Header graphic for print

The Energy & Environment Investor

News and Trends Impacting Investments in Energy and Environmental Solutions

Storage Update: FERC Technical Conference on Compensating Storage Resources

Posted in Policy & Regulation, Power Production & Supply, Solar

On November 9, FERC staff held a technical conference on using electric storage resources in organized markets (“Utilization In the Organized Markets of Electric Storage Resources as Transmission Assets Compensated Through Transmission Rates, for Grid Support Services Compensated in Other Ways, and for Multiple Services,” Docket No. AD16-25-000, agenda here).  The conference comprised three panels: (1) potential models for cost recovery for electric storage resources used as transmission assets (while also selling energy, capacity or ancillary services at wholesale); (2) potential models for an electric storage resource to provide a compensated grid support service (like a generator providing ancillary services under a reliability must-run contract), rather than being compensated for providing transmission service; and (3) electric storage resources providing multiple services at once (i.e., providing both wholesale service(s) and retail and/or end-use service(s)).

(1) Neil Miller from CAISO noted that none of the 17 battery storage projects proposed as transmission assets in CAISO have been successful, but that storage has had more success through capacity procurement.  The ISO thus prefers that storage assets participate in the markets, rather than seeking transmission asset compensation; however, Mr. Miller remained skeptical about the ability of battery storage to provide black start services.  John Fernandes of RES America suggested that transmission system modeling is not advanced enough to most efficiently provide for system needs.

(2) There seemed to be general opposition among the grid operators that using storage to provide grid support services akin to RMR contracts was not optimal.  CAISO and PJM each have one generator with an RMR.  Neil Miller of CAISO noted that RMRs are used to support existing units, rather than develop new ones, and were RMRs open to competitive bidding, new resources would find it difficult to compete with heavily depreciated units.  Mike DeSocio of NYISO noted that RMRs are used to meet short-term needs, while markets address longer-term needs.

Eric Hsia of PJM did not oppose the potential of a bidding option that would allow rapidly deployable storage resources to compete with leaving generators.  Jason Burwen of the Energy Storage Association noted that rapid deployment is expected in the industry, pointing to storage deployed in response to the Aliso Canyon leak in California.  Mike DeSocio indirectly responded by pointing out that opening RMRs to competitive processes extends the timeline for their implementation.

(3) Storage can bid into 90% of NYISO markets, including regulation and ancillary services (excluding black start); it can bid into the capacity market if it can provide 1 MW for at least four hours, and into the regulation market if capable of providing 1 MW for one hour.  In PJM, storage may provide black start services as long as it has a 16-hour run time, and capacity services may be provided with a five-hour run time.  Bill Capp of Grid Storage Consulting noted that frequency response is an ideal application for storage and that the same asset can provide frequency response and voltage control.

Storage Update: Order No. 825 and Comments in Storage-Specific Dockets

Posted in Policy & Regulation, Power Production & Supply, Solar

Order No. 825, on Settlement Intervals and Shortage Pricing in Markets Operated by Regional Transmission Organizations and Independent System Operators, was issued yesterday.  It brings about a shortage pricing requirement that is expected to encourage greater investment in storage.

Ten days earlier, on June 6, comments were due in the proceeding on Electric Storage Participation in Regions with Organized Wholesale Electric Markets proceeding (Docket No. AD16-20-000), following RTO responses to Staff data requests, submitted mid-May.  A common theme among the RTO responses, noted by, e.g., PJM, is that most rules are technology neutral, so any market rule could impact storage, though certain stakeholder processes are more applicable than others (e.g., NYISO’s fuel constrained bidding design).  There are storage-specific rules, however, like ISO-NE’s Alternative Technology Regulation Resource categorization for participation in its regulation market, which is echoed in SPP’s Short-term Stored Energy Resource proposal.  Another example is found in Docket No. ER16-1735, where CAISO has proposed tariff amendments to allow batteries to self-manage their state of charge and energy limits.

June 6 responsive comments tended to support a technology-neutral approach to rules and definitions of market products (e.g. EEI’s comments), and Tesla called for eschewing market product design based on “operation parameters that were designed for conventional generators” in favor of design based on the needs of the electric system.  Tesla also asked whether energy storage customers could accept charging restrictions in lieu of expensive interconnection upgrades.

There is still time to comment on storage interconnection issues raised in the May 13, 2016, technical conference: the comments deadline in Dockets RM16-12-000 and RM15-21-000 has been extended to June 30.

FERC Interconnection Technical Conference Looks at Connecting Storage to the Grid

Posted in Policy & Regulation, Power Production & Supply, Solar

The last panel in FERC’s Review of Generator Interconnection Agreements and Procedures Technical Conference, held on Friday, May 13, discussed the role of electricity storage in wholesale markets (Docket Nos. RM16-12-000 and RM15-21-000).  Panelists pointed out multiple types of values provided by storage, including acting as a transmission asset, though some speakers pointed to the difficulties of holding multiple obligations.  Noting that charging storage is treated as load, at least one panelist called for creating a separate storage asset class.  While another panelist noted that pumped storage has been used for energy arbitrage for decades, Commissioner LaFleur recognized that storage is a growing field and concluded the session by asking a philosophical question: if you were to build the entire electricity system from scratch, how would you design it?

