Energy Storage Initiative Issue Identification
Date:
June 13, 2013
Prepared by:
Jenny Chen, Senior Market Design Specialist
Mariya Goloshchapova, Wind Integration Intern
Prepared for: Kelly Gunsch
Vice President, Market Services
Table of Contents
1
2
3
Executive Summary ............................................................................................................................. 1
Purpose ................................................................................................................................................. 1
Background ........................................................................................................................................... 1
3.1
3.2
3.3
4
Regulatory and Policy Coherence ...................................................................................................... 5
4.1
4.2
5
Facilitating Participation on a Non-Discriminatory Basis .............................................................................. 6
Maintaining a Level Playing Field ................................................................................................................. 6
ES Initiative Issue Identification.......................................................................................................... 7
5.1
5.2
6
7
ES Technologies and their Applications ....................................................................................................... 1
Increased Interest in ES Integration in Alberta ............................................................................................. 4
3.2.1
CCEMC Call for Expressions of Interest ........................................................................................ 4
3.2.2
WECC New Reliability Standard .................................................................................................... 4
3.2.3
Potential Opportunity to Use the Technical Features of ES ........................................................... 4
3.2.4
System Access Service Requests from ES Projects...................................................................... 5
Challenge of ES Integration within the Existing Market Design .................................................................... 5
Issues in Relation to ES Integration ............................................................................................................. 7
5.1.1
Technical Standards for ES to Connect to and Operate in the AIES ............................................. 7
5.1.2
Technical Requirements for the Provision of Products .................................................................. 8
5.1.3
Asset Classification ........................................................................................................................ 9
5.1.4
Market Rules .................................................................................................................................. 9
5.1.4.1 Must Offer Must Comply Rules ...................................................................................................... 9
5.1.4.2 Outage Reporting Rules .............................................................................................................. 10
5.1.5
OR Procurement Practice ............................................................................................................ 11
5.1.6
ISO Tariff...................................................................................................................................... 12
Possible Ways to Find Solutions ................................................................................................................ 13
5.2.1
Possible ES Trial Project.............................................................................................................. 13
5.2.2
Energy Storage Workgroup.......................................................................................................... 13
Next Steps ........................................................................................................................................... 14
Appendix: Synopsis of Energy Storage Integration in Other Markets.......................................... 15
1 Executive Summary
Driven by interest from industry to connect Energy Storage (ES) facilities to the Alberta Interconnected
Electric System (AIES) and enable their participation in the Alberta electricity market (the Alberta Market),
the AESO launched an Energy Storage integration initiative in September 2012. The AESO will initially
assess possible ways of integrating Energy Storage by identifying and prioritizing issues that may exist
within the current market design in relation to ES integration. These issues include creating technical
standards for ES to connect to and operate within the AIES, creating technical requirements for the
provision of energy and ancillary services, asset classification, market rules, Operating Reserve (OR)
procurement practice, and the ISO tariff. The AESO also plans to engage industry through ES working
group sessions in order to better prioritize and find solutions to the issues.
2 Purpose
The purpose of this paper is to summarize the issues identified by the AESO during its initial evaluation of
ES integration. It serves as a starting point for further discussions with the industry on how to integrate ES
into the AIES and allow ES to participate in the Alberta Market in a fair, efficient and openly competitive
(FEOC) manner.
3 Background
3.1
ES Technologies and their Applications
ES technologies have the ability to store electric energy. Energy storage is the retention of electric energy
available at one point in time in a form that permits the electric energy to be made available at a later
point in time. While there are a variety of different types of ES technologies, utility-scale ES technologies
mainly fall into the following categories:
•
Electrochemical ES, e.g., batteries
Batteries convert electric energy into chemical energy and store it in liquid or solution form, so
that at a later time when electric energy is needed, it can be converted back from the stored
chemical energy.
There are two main types of battery technologies. The first type includes lead-acid, nickelcadmium, nickel-metal hydride and lithium-ion batteries. The electrochemical process in these
types of batteries produces powerful bursts of energy; however, continuous cycling can limit the
battery life. Due to their fast response ability, these batteries are used to provide power quality
service such as frequency regulation.
The second type is high-energy batteries that include flow batteries and sodium-sulfur batteries.
Both of these technologies have long-cycle life. Flow batteries also have an advantage in that the
1
power component and energy component can be sized independently. High-energy batteries are
typically used in energy management, such as load leveling, capacity firming, and transmission
and distribution (T&D) replacement and deferral.
•
Mechanical ES, e.g., pumped storage hydro (PSH), compressed air energy storage (CAES), and
flywheels
PHS pumps water from a low elevation reservoir to a higher elevation reservoir to store electric
energy, and then releases the water to generate electricity. CAES stores electric energy in the
1
National Renewable Energy Laboratory. The Role of Energy Storage with Renewable Electricity Generation, P42.
Page 1
form of compressed air in an underground cavern and later heats the air to run a standard
combustion turbine to generate electricity. Both PSH and CAES technologies can be applied to
load leveling and energy price arbitrage by storing electric energy during off-peak hours and
generating electricity during on-peak hours.
Flywheels store electric energy as rotational energy by accelerating a rotor to a very high speed.
When generating electricity, flywheels discharge electric energy by reducing the rotational speed.
Flywheels are fast responding and are used to provide frequency regulation service.
•
Magnetic ES, e.g., Super-conducting Magnetic Energy Storage (SMES)
SMES stores electric energy in a magnetic field in a super-conducting coil and releases the
energy by discharging the coil. SMES has the ability to respond instantly to power fluctuations,
similar to capacitors.
