Wisconsin Public Utility Institute Interconnection Issues with Distributed Energy Resources June 25, 2019 Andrew Hanson, Senior Counsel Perkins Coie LLP
Overview Status of DER Deployment Federal Policies and FERC Orders on DER Interconnection and Market Participation DER Interconnection Issues in Wisconsin Grid Modernization Case Law Update 2 Perkins Coie LLP | PerkinsCoie.com
Distributed Energy Resources • Traditionally referred to small, geographically dispersed generation resources located on the distribution system (e.g., solar or combined heat and power). • Now also includes energy storage, energy efficiency, and demand response resources. 3 Perkins Coie LLP | PerkinsCoie.com
Battery storage pictures aren’t that interesting… 4 Perkins Coie LLP | PerkinsCoie.com
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Source: https://www.greentechmedia.com/articles/read/distributed-energy-poised-for-explosive-growth-on-the-us-grid 7
Annual Installed DER Power Capacity by DER Technology, United States 2015-2024 Source: FERC, Distributed Energy Resources: Technical Considerations for the Bulk Power System , Staff Report, Docket No. AD18-10-000, February 2018, quoting Navigant, Take Control of Your Future, Part II: The Power of Customer Choice and Changing Demands, May 9, 2016, available at https://www.navigantresearch.com/blog/take-control-of-your-future-part-ii-the-power-of-customer-choice-and-changing-demands 8 Perkins Coie LLP | PerkinsCoie.com
U.S. DER Deployments Source: U.S. Energy Information Administration, Release Date: February 2017 for December 2016 data, available at https://www.eia.gov/electricity/reports.php#/T194 9
Federal Policies and FERC Orders Affecting DER Deployment 10 Perkins Coie LLP | PerkinsCoie.com
Energy Policy Act (EPAct) of 2005 • Section 1223(a) of the Act defines ‘advanced transmission technology’’ to mean a technology that increases the capacity, efficiency, or reliability of an existing or new transmission facility, including… • (11) energy storage devices (including pumped hydro, compressed air, superconducting magnetic energy, flywheels, and batteries; • (13) distributed generation (including PV, fuel cells, and microturbines); • (16) fiber optic technologies;…” [and] • And (19) “any other technologies the Commission considers appropriate.” • Section 1223(b) directs FERC to “encourage, as appropriate, the deployment of advanced transmission technologies.” 11 Perkins Coie LLP | PerkinsCoie.com
In re Western Grid Development LLC , Order on Petition for Declaratory Order, January 21, 2010 ( Western Grid ) Summary and Holding: • Western Grid proposed NaS battery storage projects ranging in size from 10 to 50 MW, intended to provide voltage support and address thermal overload situations. • FERC held that Western Grid’s battery storage projects would qualify as wholesale transmission facilities; but FERC’s holding was limited to the facts presented by Western Grid. • Commission further noted that energy storage devices “do not readily fit into only one of the traditional asset functions of generation, transmission or distribution. Under some circumstances, they can resemble any of these functions or even load.” • Accordingly, the Commission would make determinations of whether energy storage could be a transmission asset on a case-by-case basis. 12 Perkins Coie LLP | PerkinsCoie.com
In re Western Grid (cont.) Factors considered by FERC: • Western Grid proposed to operate the Projects under the direction of the CAISO in a similar manner to the way in which high-voltage wholesale transmission facilities are operated by PTOs under the direction of the CAISO. Western Grid will operate the Projects, at the CAISO’s direction, only as transmission assets. • Western Grid’s proposed operation of the projects share some important characteristics with capacitors. • Western Grid would be responsible for all operating functions, including maintenance, communication, and system emergencies. Most importantly, Western Grid would be responsible for energizing the NaS batteries used in the Projects. 13 Perkins Coie LLP | PerkinsCoie.com
In re Western Grid (cont.) Factors considered by FERC: • CAISO would not be responsible for buying power to energize the batteries or physically operating them when they are being charged and discharged. • As with other transmission assets, and unlike traditional generation assets, Western Grid would not retain revenues outside of the transmission access charge, and would credit any revenues it may accrue as a result of charging/discharging the Projects through its PTO tariff. • Distinguished Nevada Hydro : In that case, CAISO would have controlled the charge and discharge of that pumped hydro storage facility, and there was no mechanism with potential costs and revenues from market operations. 14 Perkins Coie LLP | PerkinsCoie.com
