Stakeholders Considering Issue Charge to Guide Storage Capability Calculation

PJM Awaits Decision From FERC on Request to Pause Related Paper Hearing

2012

Stakeholders will be considering an issue charge introduced by PJM to guide the creation of a new method for calculating how much power certain resources may offer into the capacity market.

The issue charge is set to be presented for a simultaneous first read and endorsement vote at the next meeting of the Markets & Reliability Committee.

The initiative follows a motion PJM filed Feb. 27 with the Federal Energy Regulatory Commission (FERC) asking for time to work with stakeholders on a plan to calculate the capability of energy storage resources that offer into the capacity market.

Reconsidering the ‘10-Hour Rule’

PJM’s filing requests that FERC “hold in abeyance” until Jan. 29, 2021, a paper hearing to investigate whether PJM’s provisions for establishing the capability of energy storage resources in the capacity market are unjust and unreasonable. Currently, PJM employs a 10-hour rule, under which a resource’s capability is judged by the power output it can provide for 10 continuous hours.

The subject stems from FERC’s ruling last fall largely accepting PJM’s compliance filing regarding FERC Order 841, which required regional grid operators to remove barriers to the participation in wholesale markets for electric storage resources, such as batteries.

PJM requested the abeyance to allow time to work through a special stakeholder process to pursue an Effective Load Carrying Capability (ELCC) solution for energy storage resources, as well as other limited duration resources and variable resources such as wind and solar.

What is ELCC?

PJM had expressed its desire to FERC to re-engage stakeholders on the application of capability rules to capacity storage resources before filing an initial brief.

“Those conversations undertaken during this period have proved fruitful, and provide a basis for PJM to seek to pursue an ELCC-type solution to the issue of determining the appropriate capacity value of energy storage resources,” according to the Feb. 27 motion.

ELCC is an established method used to evaluate the capability of resources that cannot run at their full output around the clock. “ELCC represents the amount of incremental load that a resource can dependably and reliably serve, while also considering load uncertainty and the probabilistic nature of generation shortfalls and random forced outages as driving factors to load not being served,” the filing said.

Resources able to deliver at periods of high risk have a high ELCC; those that can do so less consistently have a lower ELCC. As various types of limited resources are deployed in greater numbers, the periods of high risk can become shorter or longer, can shift earlier or later in the day, or even shift to another season.

As installations of a class of limited-duration or variable resources increase, ELCC results for that class decline (with all else being equal). At the current level of market deployment, shorter-duration energy storage resources could be expected to receive a higher capacity value using ELCC – and thus earn more through the capacity market – than under the current framework employing the 10-hour rule.

An Eight-Month Process

The stakeholder process, outlined at a special meeting of the Market Implementation Committee, is expected to last eight months. During that time, the status quo would remain in place.

According to its filing, if PJM did not submit a proposal with FERC by the end of January, the paper hearing would be re-engaged.

Issued in early 2018, Order 841 aims to remove barriers to the participation of energy storage resources in the capacity, energy and ancillary services markets of all independent system operators and regional transmission organizations under FERC’s jurisdiction. PJM’s new rules took effect in December. Battery storage projects have been proposed throughout the PJM region, with a concentration in Virginia and New Jersey. PJM invites feedback on the subject at ESR@pjm.com.