Figure 1 is a summary of the applications of different types of ES technologies excerpted from
Electricity Energy Storage Technology Options published by Electric Power Research Institute
(EPRI).
Figure 1: Positioning of Energy Storage Technologies2
2
Electric Power Research Institute, Electricity Energy Storage Technology Options, P2-4.
Page 2
ES applications to specific areas of the electric system value chain are also illustrated in the same report
(see Table 1).
Table 1: General Energy Storage Application Requirements 3
3
Electric Power Research Institute, Electricity Energy Storage Technology Options, P2-5.
Page 3
Table 1 suggests that ES technologies can provide a variety of services along the entire value chain of
the electrical system. Not only can they become new suppliers of energy and ancillary services, but they
can also become part of the transmission plan.
3.2
Increased Interest in ES Integration in Alberta
Driven by the direction of the U.S. Federal Energy Regulatory Commission (FERC) to allow non4
generating resources to participate in energy and OR markets and the need to address the challenges of
5
integrating more renewable resources, many jurisdictions in the U.S. have started the process of
developing initiatives to integrate ES facilities (see Appendix).
In Alberta, ES has primarily been studied in conjunction with wind energy. In 2011, in collaboration with
the AESO, Alberta Innovates Technology Futures conducted a study on using ES to support dispatch of
6
wind facilities. The final report, Energy Storage – Making Intermittent Power Dispatchable, suggests that
wind facilities could benefit from ES through profit shifting in the form of creating energy arbitrage and
energy firming. The study also suggests the possibility of ES enabling wind participation in the OR
market. However, these ideas have not yet been put to the test in the Alberta Market.
In 2012, interest in integrating ES facilities into the Alberta Market increased. This interest was primarily
driven by the funding initiative of the Climate Change and Emissions Management Corporation
7
8
(CCEMC), the approval of a new reliability standard for contingency reserves by both the Western
Electricity Coordinating Council (WECC) and the North America Reliability Corporation (NERC), and the
opportunity to use the technical features of ES as additional wind power is integrated into the AIES.
3.2.1
CCEMC Call for Expressions of Interest
9
In June 2012, the CCEMC announced the Call for Expressions of Interest for projects aimed at reducing
greenhouse gas (GHG) emissions as well as improving the understanding of new technologies in Alberta.
The CCEMC Call for Expressions of Interest triggered an increased amount of inquiries from parties who
are interested in bringing ES into the Alberta Market. The AESO supported these parties in their
10
Expressions of Interest by providing a Letter of Support addressed to the CCEMC . The AESO also
concurrently announced the launch of its Energy Storage Integration Initiative.
3.2.2
WECC New Reliability Standard
Although ES technologies have been identified as being technically capable of providing OR services, the
11
WECC reliability standard currently only allows generating resources to provide Regulating Reserve
(RR) and Operating Reserve – Spinning (SR). In Alberta, in accordance with the WECC reliability
standard, only generators are allowed to provide RR and SR. In July 2012, WECC approved a new
standard for contingency reserves, which allows non-generating resources to provide RR and SR. The
new WECC standard was approved by NERC in November 2012. Pending approval from FERC, the
opportunity for ES to participate in the RR and SR markets is expected to emerge in the WECC region,
including Alberta.
3.2.3
Potential Opportunity to Use the Technical Features of ES
Increased market interest is also generated by the possibility that new reliability products may be
beneficial with respect to managing the grid more efficiently as increased wind capacity is connected to
4
Order No. 890, FERC Stats. & Regs. - 31, 241
http://www.eia.gov/todayinenergy/detail.cfm?id=4850
6
http://www.albertatechfutures.ca/LinkClick.aspx?fileticket=CR1tyGfMACc%3D&tabid=40
7
http://environment.alberta.ca/02486.html
8
WECC Standard BAL-002-WCC-1 – Contingency Reserves (pending approval from FERC).
9
http://ccemc.ca/_uploads/2012-Renewable-Energy-EOI-Guide-and-Instructions-Final1.pdf
10
http://www.aeso.ca/downloads/energy_storage.pdf
11
WECC Standard BAL-STD-002-0 – Operating Reserves.
5
Page 4
12
the AIES. According to the AESO 2012 Long-Term Outlook, total wind capacity is expected to increase
to over 2,200 MW by 2022, from the current 7.5 per cent of total installed capacity to 11 per cent of total
installed capacity. Significant increases in wind power capacity may exacerbate the challenge of reliably
balancing the system and maintaining system frequency given the intermittent nature of the wind
resource. In its Phase Two Wind Integration recommendation paper, the AESO made a recommendation
“to explore the need for and development of a new system ramping service” as part of the wind
13
integration program. ES is one of the resource types that is able to provide fast ramping and fast
response services. The potential use of ES resulted in the industry becoming more active in ES
integration.
3.2.4
System Access Service Requests from ES Projects
In December 2012, the AESO received a System Access Service Request (SASR) from the first ever ES
project in Alberta. In February 2013, another ES project submitted a SASR to the AESO.
3.3
Challenge of ES Integration within the Existing Market Design
Integrating ES projects is a new undertaking in Alberta and it is expected that technical and market
challenges will be encountered. This is because the existing technical standards and market rules were
developed based on experience with existing generation fleet and load characteristics. ES resources
encompass new technologies with characteristics that are different from those that currently exist. Given
its mandate to operate a reliable electric system in a FEOC manner, the AESO has a duty to facilitate the
connection and integration of the proposed ES projects. Therefore, identifying issues in the integration of
ES technologies is an important step to ensure the market design allows ES to compete in the Alberta
Market on a level-playing field.
4 Regulatory and Policy Coherence
In working with the industry and seeking solutions for ES integration, the AESO will follow its legislative
mandate and the direction set by the provincial government.