FERC Order 792: Small Generator Interconnection Agreements and Procedures (Nov. 22, 2013) • Revisions to the proforma Small Generator Interconnection Procedures (SGIP) and Small Generating Interconnection Agreement (SGIA), which establish the terms and conditions under which public utilities must provide interconnection service to Small Generating Facilities of no more than 20 MW. • Revised the SGIP and SGIA to specifically include energy storage devices • Spurred by significant increase in distributed resources • Just 79 MW of grid-connected PV in 2006, with first SGIP and SGIA • 3,300 MW of grid connected PV in 2012 • Approximately 8 GW expected to come online in 2019 alone, per EIA: https://www.eia.gov/todayinenergy/detail.php?id=37952 15 Perkins Coie LLP | PerkinsCoie.com
Policy Statement: Utilization of ESRs for Multiple Services When Receiving Cost-Based Rate Recovery (Jan. 19, 2017) • Purpose was to provide guidance on the ability of electric storage resources to provide services at and seek to recover costs through both cost-based and market-based rates concurrently. • Western Grid should not be read to require entities to forgo market sales in order to receive cost-based rate recovery. • Three main issues addressed by the Policy Statement: • Potential for combined cost-based and market based rate recovery to result in double recovery of costs by ESR; • Potential for cost-based rates to suppress competitive prices; • Level of control in the operation of the ESR could jeopardize RTO/ISO independence. 16 Perkins Coie LLP | PerkinsCoie.com
Policy Statement: Utilization of ESRs for Multiple Services When Receiving Cost-Based Rate Recovery (Jan. 19, 2017) Double recovery: • Address through market revenue crediting back to customers or using market revenues to reduce the revenue requirement. No risk of adverse impacts to wholesale electric markets: • “If we were to deny electric storage resources the possibility of earning cost -based and market-based revenues on the theory that having dual revenue streams undermines competition, we would need to revisit years of precedent allowing such concurrent cost- based and market- based sales to occur as described above.” RTO/ISO Independence: • “[T]he provision of market -based rate services should be under the control of the electric storage resource owner or operator, rather than the RTO/ISO, to ensure RTO/ISO independence.” 17 Perkins Coie LLP | PerkinsCoie.com
FERC Order 841: Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators (Feb. 15, 2018) • Remove barriers to the participation of electric storage resources in the capacity, energy, and ancillary service markets operated by Regional Transmission Organizations and Independent System Operators (RTO/ISO markets), with a view to expand the existing market for storage resources. • Enhance competition and help ensure that RTO/ISO markets provide just and reasonable rates . • Support the resilience of the bulk power system. 18 Perkins Coie LLP | PerkinsCoie.com
FERC Order 841 Significance: • Creates a clear legal framework for storage resources to operate in all electric markets and provides clarity around market access; • Establishes a participation model that recognizes the physical and operational characteristics of storage resources; • Expands the universe of solutions that can compete to meet electric system needs; • Represents necessary steps on the path to a more flexible electricity system. 19 Perkins Coie LLP | PerkinsCoie.com
FERC Order 841 Defines “ electric storage resource ” or ESR as: • A resource capable of receiving electric energy from the grid and storing it for later injection of electric energy back to the grid. • Does not differentiate location on grid (e.g. transmission, distribution, or behind-the-meter). • Storage resources currently participating in demand-response programs can continue doing so under the new rule. 20 Perkins Coie LLP | PerkinsCoie.com
FERC Order 841 Reach of FERC’s jurisdiction over ESRs: • FERC Order 841 “applies to [ESRs] that are capable of receiving electric energy from the grid and storing it later for injection of electric energy back to the grid, irrespective of where the resource is interconnected . The sale of charging energy to an [ESR] that the resource then resells into the RTO/ISO markets is a sale for resale in interstate commerce and thus subject to the Commission’s jurisdiction.” (FERC Order 841 ¶ 295) (emphasis added) 21 Perkins Coie LLP | PerkinsCoie.com
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