At the state level, the CPUC issued its Decision Adopting Net Energy Metering Bill Credit Estimation Methodology for Generating Facilities Paired with Small Storage Devices on April 28.  It caps NEM credits for solar PV systems paired with small storage devices on a monthly basis based on modeled monthly production.

FERC Examining Storage Participation in Markets

Posted in Energy Efficiency & Demand, Policy & Regulation, Power Production & Supply, Solar

Following the energy storage panel discussion at the November 19, 2015, Commission meeting, FERC staff issued data requests Monday to RTOs/ISOs on electricity storage resources’ participation in capacity, energy and ancillary service markets. (Docket AD16-20-000.)  Responses are due May 2; comments on the responses, and on rules that affect storage participation in RTO and ISO markets, are due on May 23.  Staff notes that, if potential barriers to participation exist, it “expects to examine … whether any tariff changes are warranted.”

Meanwhile, at the retail level, the California PUC will vote at its April 21 meeting on a proposal for capping net energy metering (NEM) credits at the modeled monthly production estimate for rooftop solar facilities combined with storage devices under 10 kW.  The proposed decision is aimed at limiting NEM credits to power produced by customer-sited generating facilities, rather than energy from the grid stored by the customer.

Georgia Power Issues $325 Million in Green Bonds

Posted in Cleantech

Georgia Power issued $325 million of Green Bonds on March 9, in what the company says is the first green bond issuance by a retail electric utility in the United States. Per Georgia Power, the proceeds of the bonds will be used primarily to support renewable energy generation projects, with any remaining proceeds to be used for electric vehicle charging infrastructure or payments under renewable power purchase agreements.

Georgia Power’s press release on the bonds is available here.

States’ Exclusion of Coal May Face Legal Roadblocks

Posted in Energy Efficiency & Demand, Power Production & Supply

Plans by some states to force adoption of wind, solar, and other renewable energy technologies — to the exclusion of coal — may face legal roadblocks from surrounding states. Legislatures in states that include Oregon, Colorado, and Minnesota have adopted statutes restricting or completely prohibiting the importation of electrical power generated by coal-fired plants. Such measure have started litigation battles with neighboring, coal-rich states, such as South Dakota, which complain that the measures are unconstitutional. They argue that these novel statutes violate the Constitution’s Dormant Commerce Clause because of their extra-territorial effect. Both the Eighth and Ninth Circuits are currently considering the issue.

McGuireWoods Succeeds in Obtaining the Annulment of Anti-Dumping Duties for China Solar Co.

Posted in Policy & Regulation, Solar

McGuireWoods’ international trade team has obtained before the EU Courts the annulment of the anti-dumping duties imposed by the European Commission against imports into the EU of solar glass made by our client XinYi PV Products (Anhui) Holdings Ltd (XinYi PV).

Having found that XinYi PV was not operating under market economy conditions, the European Commission had calculated the company’s dumping margin by comparing its export price with a benchmark calculated based on prices in an ‘analogue’ country (Turkey).  This methodology was applied on the ground that XinYi PV was subject to “significant distortions carried over from the former non-market economy system,” in the form of two tax breaks, and as such was not eligible for Market Economy Treatment (MET).  A high anti-dumping duty was imposed as a result.

Reviewing the history of the provision requiring the European Commission to review MET claims by Chinese producers, our team managed to convince the General Court of the European Union that the type of distortions contemplated by the EU anti-dumping laws (“distortions carried over from the former non-market economy system”) are distortions of a type that existed in China in the 1970s and the 1980s.

In a decision of 16 March 2016, the three judges of the Court’s chamber in charge of the case annulled the Commission Regulation entirely, as far as XinYi PV is concerned, because the tax incentives the company received satisfied specific purposes of attracting foreign investment in China and boosting the country’s high-tech sector, similar to state aid provided in several EU member states to satisfy the legitimate objectives of market economies.  They could not therefore be described as being distortion carried over from the former state-trading system.

The ruling reversed a well-established practice of the European Commission concerning one of the criteria for assessing whether Chinese companies deserve MET in anti-dumping investigations.  The European Commission has two months to appeal this ruling before the Court of Justice of the European Union, on points of law only.

Please click here for Law360’s coverage of the case.

China’s Solar Muscle

Posted in Power Production & Supply, Solar

China’s National Energy Administration is reported by Bloomberg BNA to have stated that within the next 5 years there will be an additional 15 to 20 GW of PV solar capacity in the country. This same article notes China’s 2015 installation of 15.1 GW was at least 25% of the world’s amount for that year. See the article here.