California grid officials are expecting up to 1,500 MW of energy storage to come on line by the end of next year and are refining market rules to more quickly and efficiently integrate storage with other resources.
The California ISO is developing the new rules in two phases for generation with two different technology types behind the same interconnection—such as renewables-storage combinations—known as the "hybrid resources initiative"
"Throughout the West, it is expected that energy storage paired with wind and solar resources will be pursued to accommodate the retirement of natural gas and coal-fired generation," Mark Rothleder, CAISO's senior VP and COO, told the Board of Governors Nov. 18. "In particular, the ISO has identified a potential shortfall of capacity to meet projected system net load peaks over the next few years because of pending retirements of the once-through-cooled natural gas generation fleet."
The board approved the second phase of the rules on Nov. 18 that apply to generation resources modeled under a single resource ID. This allows the resource to be managed by its operator rather than the ISO, which the grid operator says will allow for more effective management and dispatch.
The board in July approved Phase 1 of the rule changes, known as the co-located resource model, and approved by FERC on Nov. 19 [ER20-2890]. Co-located resources operate as two separate resources, and their rule changes require less functionality, so CAISO plans to implement those changes this fall.
The rules the Board of Governors approved Nov. 18 are for hybrid resources, allowing them to provide both energy and ancillary services to the grid.
The rules include a "dynamic limit tool" that enables the resource operator to communicate maximum and minimum operating limits to the ISO in real time, which is meant to help the ISO ensure it is issuing dispatches that are feasible for hybrid resources participating in the market, according to a briefing to the board by Rothleder.
The tool will allow resource operators to specify the upper and lower operational limits for a resource in five-minute intervals, going three hours into the future.
The rules also expand the co-located resource model to accommodate deviations from dispatch instruction under certain conditions, meant to avoid curtailment of renewable resources. They also include a new requirement for telemetered data, called the "high sustainability limit," for both hybrid and co-located resources that have a variable resource component.
Stakeholders had requested that storage resources co-located with variable generation be given a way to deviate from dispatch instructions to manage the variable output of solar and wind, CAISO said. Under the newly approved rules, CAISO will allow resources to deviate from their dispatch instructions when they are able to produce above their dispatch level; when additional variable generation above their dispatch level would violate the aggregate capacity constraint; and when the co-located resource is not providing ancillary services.
The new rules also require co-located and hybrid resources with a wind or solar component to provide certain data to allow for better operation of those resources. Today, the ISO requires a suite of meteorological data submitted from variable energy resources, including forecast data that is used to estimate the output of those variable resources at any time, and requires storage resources to submit state-of-charge data. The new rules would require scheduling coordinators for hybrid resources to submit both meteorological data for a variable resource and state-of-charge data for the storage component of the resource.
Also within the new rules is an exemption for hybrid resources from the "resource adequacy incentive mechanism," which currently runs the risk of double-penalizing a variable resource for its availability.
In an analysis of the new rules, consulting firm Energy GPS said, "Hybrid resources [are] a natural combination for California in light of [the] state's abundant solar resources, falling battery costs, and the compelling economics with the Investment Tax Credit (ITC), which can be applied to an entire storage + solar facility if it can come online by 2023 (assuming certain safe harbor purchases are in place). And, we all know about the duck curve, so why not capture those low prices and put them into a battery before they even get past the Point of Interconnection?"
Additionally, the CAISO board on Nov. 18 approved:
- A provision that allows the ISO market to model a portion of a resource's output that is outside of the CAISO balancing authority area as a "pseudo-tie." This is a mechanism that allows a resource that connects to a transmission line in one BAA to be a supply resource for another BAA. Currently, the ISO's market rules only allow the full output of a resource to be connected as a pseudo-tie to the CAISO BAA. The change is meant to ensure the ISO accurately models the share of the resource and equitably settles it.
- Rules that change how operations and maintenance costs are estimated in the ISO markets via two components: the variable operations and maintenance adder and the major maintenance adder. Market participants currently negotiate with the ISO to receive two adders that reflect O&M costs in the ISO markets, but a lack of publicly available principles for the categorization of O&M costs makes these negotiations overly complex and burdensome, the ISO said. The new rules create explicit principles for use in the categorization of O&M costs to be included in the tariff.