCOT), recent state legislation has created new ancillary service products that storage can participate in, such as dispatchable reserves required by HB15000.
- SB2627 allocated billions of dollars to support dispatchable generation with only partial eligibility for energy storage, but nearly $2 billion is reserved for microgrids, which may incorporate storage systems.
- Across U.S. states, regulatory adaptations vary, with many states evolving their energy storage policies and procurement strategies to support storage deployment.
3. Interconnection and Technical Standards (Example: India)
- The Central Electricity Regulatory Commission (CERC) in India permits energy storage to connect to the grid as stand-alone assets or combined with renewables in hybrid projects, with specific interconnection application requirements depending on size.
- Amendments to grid connectivity standards now allow storage devices and charging infrastructure to connect, supporting a wide range of storage technologies including mechanical, electrochemical, and thermal.
- Efforts are underway to develop and standardize safety and technical standards for storage grid integration, including collaboration with the Bureau of Indian Standards and international organizations to address gaps.
4. Tax Credits and Financial Incentives
- While not a regulatory change per se, changes in tariffs and the phase-out of tax credits for storage could reduce the economic base case for storage projects by approximately 20% over the next five years, influencing deployment decisions.
Summary
| Regulatory Aspect | Description | Impact |
|---|---|---|
| FERC Order 841 | Non-discriminatory market participation for storage in RTO/ISO markets | Facilitates market access but impact on capacity growth is gradual and ongoing |
| State Legislation (e.g., Texas) | Creation of ancillary service markets accessible to storage; targeted subsidies for microgrids | Enables storage participation in new markets, with mixed subsidy eligibility |
| Grid Interconnection Rules (India) | Specific interconnection criteria for storage projects; standards development for safety and grid integration | Supports diverse storage technologies with clearer interconnection pathways |
| Tax Credits & Tariffs | Changes reducing financial incentives and credits | Potentially decreases project economics, influencing deployment rates |
These regulatory changes collectively shape the deployment landscape for utility-scale energy storage by improving market access, defining interconnection processes, and adjusting financial incentives, all of which are critical for scaling energy storage as part of the evolving power grid.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-regulatory-changes-are-most-significant-for-utility-scale-energy-storage-systems/
