Dive Brief:

• The California ISO has launched a proceeding to consider how transmission-connected storage assets that provide cost-based services might also participate in energy and ancillary services markets.
• The California grid operator has previously avoided turning to storage as part of the Transmission Planning Process but has recently approved projects following a federal policy statement in 2017 on the issue.
• The ISO will hold a public stakeholder call on Friday to discuss the grid operator's straw proposal, and stakeholders may submit comments on the proposal through April 20. 

Dive Insight:

Storage and its strange attributes have created a unique set of opportunities and challenges, considering the resource can act as load or generation.

Utilities have struggled how to utilize storage as a transmission-deferral option. Last year, the Federal Energy Regulatory Commission clarified that storage resources may concurrently recover their costs through cost-based and market-based rates. Earlier this year, the California Public Utilities Commission approved new market rules for energy storage aimed at enabling the resources to stack incremental value and revenue streams.

Now the California ISO has begun an initiative to "explore how transmission connected electric storage resources can provide cost and market-based services to maximize their efficiency and enhance their value to the system and ratepayer."

The ISO's paper says the overall goal is to "determine a pathway" ​for transmission-connected storage assets providing a regulated cost-of-service transmission service to also provide market-based services and access market revenues.

"This may include options such as providing additional market-based services, with the resulting market-based revenues ultimately reducing the burden on rate-paying consumers," the paper notes. Allowing storage to access more revenues will ultimately lower costs and provide greater flexibility for the benefit of ratepayers, the ISO said.

CAISO said it identified two mechanisms for a storage resource serving as transmission to meet an identified reliability need: either as an asset in a Participating Transmission Owner’s Transmission Access Charge rate base; or through a contractual provision of “cost-based” transmission service without becoming a PTO. The ISO also said it will assess the need for "notification time-lines, capability duration needs, and energy and/or cycle limitations necessary to maintain the resource’s life-cycle."