Section 5 of the Electric Utilities Act, SA 2003, c.E-5.1 (the Act) lists several purposes of the legislation,
some of which include:
(b) to provide for a competitive power pool so that an efficient market for electricity based on fair
and open competition can develop, where all persons wishing to exchange electric energy
through the power pool may do so on non-discriminatory terms and may make financial
arrangements to manage financial risk associated with the pool price;
(c) to provide for rules so that an efficient market for electricity based on fair and open
competition can develop in which neither the market nor the structure of the Alberta electric
industry is distorted by unfair advantages of government-owned participants or any other
participant;
(d) to continue a flexible framework so that decisions of the electric industry about the need for
and investment in generation of electricity are guided by competitive market forces.
[emphasis added]
Section 5 of the Act clearly sets out the principles of facilitating participation on a non-discriminatory basis
and maintaining a level playing field for suppliers of all fuel types.
12
13
The AESO, AESO 2012 Long-term Outlook, P52.
The AESO, Phase Two Wind Integration.
Page 5
4.1
Facilitating Participation on a Non-Discriminatory Basis
The specific duties and responsibilities related to participation in the Alberta Market on non-discriminatory
terms are set out in section 17, subsection 18(1) and section 29 of the Act:
17 The Independent System Operator has the following duties:
(a) to operate the power pool in a manner that promotes the fair, efficient and openly competitive
exchange of electric energy;
(b) to facilitate the operation of markets for electric energy in a manner that is fair and open and
that gives all market participants wishing to participate in those markets and to exchange
electric energy a reasonable opportunity to do so;
(g) to provide system access service on the transmission system and to prepare an ISO tariff;
(h) to direct the safe, reliable and economic operation of the interconnected electric system;
18(1) The Independent System Operator must operate the power pool in a manner that is fair,
efficient and open to all market participants exchanging or wishing to exchange electric
energy through the power pool and that gives all market participants a reasonable opportunity
to do so.
…
29 The Independent System Operator must provide system access service on the
transmission system in a manner that gives all market participants wishing to exchange electric
energy and ancillary services a reasonable opportunity to do so.
[emphasis added]
In accordance with its duties under the Act, the AESO has an obligation to provide ES facilities with
system access service on a non-discriminatory basis and a reasonable opportunity to participate in the
Alberta Market.
4.2
Maintaining a Level Playing Field
In carrying out its duties under the Act, the AESO may make rules. Section 20(1) of the Act states that the
AESO may make rules respecting, among other things, the practices and procedures of the AESO, the
operation of and the exchange of electric energy through the power pool, the operation of the
interconnected electric system, the provision of ancillary services, and the planning of the transmission
system, including criteria and standards for the reliability and adequacy of the transmission system.
Both the Act and the Alberta government’s Alberta’s Electricity Policy Framework (the Policy Framework)
make it clear that all fuel sources should be free to compete in the Alberta Market on a level playing field.
The Policy Framework confirms that a level playing field for all participants is a key element of Alberta’s
Market by stating:
Suppliers using diverse fuel sources will compete for the opportunity to sell their products, based
on a straightforward and transparent market framework, minimal barriers to entry, and a level
14
playing field.
14
Alberta Department of Energy, Alberta’s Electricity Policy Framework: Competitive, Reliable, Sustainable. June 2005, P7.
Page 6
The Policy Framework also makes statements regarding the integration of renewable energy suppliers,
which are relevant to the integration of ES facilities:
The Department does not support one type of generation over another but rather allows
competitive market forces to determine the appropriate generation mix (e.g., no fuel use policy).
As a result, the Department does not support market refinements that will create an uneven
15
playing field or be detrimental to the development of renewable resources.
The AESO intends to create a level playing field to enable ES participation in the Alberta Market and
competition with other types of facilities for the provision of electric energy and ancillary services. The
AESO will work with members of the electricity industry to develop appropriate technical standards and
market rules and ensure that ES facilities are integrated on a level playing field.
5 ES Initiative Issue Identification
Increased inquiries from parties interested in integrating ES facilities and the SASR submissions of the
ES projects have led to discussions on ES integration at the AESO. These discussions focused mainly on
the identification of potential issues in relation to ES integration and the possible ways to find solutions.
5.1
Issues in Relation to ES Integration
Initial discussions have identified certain challenges in relation to ES integration. Areas that have been
identified include setting technical standards for ES to connect to and operate in the AIES, setting
technical requirements for the provision of products and services, asset classification, ISO rules relating
to participation in the Alberta Market, OR procurement practice, and the ISO tariff.
5.1.1
Technical Standards for ES to Connect to and Operate in the AIES
16
Currently, facilities connecting to the AIES are required to meet various technical standards. These
17
include the Generation and Load Interconnection Standard and the Wind Aggregated Generating
18
Facilities Technical Requirements.
Since generation facilities and load facilities are technically different in nature, the Generation and Load
Interconnection Standard established different requirements for generation interconnection from those for
load interconnection. In recognition of the unique technical and operational features of wind generating
facilities, the Wind Aggregated Generating Facilities Technical Requirements were developed separately
from the Generation and Load Interconnection Standard.
These existing technical standards may not be sufficient for or applicable to ES facilities. This is because
ES facilities have unique technical and operational characteristics that are different from those of
generation or load. In addition, ES encompasses resources with a variety of different technical
characteristics that may impact the grid operation in different ways. Connecting ES facilities to the grid is
a new experience in the connection process.
Issues:
•
Should the connection of ES facilities follow the existing connection standards or requirements?
•
Which standards or requirements do ES facilities have to follow?
