The Federal Energy Regulatory Commission (FERC) issued a final rule on February 15, 2018, aimed at increasing participation of energy storage sources in organized wholesale electric markets. The final rule, Order No. 841, requires Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) to develop a new “participation model” that includes electric storage resources. The participation model refers to tariffs creates by RTOs/ISOs for different sources of energy resources.

Examples of electric storage include more obvious technology, such as batteries, along with less well-known energy storage options, such as compressed air, flywheels, and pumped-hydro. The new participation model developed by the RTOs/ISOs will address these types of storage methods, since storage includes different challenges and provides different benefits than generation sources. For example, the new participation model will account for physical and operational characteristics of energy storage through tailored bidding parameters, and the participation model must ensure that a resource using the model can set the wholesale market clearing price as both a wholesale seller and buyer.

Pursuant to the Order, RTOs/ISOs must file their proposed participation model within 270 days of the Order’s publication. From that date, a year will be provided to implement the changes. In a statement regarding the order, FERC Commissioner Neil Chatterjee emphasized that this rulemaking process empowers the different regions to take actions which best address their needs, rather than forcing a top-down, one-size-fits all approach.

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