For years, the US electric power industry has witnessed a steady uptick in the total capacity of deployed energy storage resources. Part of that growth is attributable to more favorable economics for storage projects, a trend that is set to continue in the coming years—a recent study by Bloomberg NEF forecasted that the global energy storage industry will see $620 billion in new investments by 2040. While the development of stationary batteries is expected to be outpaced by other storage applications, such as electric vehicles, the study also suggests that rapidly sliding capital costs for battery systems will be advantageous for utility-scale projects.
The US electric power industry is expecting continued rapid growth of energy storage deployments, especially now that the Federal Energy Regulatory Commission’s (FERC’s) landmark Order No. 841 rulemaking directed Independent System Operators (ISOs) and Regional Transmission Operators (RTOs) to remove barriers to storage participation in organized markets. As it stands today, several RTOs and ISOs already have hundreds of new storage resource proposals pending in their interconnection queues. For example, ISO-NE, which has relied primarily on long-term pumped storage facilities until now, reportedly has more than 500 battery storage resource proposals in its interconnection queue.
The influx of storage resources in the United States is not only expected to provide grid stability benefits, but also highlights some of the pending operational challenges facing grid operators as they try to incorporate storage resources in a way that takes advantage of their many unique physical and operational characteristics. Currently, ISOs and RTOs are grappling with the question of how to account for energy storage as a regulated transmission asset that can also derive energy and capacity revenues as a market resource. In addition to resolving the compensation scheme, ISOs and RTOs must also consider complex operational and reliability challenges to ensure that a storage resource is able to fulfill its obligations as a transmission asset and a market resource. These and other novel issues are expected to be addressed with regulators in the coming years. In the shorter term, ISOs and RTOs will be proposing revisions to their market designs in response to FERC’s Order No. 841 by December 3.
This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.