15
Alberta Department of Energy, Alberta’s Electricity Policy Framework: Competitive, Reliable, Sustainable. June 2005, P47.
The transmission connection standards are listed at http://www.aeso.ca/rulesprocedures/8674.html.
The AESO, Generation and Load Interconnection Standard.
18
The ISO Rules 502.1.
16
17
Page 7
•
If the existing standards or requirements are not readily applicable to ES connection, what
variances need to be specified?
•
If certain variances are granted to the early ES projects to help determine appropriate standards
applicable to ES, how can the variances be minimized to allow early ES projects to integrate into
the market without compromising the level playing field?
•
Should separate connection standards or requirements be developed specifically for ES?
5.1.2
o
What is the threshold that would trigger the establishment of separate connection
standards or requirements specifically for ES?
o
Is it adequate to establish common standards or requirements that can be applied
broadly to all ES technologies or should the standards or requirements vary among
different types of ES that may technically have little commonality? For example:

CAES uses electric energy to compress air, and then releases the air through
turbines to generate electricity. Therefore, a CAES has a distinct ‘charging’
device and a distinct ‘discharging’ device that may be separately connected to
the grid. However, a battery transforms between chemical energy and electric
energy through charging and discharging using the same electrochemical device.
Is it feasible to use common standards for a CAES connection and for a battery
connection?

In the case of batteries, should there be any additional requirements with respect
to State of Charge (SOC)?
Technical Requirements for the Provision of Products
Facilities must meet various technical requirements before they are able to provide ancillary service
products. Providing OR and the intertie restoration service currently provided by Load Shed Service for
imports (LSSi) have been identified by certain ES developers as potential opportunities. However, the
current technical requirements for the provision of OR preclude ES from providing RR and SR due to the
synchronicity, resource type and minimum size requirements. In addition, no technical requirements exist
for facilities that are able to provide an intertie restoration service by rapidly injecting energy to help arrest
and correct frequency decline during an unexpected intertie trip.
19
According to the existing OR technical requirements, only synchronous generators are allowed to
provide RR and SR. In addition, there is a minimum size requirement for the provision of each OR
20
product, 15 MW for RR, 10 MW for SR and 5 MW for Supplemental Reserves (SUP) . These
requirements were developed many years ago based on the technologies of the existing fleet and
preclude ES technologies that are either asynchronous, not classified as generation, or smaller than 10
MW from participating in the provision of RR and SR.
With respect to LSSi, the product is used as part of the AESO’s intertie restoration program to increase
21
import Available Transfer Capability (ATC). Loads that meet the AESO’s LSSi Requirements are able to
offer LSSi by providing instantaneous 59.5 Hz underfrequency load shedding during an unexpected
intertie trip. However, for resources with the ability to rapidly inject energy to help arrest and correct
frequency decline during an unexpected intertie trip, there are no technical requirements to facilitate their
participation in offering the intertie restoration service similar to that offered by LSSi.
19
The AESO Ancillary Services Technical Requirements can be found at http://www.aeso.ca/rulesprocedures/9108.html
Loads below 5 MW are allowed to provide OR through aggregators if the aggregators are able to provide at least 5 MW through
aggregation.
21
The AESO, Load Shed Service for Import (LSSi) Requirements.
20
Page 8
Issues:
•
What are the impacts on grid operation if the AESO removes the requirement that only
synchronous generating resources be allowed to provide RR and SR?
•
What are the impacts on grid operation if the AESO relaxes the size requirements on the
provision of certain OR products?
•
Should LSSi requirements be modified to include non-load resources, such as ES, that are
technically capable of providing intertie restoration service, or should separate requirements be
developed to facilitate the participation of non-load resources in the provision of intertie
restoration service?
5.1.3
Asset Classification
‘Asset’ is an ISO identifier that enables a pool participant to “submit bids, offers, operating constraints,
22
ancillary service declarations and /or identify specific settlement information”. Currently, ‘pool assets’
are categorized as either ‘source asset’ or ‘sink asset’. ‘Source asset’ means one or more aggregated
generating facilities, generating units or import assets. ‘Sink asset’ means one or more load assets or
23
export assets. With ES facilities, we may encounter issues of whether the existing asset classification is
adequate in facilitating the participation of ES in the market.
Issues:
•
Is an ES facility a source asset or a sink asset?
•
Should asset classification depend on specific ES technologies? For example:
o
•
How does asset classification impact the submissions from an ES facility? For example:
o
5.1.4
With the existing asset classification, a CAES is able to identify its generator as a ‘source
asset’ and its air compressor load as a ‘sink asset’. How should a battery facility that is
able to inject and withdraw electric energy with the same device be classified?
If a battery facility is classified as both a source and a sink asset and offers 10 MW RR
from the combined capacity provided by the source asset and the sink asset, i.e., from +5
MW to -5 MW, how should the battery submit the RR volume?
Market Rules
Two key ISO rules are ‘Must Offer Must Comply Rule’ and the ‘Outage Reporting Rule’. In relation to
certain unique features of ES, issues are likely to arise with respect to which ISO rules are applicable to
ES and how the existing ISO rules can be applied to ES facilities. These issues are also related with
asset classification discussed in the previous section.
5.1.4.1
Must Offer Must Comply Rules
Certain sections of Part 200 of the ISO Rule establish the requirements on the submission of offers and
the compliance with dispatch. Collectively these rules are often referred to as ’Must Offer Must Comply’
(MOMC) rules.
ISO Rule Section 201.7: Dispatches states that subject to certain exceptions, a pool participant that is a
legal owner of a generating source asset or an operator of a generating source asset must comply with a
dispatch it receives.
