At a cost of $350/kWh installed, Order 841 could unlock 7,000 MW of new storage based solely on wholesale market participation in the market zones of U.S regional transmission operators (RTOs).
According to analysis by the Brattle Group, this increases to 50,000 MW if all benefits of energy storage can be capture, e.g. ancillary services. The highest potential for storage additions is seen in PJM and in MISO Interconnection, followed by the Electric Reliability Council of Texas (ERCOT).
Storage becomes a price-setter
The FERC Order 841 requires regional transmission operators (RTOs) to execute energy storage transactions at the locational marginal price, allowing storage to directly compete with coal- and gas-fired power plants. RTOs need to ensure that energy storage can be dispatched, when needed, and set the wholesale price.
“How RTOs implement Order 841 will directly affect storage’s market value,” analyst commented.
Grid operators have flexibility to launch new ancillary service products, set appropriate minimum run-time requirements and determine if storage can sell ancillary services without participating in the energy markets. For new-build storage units, the grid operator can set a minimum size requirement that may not exceed 100 kW.
Need to remove T&D barriers
“Though FERC’s order 841 addressed wholesale barriers, state regulatory action is needed to address transmission and distribution as well a customer-related barriers,” analyst said.
To realise the goal of 50 GW energy storage deployment, there needs to me a more granular, cost-based and stable rate design, the Brattle Group said. Today, storage is often not considered in T&D planning processes and there is no clear dispatch priority for storage.