FERC commissioners deny opportunity for state-by-state opt out of storage order

Dive Brief:

The Federal Energy Regulatory Commission (FERC) voted Thursday to deny requests for rehearing of Order 841, a landmark decision seeking to provide fair market access for energy storage resources.
Commissioners were nearly unanimous in voting to affirm FERC's determinations made in Order 841 regarding their authority over wholesale market sales, and to decline to adopt a state-by-state opt out of storage participation in the wholesale market.
Commissioner Bernard McNamee, R, partly concurred and partly dissented with the order on rehearing and clarification due to concerns that states' interests are not recognized regarding energy storage behind the meter or connected to distribution facilities. "I read our jurisdictional authority differently than the majority," McNamee wrote in his response, adding that he would have supported a rehearing to include an opt-out provision for states.

Dive Insight:

Denying the rehearing for an opt-out provision would ensure storage resources can participate within wholesale markets per the different rules established by grid operators.

The order is broadly viewed as a path to enable intermittent renewable resources such as wind and solar.

"As I've said before, storage is a 'Swiss army knife' that can provide energy, capacity and ancillary services as well as making use of resources that would otherwise be curtailed," Commissioner Cheryl LaFleur, D, said during the public hearing.

LaFleur does not believe adopting a state by state opt-out of storage participation for the order, which is based on FERC's authority over wholesale market sales, is outside FERC's jurisdiction. The view was supported by the rest of the commission including Chairman Neil Chatterjee, R.

"I believe the order speaks for itself and will withstand legal scrutiny," Chatterjee told reporters.

Advanced Energy Economy and other groups supporting the proliferation of storage technology echoed support for FERC's legal position within the Federal Power Act.

"This is no different than FERC’s regulation of demand response participation in wholesale markets," Jeff Dennis, managing director and general counsel at Advanced Energy Economy, told Utility Dive via email.

In 2016, the Supreme Court ruled 6-2 to uphold FERC Order 745, which established compensation for demand response providers to match the reduction of electricity load at the same rates as electricity generation. The ruling established "FERC’s jurisdiction despite the fact that it may have some impact on retail matters," Dennis said.

"I do understand there are operational issues to work out between transmission grid operators and distribution companies, and we will be working more on these as we move forward with the distributed energy resources part of the proceeding, which I hope we will do soon," LaFleur said.

FERC's approach to remove barriers to entry for energy storage could become a standard to integrate other advanced energy technologies alongside traditional resources.

"We urge FERC to finalize a similar rule to permit aggregations of distributed energy resources to participate in wholesale markets, utilizing the same legally sound approach taken in today’s order," Dennis said in a statement.