22
23
The AESO, Consolidated Authoritative Document Glossary, P3.
The AESO, Consolidated Authoritative Document Glossary, P30.
Page 9
ISO Rule Section 203.1: Offers and Bids for Energy requires a pool participant to submit an offer for each
of its source assets with a maximum capability (MC) of 5 MW or greater. It further requires a pool
participant that submits an offer to also submit the available capability (AC) for each source asset, of
which the AC must equal the MC of the source asset unless the pool participant has submitted an
acceptable operational reason (AOR) with the offer.
A pool participant is permitted under ISO rules to submit an AC restatement. However, ISO Rule Section
203.3: Energy Restatements permits an AC restatement if the revision is as a result of an AOR, or in
relation to changes to the minimum stable generation or reflecting the output during commissioning or
testing.
Issues:
•
Is the existing MOMC rule readily applicable to an ES?
o
•
If the existing MOMC rule applies, should AOR be re-defined? For example:
o
If a 15 MW battery is depleted 50 per cent and in a charging mode (hence cannot offer
into the energy market), is it an AOR for not offering up to the remaining 7.5 MW?
o
If a 15 MW battery is depleted 50 per cent and in a charging mode, what is the AC of this
battery? For example:
o
•
5.1.4.2
If the existing MOMC rule is not readily applicable to ES, what rules should be developed
around ES offers?

Is the AC 0 MW because the battery is charging and unable to offer any MW into
the energy market?

Is the AC 7.5 MW because the battery has the capability to inject 7.5 MW of
electric energy?

If the battery is charging at 5 MW and by switching from the charging mode to a
discharging mode of 7 MW, it is capable of providing 12 MW of OR. By switching
from the charging mode to a discharging mode of 5 MW, it is capable of providing
10 MW of OR. What should the AC of this battery be?
Some types of ES, such as flywheels, have the ability to provide fast and accurate
response to dispatches but are very limited in energy. Therefore, they may not have the
technical capability to sustain energy output for an hour. If applying MOMC rules to a
flywheel, intra-hour AC restatement to 0 MW may be inevitable when a flywheel is
dispatched into the energy market. Should flywheels be excused from participating in the
energy market and allowed to only participate in the OR market?
In any given hour, a battery may have the option to offer energy into the Alberta Market as a
generating unit, or withdraw energy from the grid as a load, or constantly alternate from a
charging mode to a discharging mode to provide RR. How should the compliance monitoring on
the battery be conducted?
Outage Reporting Rules
ISO Rule 5: Reliability Assessment and Scheduled Generator Outage Cancellation and ISO Rule Section
208.1: Load Outage Reporting set out the requirements for scheduled generator outages and forced
outage reporting, and for load outage reporting respectively. These rules are often referred to as ‘Outage
Reporting Rules’.
Page 10
Scheduled generator outage means “the period of time as planned by the legal owner of a generating unit
or the legal owner of an aggregated generating facility during which that generating unit or aggregated
generating facility is partially or fully removed, derated from, or otherwise is not physically or mechanically
available for service due to planned or scheduled maintenance or repairs to any of the plant, equipment
24
or components of the generating unit.” Forced outage means “a necessary, automatic or emergency
removal of the facility directly caused by defective equipment, adverse weather, adverse environment,
system condition, human element or foreign interference to avoid risk of danger or damage to personnel,
25
the public, or physical plant.”
Section 5.2 of ISO Rule 5 requires that generating units with an installed capacity of 5 MW or greater, or
derate changes of plus or minus 5 MW or greater, comply with the scheduled generator outage reporting
requirements. The generator outage reporting requirements require that by the first day of every month
subsequent to the date of commission, scheduled generator outages that are planned to occur within the
next 24 months must be submitted to the AESO. It also requires that for forced outages, the system
controller be informed on a designated telephone line and through the outage scheduling entry in the
Energy Trading System. Both scheduled generator outages and forced outages must include the dates,
times, durations, impact to MW capacity and the specific nature of the outages.
With respect to load outage reporting, ISO Rule Section 208.1: Load Outage Reporting obligates a load
market participant who has a planned decrease in its capability to consume load at a facility of 40 MW or
greater to submit outage information to the AESO “as soon as reasonably practicable”, with the
commencement date and time, the end date and time of the outage, and the actual decrease in MW in
the load capability.
Issues:
•
Are the ‘Outage Reporting Rules’ readily applicable to ES facilities or do outage reporting rules
specifically for ES need to be developed? For example:
o
•
5.1.5
What is an ‘outage’ for a battery or a flywheel?

Is the scheduled charging of a battery a scheduled outage?

If a flywheel is incapable of generating electricity for an hour, is it a forced
outage?
Are all changes in the withdrawal from the grid exempted from outage reporting as long as an ES
is smaller than 40 MW?
OR Procurement Practice
Under the existing OR market design, OR products are procured using standardized instruments on WattEx one business day before the OR is dispatched. As part of the OR market redesign, non-standardized
26
hourly Over-the-Counter (OTC) contracts were eliminated in 2011 in order to simplify, increase the
transparency and liquidity of the OR market, and to encourage greater participation. The current
27
standardized instruments are all multi-hour ‘block’ instruments which may not be practical for those ES
facilities that cannot sustain energy output for long durations.
24
The AESO, Consolidated Authoritative Document Glossary, P29.
The AESO, Consolidated Authoritative Document Glossary, P12.
26
These products are also referred to as ‘Shaped Products’.
