California ISO board approves measures to propel energy storage, DERs

Dive Brief:

The board of directors of the California Independent System Operator (ISO) on Wednesday approved a variety of measures aimed at fostering greater participation of distributed energy resources (DERs) in the state’s wholesale power market.
One of the approved measures makes adjustments to how behind-the-meter (BTM) energy storage resources participate in the ISO.
Another measure changes the ISO’s bidding requirements, making it easier for demand response resources to participate in the wholesale market.

Dive Insight:

Several of the proposals approved by CAISO’s board on Wednesday were part of the third and final phase of the Energy Storage and Distributed Energy Resources (ESDER) initiative that stakeholders launched to foster greater participation of those resources in the wholesale market.

The proposals remove one more set of barriers and would allow greater participation of DERs and energy storage in the wholesale market, CAISO spokesman Steven Greenlee told Utility Dive.

The proposal approved for energy storage would allow BTM batteries to more easily consume energy during oversupply conditions and return that energy to the system during times of need.

BTM batteries can already participate in CAISO’s day-ahead and real time markets, but the proposed change to ISO rules would allow two resource identifications for one storage unit, depending on whether it is charging or discharging energy.

The rule change would create a new product, the proxy demand resource-load shift resource (PDR-LSR) that would help avoid confusion when a storage unit receives conflicting dispatch signals. In addition, it would allow a storage device to enter separate bids for charging and discharging.

That would help "incentivize behind-the-meter storage operators to operate their unit in alignment with grid needs," Greenlee said. For example, he said, it would provide a signal for battery operators not to send energy to the grid when it is not needed or to charge when the energy is needed. The proposal would require direct metering of BTM batteries.

There is a separate proceeding underway at CAISO that is studying how transmission-connected storage assets can participate in the ISO’s energy and ancillary services markets.

For demand response, the ISO board approved a proposal that would allow some DR resources more time to respond to real-time dispatch signals. The ISO usually expects an immediate response to its dispatch signals, but the proposal "builds in some accommodation so we can dispatch without an immediate response," Greenlee said.

"What we’ve learned over these past few years is we have to be sensitive to the operating resources we are now using. We are identifying those characteristics and how we can better accommodate them," Greenlee said.

The board accepted eight provisions aimed at enhancing the ISO’s ability to more efficiently manage the generation interconnection study and approval process.

There are 280 generation projects in the ISO’s interconnection queue, representing about 60,000 MW of new capacity. Almost all of the proposed capacity is renewable energy and "by far and away, the majority" are solar power projects, Greenlee said.

The ISO board also recommended extending reliability-must-run contracts for the Dynegy Oakland and Gilroy Energy Center generating units through 2019.

The newly approved ESDER3 proposals must still be approved by the Federal Energy Regulatory Commission (FERC) before they can take effect. The first set of ESDER proposals was approved by the ISO board in February 2016, by FERC in August 2016, and implemented that fall. The second phase of ESDER proposals was approved by the board in July 2017 and is still awaiting FERC approval.