CAISO Postpones Entry of Energy Storage

The California Independent System Operator (CAISO), the state agency running the transmission system, has postponed the entry of limited energy storage resources (LESRs) into their ancillary services markets.

CAISO is bound by the Federal Energy Regulatory Commission (FERC) Order Nos. 719 and 890 to allow Non-Generator Resources to participate "on a comparable basis to services provided by generation resources in meeting mandatory reliability standards, providing ancillary services and planning the expansion fo the transmission grid".

To that end, CAISO began a stakeholder proceeding in September, 2009. LESR technology providers, like the Beacon flywheel, Altarinano and A123 lithium ion batteries, saw this as an opportunity to open these markets to their short term energy storage systems, as they have been able in other ISO markets. Many saw this as a continuation of the various energy storage proceedings that have started and stopped without resolution at CAISO since 2008.

However, the existing CAISO markets require greater energy resources than the above technologies can provide. Although CAISO reduced their requirements from up to 2 hours of energy, to as little as 30 minutes in the course of this proceeding, the LESR technologies are limited to 15 minutes of energy in one direction - charging or discharging. In fact, they want to be paid for providing service in both directions, requiring them to operate in the middle of their capacity, which only allows them to provide 7 minutes of energy - more or less.

The final decision of CAISO, after months of meetings and stakeholder comments, was the determination that new ancillary services markets would need to be created for these technologies because, "...energy storage and other resource have different operating characteristics and different implementation issues." (Draft Final Proposal, page 3)

CAISO proposes to take up the issue of LESR participation in future proceedings, although the timing is uncertain. This is understandably disappointing for the LESR companies, who have seen some success in other ISO territories, either with full participation or through pilot programs. However, for the foreseeable future, limited energy storage will not be able to participate in CAISO markets.

However, nothing in this decision or other proceedings prevents other energy storage technologies, with longer energy capability, from participating in CAISO markets. For example, the VRB flow battery, with the ability to store hours of energy, qulifies to provide spinning reserve, frequency regulation and other ancillary services. The VRB Energy Storage System (VRB-ESS), sited in conjuction with a solar PV, could shift generation, maintain peak output for the solar generator, and could then provide services to CAISO when not needed for solar energy.