27
Currently, the standardized instruments include Active On-Peak Regulating Reserve, Active On-Peak Spinning Reserve, Active
On-Peak Supplemental Reserve, Active Off-Peak Regulating Reserve, Active Off-Peak Spinning Reserve, Active Off-Peak
Supplemental Reserve, AM Super Peak Regulating Reserve, PM Super Peak Regulating Reserve; Standby On-Peak Regulating
Reserve, Standby On-Peak Spinning Reserve, Standby On-Peak Supplemental Reserve, Standby Off-Peak Regulating Reserve,
Standby Off-Peak Spinning Reserve, Standby Off-Peak Supplemental Reserve.
25
Page 11
Issues:
•
How should the AESO procure OR products from ES resources that are capable of meeting the
technical requirements in absence of non-standardized hourly instruments?
•
Is it necessary to implement other mechanisms so that the OR products that ES is technically
capable of providing can be transacted?
5.1.6
ISO Tariff
Currently, there are several different transmission service rate classes in the ISO tariff. These rate
classes include:
•
Demand Transmission Service (Rate DTS)
•
Fort Nelson Demand Transmission Service (Rate FTS)
•
Demand Opportunity Service (Rate DOS)
•
Export Opportunity Service (Rate XOS)
•
Demand Under-Frequency Load Shedding Credits (Rate UFLS)
•
Primary Service Credit (Rate PSC)
•
Supply Transmission Service (Rate STS)
•
Import Opportunity Service (Rate IOS)
Except for the BC Hydro load at Fort Nelson, and importers and exporters on the intertie, system access
service provided by the AESO is either under Rate DTS when energy is withdrawn from the transmission
system, or under Rate STS when energy is injected into the transmission system. If a market participant
with Rate DTS service qualifies under Section 12 of the ISO tariff, it may also be eligible for service under
Rate DOS for energy withdrawn from the transmission system. In addition, Rate UFLS offers credits to
compensate a market participant who falls under Rate DTS yet also has load connected to under28
frequency load shedding devices, and therefore faces a higher risk of being tripped off. Rate PSC is a
credit that compensates a market participant who receives system access service under Rate DTS and
whose connection does not include conventional transformation facilities owned by a transmission facility
29
owner .
Subsection 30(2) of the Act states that the ISO tariff rates for each class of service “must reflect the
prudent costs that are reasonably attributable to each class of system access service…”Section 47 of the
Transmission Regulation, AR 86/207 stipulates that the ISO tariff must charge the cost of the
transmission system to load and exports, and charge transmission losses to generating units. Currently,
ancillary service costs, as part of the transmission system costs, are included Rate DTS, whereas
transmission losses are included Rate STS. Certain features of ES raise the issues of which rate class
applies to ES.
Issues:
•
28
29
Should an ES facility whose ‘load’ is interruptible be connected under Rate DTS, which includes
charges for ancillary service costs? For example, if an ES facility withdraws electricity from the
AIES, stores it and returns it to the AIES, it is not an ‘end user’ of the electricity. As a result, an
ES facility may be willing to be curtailed when a state of insufficient OR is imminent. Therefore,
there may be no need for the AESO to procure OR for the ES ‘load’. Should the ES facility be
charged the Rate DTS and pay OR costs?
ISO Tariff – Rate UFLS Demand Under-Frequency Load Shedding Credit.
ISO Tariff – Rate PSC Primary Service Credit.
Page 12
•
Which of the existing ISO tariff classes more reasonably attributes the system costs to ES? For
example, if allowed to provide RR, ES resources may comply with automatic generation control
(AGC) signals by constantly alternating from withdrawing electric energy (being a ‘load’) to
injecting electric energy (being a ‘generator’). The AGC-directed ES ‘load’ provides service to the
transmission system just like an AGC-directed generator, as opposed to a ‘load’ that uses the
service. In this case, is Rate DTS or Rate STS a more appropriate tariff rate for the ES facility?
•
Are the energy conversion losses of an ES facility more akin to transmission line losses charged
under Rate STS or to a load under Rate DTS?
5.2
Possible Ways to Find Solutions
The provision of energy or OR from ES facilities is untested in Alberta. This poses questions of how to
develop technical standards and market rules for the ES projects. Two ways that have been considered
during the initial assessment are a possible ES facility trial project and an energy storage workgroup.
5.2.1
Possible ES Trial Project
The AESO is considering whether an ES trial project should be conducted for the purpose of
understanding what technical standards need to be established, which ISO rules need to be addressed
and how ISO rules should be addressed in order to facilitate the integration of ES resources.
Issues:
•
5.2.2
If an ES trial project is advisable, what would be the parameters of the trial? For example:
o
How will it be determined which ES projects should be included in the trial?
o
What questions should the trial aim to answer?
o
Should the OR volume provided by the trial ES be procured in addition to the OR
requirement to ensure that the system reliability is not compromised?
o
What needs to be considered if additional OR volumes are procured for the trial in order
to control additional OR procurement cost?

Should the trial volume be subject to a cap?

How should OR volumes from ES be procured during the trial period so that the
regular OR trading activities on Watt-Ex are not impacted?

What price should be paid to the trial volume procured from ES?
o
Should a trial period with a definite end time be established and what is the appropriate
duration of the trial period?
o
What are the next steps at the end of the trial?
Energy Storage Workgroup
The issues listed in this paper are the ones identified from an initial AESO assessment and are not
exhaustive. Further exploration of the application of ES technologies in the Alberta Market will help the
AESO and industry uncover more possible issues, prioritize the issues and work on solutions. Therefore,
the AESO is proposing to form an industry-wide energy storage workgroup as the first step in the ES
integration process. The workgroup is expected to meet on a regular basis to identify and prioritize
issues, discuss actions that need to be taken and determine appropriate timing of these actions. The
workgroup is expected to commence discussions in Q3, 2013.
