Key Developments:
- Recent suggestions for market improvements hope to enhance energy storage adoption, making the grid more reliable while addressing high capacity prices faced by markets such as PJM Interconnection, MISO, and NYISO, according to a report by the Brattle Group for the American Clean Power Association.
- The Brattle Group and ACP’s report proposes adjustments to PJM rules, speeding up energy storage responses to market demands. These recommendations also include updates for MISO and NYISO to better align power supply with consumer needs.
- These proposed changes aim to maximize energy storage potential, likened to a versatile tool for the electric grid, assisting in energy management and improving the effectiveness of renewable energy sources.
Insights:
In 2018, the Federal Energy Regulatory Commission urged regional bodies to allow energy storage to participate in energy, capacity, and ancillary service markets.
Since then, battery energy storage systems have greatly enhanced the reliability of power grids and reduced costs for consumers in markets that support their use. For instance, on the Electric Reliability Council of Texas (ERCOT) grid, new storage deployments are projected to save customers upwards of $750 million by lowering power prices this summer.
However, energy storage expansion faces challenges in some areas, as current market frameworks primarily reflect traditional energy generation methods. With an expected increase in electricity demand and the retirement of old thermal plants, the need for flexible and reliable resources becomes even more critical.
Despite recent advancements in regions like ERCOT and California, places like PJM, MISO, and NYISO lag in storage deployment as many states target ambitious renewable energy goals.
Moreover, various states have set significant storage targets, including New York (6 GW by 2030), Virginia (3.1 GW by 2035, potentially increasing to 10 GW), and Maryland (3 GW by 2033). In total, PJM states aim for 18 GW of storage capacity.
Regions have clear opportunities for reforms to enhance energy storage marketability. For instance, PJM could adjust its rules to allow storage operators to better reflect the value of their energy bids, thereby optimizing efficiency and reliability.
Additionally, PJM should consider developing products to address ramping needs and day-ahead uncertainties, while NYISO could accelerate the rollout of similar products to boost flexibility in market mechanisms.
MISO is also encouraged to create day-ahead uncertainties and modify its accreditation processes to better acknowledge the reliability benefits offered by energy storage.