FERC orders, particularly Order No. 841, play a critical role in facilitating the participation of energy storage resources in wholesale electricity markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs). The key impacts of these orders are:
FERC Order No. 841: Removing Market Barriers for Energy Storage
- Eliminating Barriers: Order No. 841, issued in February 2018, is a landmark ruling designed to remove barriers that electric storage resources faced under existing market rules, which had been primarily designed around traditional, non-storage generation resources. This order recognizes the unique physical and operational characteristics of energy storage technologies, such as batteries, flywheels, compressed air, and pumped hydro, and seeks to integrate them fairly into capacity, energy, and ancillary service markets run by RTOs/ISOs (excluding ERCOT).
- Defining Electric Storage Resources Broadly: FERC’s definition of electric storage resources includes any resource capable of receiving electric energy from the grid and storing it for later injection back into the grid. This resource-neutral approach avoids favoring any particular storage technology and applies to resources regardless of their location on the grid—whether on the interstate transmission system, distribution system, or behind the meter.
- Market Participation Requirements: The order requires RTOs/ISOs to establish minimum participation criteria and revise their market rules and tariffs to accommodate electric storage resources fully. This means storage can offer services in wholesale markets similarly to traditional resources, including capacity commitments, energy injection, and ancillary services provision such as frequency regulation and reserves.
- Leveling the Playing Field: By mandating access and non-discriminatory treatment, Order 841 creates substantial market opportunities for energy storage, promoting gigawatts of new storage deployment and enabling these resources to compete fairly with other types of generation and demand response resources.
Other Relevant FERC Orders
- Order No. 2222: Facilitates the participation of distributed energy resources (DERs), including distributed storage, in wholesale electricity markets, further expanding access and integration of smaller-scale storage technologies operated aggregatively.
- Continuous Regulatory Updates: FERC continues to issue related orders refining market rules for electric storage resources, including issues related to qualifying facility eligibility, co-location of storage with large electric loads, and reliability standards for inverter-based resources, all supporting enhanced storage market participation.
In summary, FERC orders—especially Order No. 841—are foundational in enabling energy storage to participate effectively in wholesale electricity markets by removing outdated barriers, requiring market rule reforms, and providing a broad, inclusive framework for storage technologies. This has opened the door for energy storage to contribute to grid reliability, flexibility, and decarbonization efforts on a large scale.
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