Page 13
6 Next Steps
The AESO invites stakeholders to provide comments on this paper by July 5, 2013 specifically on
whether the paper overstated or failed to raise certain issues. Given the submission of the SASRs of ES
facilities, the AESO is of the view that the development of connection standards for these ES facilities
should be a priority. The AESO has commenced and will continue to work with the SARS applicants in
their connection processes in which functional specifications will be conducted and technical standards
pertaining to these ES facilities will be identified. Through a workgroup comprised of industry
stakeholders, the AESO will work with industry to identify, prioritize and discuss possible solutions to the
broader issues in ES integration. Concurrently with the workgroup discussions, the AESO will develop a
discussion paper outlining some possible ideas regarding how to precede with the integration of ES
projects.
Page 14
7 Appendix: Synopsis of Energy Storage Integration in
Other Markets
ES projects have been commercially deployed or actively researched in other North American
jurisdictions, such as California Independent System Operator (CAISO), Midwest Independent System
Operator (MISO), New York Independent System Operator (NYISO), ISO New England (ISO-NE), the
Electric Reliability Council of Texas (ERCOT), and PJM Interconnection (PJM).
The major driver for the ISOs and RTOs to integrate ES were FERC Order No. 890 and Order No. 755.
Order No. 890 directs grid operators to remove barriers for non-generating units to participate in the
ancillary service market. Order No. 755 requires that regulating reserve resources be compensated
based on their performance. These FERC Orders prompted the U.S. ISOs and RTOs to use market
mechanisms to differentiate services and include new resources, such as ES, in the provision of products
to help more efficiently manage the electric system.
Recognizing the distinct feature of ES, some ISOs created a new class of resources. For example,
CAISO includes ES in “Non-Generator Resources” (NGR), MISO and NYISO refer to ES as Stored
Energy Resources (SER) and Limited Energy Storage (LES) respectively. ERCOT categorizes ES into
Compressed Air Energy Storage (CAES) and Duration Limited Energy Storage (DLES).
The remainder of this appendix provides a synopsis of the activities in other jurisdictions in relation to ES
integration. While these activities may provide insight for ES integration in the Alberta Market, they cannot
be used as meaningful reference unless further assessed in the context of the market framework within
which they occurred.
CAISO
30
CAISO examined ES technologies in the process of integrating renewable resources in 2008. In 2011,
California’s legislature passed a regulation that requires 33 per cent of electricity procurement from
renewable sources by 2020. As more renewable resources are added to the grid, CAISO expected the
flexibility of ES technologies to lead to better management of the instability of the grid caused by the
variable renewable resources.
CAISO filed an application with FERC to allow non-generator resources to supply regulating (RR) and
operating reserves – spinning (SR) pending the approval of BAL-002-WECC-1 by FERC. CAISO also
established an ES pilot program. Before the ES is connected, CAISO uses simulation scenarios to
observe and analyze the behavior and potential impacts of the ES on the grid. In addition, CAISO
changed certain requirements for OR provision. For example, CAISO reduced the minimum capacity
requirement from 1 MW to 0.5 MW, lowered the minimum continuous energy requirement from 2 hours to
30 minutes in the real-time market, and allowed ES to elect to participate only in the RR market.
Currently, CAISO is in the process of developing a new ‘Flexible Ramping’ product (Flex Ramp). CAISO
believes that “the existing practice of procuring only generic resource adequacy capacity with no
consideration of special resource attributes can no longer ensure the balancing area will have an
31
adequate supply of ramping capability and contingency reserves.”
MISO
30
CAISO, Integration of Energy Storage Technology White Paper – Identification of Issues and Proposed Solutions, May 22, 2008,
P1
31
CAISO, Resource Adequacy and Flexible Capacity Procurement Joint Parties’ Proposal, P6
Page 15
The major driver of the ES program for MISO is the need for greater flexibility in order to address the
challenges in grid operation stemming from increased renewable energy generation. Together with
Manitoba Hydro, MISO undertook an energy storage study. For the analysis, MISO and Manitoba Hydro
chose three technologies: batteries, compressed air (CAES), and pumped hydro (PHS). MISO refers to
ES resources as SER and categorizes SER into ‘short-term’ storage (batteries) and ‘long-term’ storage
(compressed air and pumped hydro). Short-term SER technologies are designed to provide frequency
32
control and regulating reserves, and are the focus for MISO in the first phase of the study.
MISO treated long-term and short-term SER differently. Similar to generators and loads, long-term SER
types are able to participate in both day-ahead and real-time markets. Short-term SER technologies are
only eligible in the day-ahead and real time operating reserve markets. MISO is focused on testing
regulating, spinning, and supplemental reserve supply for short-term SER and lifted the requirement of
providing the service for a continuous 60 minutes. Under FERC Order 755, MISO has developed a ‘payfor-performance’ tariff that will allow resources to be paid a ‘regulation mileage payment’ in addition to the
marginal clearing price.
SER in MISO also have the option to identify themselves with other types of resources when providing
energy or ancillary services, in which case participants need to model ES as a generator to represent the
discharging state and a load to represent the charging state.
NYISO
ES has been able to participate in the New York market since NYISO was founded. However, a new subclass of storage resources was created in 2009 and designated as Limited Energy Storage (LES). NYISO
views that “LES’s ability to respond rapidly to control signals and continually recharge makes them a
valuable resource for Regulation Service" and that the “use of storage for services that require fast
response helps to improve system efficiency while reducing the need to burn fossil fuels to provide this
33
service.”
