Tesla Megapack 0604

A Tesla Megapack energy storage system. CAISO's new rules include a minimum-state-of-charge requirement for storage resources.

California's grid operator won federal approval of a package of changes to its resource-adequacy procedures, one in a series of changes being made to better prepare the electric grid for summer heat and high demand.

Four members of the Federal Energy Regulatory Commission on May 28 approved the California Independent System Operator's enhancements to its resource-adequacy rules, with FERC member Neil Chatterjee not participating. FERC approved the changes effective June 1, except for a minimum-state-of-charge requirement for energy storage resources, which will become effective June 15 [ER21-1551].

The state's main resource-adequacy program is administered by the California Public Utilities Commission, which requires load-serving entities to make annual showings that they have adequate system, local and flexible RA. CAISO also requires LSEs to confirm they have procured adequate RA capacity, in annual and monthly filings.

CAISO began its resource-adequacy rule enhancements in 2018 due to increased penetration of renewables and energy procurement that has become more fragmented with the rise of community choice aggregators. The August 2020 blackouts provided another reason for the ISO to move forward with the program.

CAISO's RA package approved by FERC has three elements: a minimum-state-of-charge requirement for energy storage, fixes to the planned-outage process, and new authority to procure capacity to meet local-area efficiencies. The CAISO Board of Governors approved the package in March (see CEM No. 1634).

The interim minimum-state-of-charge requirement is meant to ensure energy storage is available when needed at evening peak periods, and will be imposed only during critical hours on days when supply is tightest.

There were some protests filed during the FERC proceeding against the minimum-state-of-charge proposal. Vistra-Dynegy argued that CAISO's proposal is inconsistent with FERC Order No. 841, which states that ISOs and regional transmission organizations "must permit electric storage resources to manage their state of charge because it allows these resources to optimize their operations to provide all of the wholesale services that they are technically capable of providing." The company also argued that CAISO's proposal could erode reliability and market efficiency.

Boston Energy also argued that CAISO's proposal violates provisions in Order 841 that electric storage resources must be allowed to manage their state of charge.

The "Six Cities" group also protested CAISO's changes, saying the proposal discriminates against co-located resources such as solar/storage. CAISO defines and treats co-located resources differently than "hybrid resources," which have a single common control and are not subject to the minimum-state-of-charge requirements. 

But FERC in its decision disagreed with the protests, saying that "CAISO's proposal represents a reasonable measure that will allow CAISO under specified circumstances to ensure that resource adequacy energy storage resources have sufficient charge to support their day-ahead market awards on days when tight supply conditions are expected. This will help ensure that resource adequacy capacity from energy storage resources is available in real-time during the hours of highest net load."

FERC also disagreed that the minimum charging proposal violates Order 841, because CAISO still allows storage resources to have full control of bidding and participation in its markets to provide any wholesale service they are capable of providing. CAISO offered "a reasonable and targeted solution" that limits storage dispatch in the real-time market when doing so could affect system reliability, FERC said.

The commission also disagreed that the separate treatment of hybrid and co-located resources is discriminatory, saying they are situated differently and that CAISO is not able to account for the interaction between storage resources and variable energy resources in the co-located model. 

For planned outages, the newly approved rule changes will require resources with RA commitments to provide substitute capacity for planned outages. This is meant to improve reliability, since planned outages are not included in the RA planning reserve margin and the ISO cannot evaluate planned outages far in advance.

Resource-adequacy entities can take forced outages when any portion of their capacity is not available, but this nonavailability will count against them when they are assessed by CAISO. Resources can avoid nonavailability charges by having a maintenance outage approved in advance, but CAISO rules require substitute capacity, unless CAISO determines it is not needed.

Regarding the new authority to procure capacity to meet local-area efficiencies, CAISO proposed to modify its rules for local capacity studies to include an energy sufficiency evaluation, and also proposed changes to its capacity procurement mechanism backstop procurement authority so it can procure additional capacity if the RA resources procured by load-serving entities fail the energy sufficiency test. 

In its May 28 decision, FERC found that the addition of an energy sufficiency component to the local capacity technical study gives CAISO a more accurate picture of the combination and quantity of resources needed to ensure the ISO can serve load reliably, and that the new CPM backstop authority will ensure it can get the backstop capacity it needs.

"As storage and other types of limited availability resources begin to comprise a larger portion of the resource adequacy fleet, we find it reasonable that the energy production capability of local resource adequacy resources should be considered in addition to the MW capacity," FERC said.

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