NYISO allows full participation for energy storage in wholesale power markets

Dive Brief:

The New York Independent System Operator (NYISO) Sept. 8 announced it would allow full participation of energy storage resources in NYISO's wholesale energy markets.
NYISO's action is in response to the Federal Energy Regulatory Commission's Order 841, directing regional transmission organizations (RTOs) and independent system operators (ISOs) to remove barriers to energy storage from participating in energy, capacity, and ancillary service markets, Richard Dewey, NYISO president and CEO, said.
"Full implementation for energy storage resources in NYISO is a necessary but not sufficient step for the storage market to take off in the state" Daniel Finn-Foley, head of energy storage at Wood Mackenzie Power & Renewables said in an email. "The playing field is now level — it is still up to developers to compete and win."

Dive Insight:

Energy storage resource participation in wholesale as well as retail markets will help New York State realize the goals of its Climate Leadership and Community Protection Act goals, Dewey said.

"NYISO is blazing the trail for dual-use of storage in wholesale and retail service," Jason Burwen, vice president of policy for the Energy Storage Association (ESA) said in an email. "We commend NYISO on implementing Order 841 to facilitate regular participation of energy storage in its markets."

NYISO believes that the revenue opportunities from participating in the wholesale electricity market will attract energy storage developers to the state. "We're aware there's a lot of developer money sitting on the sidelines waiting for markets to open up," Dewey said.

NYISO's efforts to open up the wholesale market to energy storage could offer an example for RTOs and ISOs in other regions to follow, according to Dewey. "I think we're ahead of the curve, so I'm sure there are a lot of eyes on us to see how well it works."

Wholesale markets need to adapt to achieve states' clean energy policy goals, William Acker, executive director of the New York Battery and Energy Storage Technology Consortium said in an email. Acker described New York's climate and clean energy goals of achieving 70% renewable energy and 3 GW of energy storage by 2030, and a carbon-free grid by 2040 as "nation-leading."

"Since storage sits at the intersection of state policy and wholesale market operations, its ability to reduce costs of service and lower emissions depends on how conflicts over clean energy policy are resolved," Burwen said.

Energy storage resources include batteries, compressed air storage, flywheels, and pumped storage and can help grid operators meet demand, handle the variability of intermittent resources like solar and wind, and possibly delay the need for transmission upgrades, according to NYISO's announcement.

NYISO's implementation of Order 841 could bolster pumped storage hydropower development because the revenue streams from wholesale markets would improve the return-on-investment for pumped hydro storage development, Cameron Schilling, vice president of market strategies and regulatory affairs for the National Hydropower Association said in an email. "This has been a hurdle for developers in the past and today's action removes the barrier to help unlock some of the nearly 20 GW of pumped storage hydro projects that are in development," Schilling said.

"Pumped storage hydropower in the U.S. is well-positioned to meet the challenges associated with the clean energy grid of the future," Schilling said, "Ensuring that market rules fully value pumped storage hydro resources is crucial to expanding this technology's potential."

"The next key frontier for storage's eligibility will be for hybrid resources, particularly storage paired with solar," Finn-Foley said. "Combining these resources creates a host of resources that ISOs, including NYISO, already are tackling, but full implementation is still a ways away. The regulatory 'cat herding' has only just begun for organized wholesale markets."