The NYISO modified its market rules to support the new class of resources. Starting in 2009, the NYISO
created new market rules and revised its software to facilitate LES. Traditionally, all resources which
provide regulation service also participate in the energy market. NYISO software co-optimized the
solution to determine the MW assigned to regulation vs. those to energy. Because battery and flywheel
technologies are energy limited, new rules were put in place to allow these devices to participate in the
market as regulation-only providers. In addition, the NYISO also modified its market software, including
real-time dispatch and AGC software to help maximize the amount of regulation the LES can provide.
The total LES capacity currently connected to the grid is 28 MW, including an 8 MW battery facility and a
20 MW flywheel system. However, the total ES capacity connected to the grid is significantly higher as it
34
also includes the two pumped storage resources operated by New York Power Authority (NYPA).
ISO-NE
In 2008, ISO-NE initiated a pilot program for alternative technology resources to provide regulation. The
pilot program is ongoing until appropriate market rules and software systems enabling non-generating
resources to provide regulation are implemented.
The major driver of the pilot program is FERC Order 890 that requires ISOs and RTOs to remove barriers
in market rules that prevent non-generating assets from providing regulating reserves. Participation in
32
MISO, MISO Energy Storage Study Phase 1 Report.
NYISO, Energy Storage in the New York Electricity Markets.
These facilities are the Blenheim-Gilboa units 1-4, each with a nameplate capacity of 290 MW; and the Lewiston (Niagara)
pumped storage unit with a nameplate capacity of 240 MW.
33
34
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ISO-NE’s pilot program is limited to a total capacity of 13 MW, which comprises approximately 10 per cent
of the average hourly regulating reserve requirement at the time the pilot program was initiated.
ES technologies can generally store only a limited quantity of energy. Therefore, following the AGC
dispatch instructions will cause the storage resource to occasionally either ‘fill up’ or ‘run out’, at which
point it may no longer be able to follow AGC dispatch instructions. The pilot program is pay-forperformance, so a resource that does not perform will receive no compensation during the interval of nonperformance, but there is no associated penalty. The storage resource is free to optimize its financial
performance by periodically modifying or biasing its regulating range in positive or negative directions to
cause the storage to be utilized more effectively. The ISO-NE regulation market is a real-time only
market, which allows the pilot program participants to provide regulation reserves only in real time.
ERCOT
ERCOT separates ES into Compressed Air Energy Storage and Duration Limited Energy Storage. The
latter represents flywheels and batteries that can alternate between charge and discharge within 5
35
minutes.
ERCOT identified that with increased penetration of renewable energy in the ERCOT system, a ‘Fast
Responding Regulation Service’ (FRRS) is beneficial as it is expected “to increase the reliability of the
ERCOT system at a lower total cost to Load as compared with solely relying on conventional Regulation
36
Service.”
37
Currently, ERCOT is exploring Fast Responding Regulation Service (FRRS) through a pilot project that
is open to ES. The ERCOT FRRS has been designed to respond immediately to significant frequency
drops. The FRRS pilot is expected to also help ERCOT develop settlement methodologies incorporating
the pay-for-performance concept similar to what is outlined in FERC Order 755. One key part of the
qualification test required for resources providing FRRS is to confirm through demonstration that the
resource can provide fast responding ’regulation up’ and /or ‘regulation down’ and sustain the deployment
for a minimum of eight minutes between 95 per cent and 110 per cent of the requested capacity. For the
FRRS pilot, ERCOT procures a maximum of 65 MW for FRRS Up and a maximum of 35 MW FRRS
Down, in addition to the existing Regulation Up and Regulation Down requirements. The duration of the
pilot project is six months (from February 2013 to August 2013).
In March 2012, the Public Utility Commission of Texas (the PUC) ruled that an ES has the option of
receiving ‘wholesale storage load’ treatment. If choosing to be a wholesale storage load, an ES is not
subject to ERCOT charges associated with ancillary service obligations or credits associated with the
revenue of Congestion Revenue Rights (CRR). However, in order to receive wholesale storage load,
generation from an ES must be ‘returned to the grid’ and the ES facility must be separately metered from
all other facilities. In addition, wholesale storage load pays the nodal price instead of the zonal price and
cannot charge from the grid during a system emergency. The PUC also determined that if an ES is
treated as a wholesale storage load, the energy loss resulting from the energy conversion process is “like
energy losses that occur in delivering energy from a generation facility through the ERCOT system to an
38
end-use customer.”
PJM
35
http://www.ercot.com/content/meetings/metf/keydocs/2012/0830/05_real_time_mkt_enhancement_strawman_8_24_2012.doc, PP
6-7.
36
ERCOT, Governing Document for Fast-Responding Regulation Service Pilot Project, November 13, 2012.
37
http://www.ercot.com/content/meetings/tac/keydocs/2012/0907/11._Fast_Responding_Regulation_Service_Pilot_Presentation_TA
.ppt
38
The Public Utility Commission of Texas, Rule Making on Energy Storage Issues.
Page 17
PJM enabled ES technologies’ participation in energy, capacity and AS markets. The first ES project was
connected in 2008 with a 1 MW battery facility. In 2011, another battery system of 32 MW in conjunction
with a 98 MW wind farm came into place. As of the end of 2012, there were 12 energy storage projects
totaling 383 MW in the PJM interconnection queue, including batteries, CAES, flywheels, and plug-in
39
hybrid electric vehicles. ES resources are going through the same interconnection process and are
subject to the same dispatch and technical requirements for participation in the OR market as
conventional generators. PJM has recently implemented a pay-for- performance rule that compensates
40
the resources for their “accuracy, speed and precision of response.”
39
40
http://www.pjm.com/planning/generation-interconnection/generation-queue-active.aspx
PJM, Performance Based Regulation (PBR) – FAQs
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