Energy storage, or the use of batteries to absorb electricity from the grid when it is plentiful and discharge it when it is scarce, is ready for the big leagues.
That was the implication of a ruling on Friday from the U.S. Court of Appeals for the D.C. Circuit that has renewable energy enthusiasts beside themselves with glee. A three-judge panel upheld a rule by the Federal Energy Regulatory Commission (FERC) that requires energy storage and distributed energy sources to be able to fully participate in the nation’s major electricity markets, freeing them from rules by state regulators and utility companies that energy storage advocates say limited the technology’s potential revenue.
Analysts believe that the ruling could clear the way for the development of up to 50 gigawatts of energy storage, would would equal a third of the country’s current total wind and solar capacity. FERC’s chairman, Neil Chatterjee, hailed the ruling and said that the rule change FERC first published in February 2018 — known as Order 841 — “will be seen as the single most important act we could take to ensure a smooth transition to a new clean energy future.”
Any electrical grid that wants to run on 100% renewable energy — as many, including California’s and Germany’s, plausibly could do in the not-too-distant future — will need to have lots of energy storage on hand to ensure that wind- and solar-generated electricity is still available even when the wind isn’t blowing or the sun isn’t out.
Yet as these super-sized batteries grow stronger and cheaper, regulators around the world are struggling to craft rules to ease them onto the grid. In the US, energy storage units have long been prevented from fully accessing the lucrative wholesale electricity markets where power plants sell electricity and utility companies buy it. Many state regulators view energy storage skeptically despite continued technological advances.
To illustrate, consider the 16 Tesla-built batteries at the base of an office building in Irvine, California.
When the sun is out and solar electricity is plentiful and cheap, these 16 refrigerator-like batteries soak in electricity through cables connected to solar panels and other power generators outside town. When the sunlight ebbs and electricity on the grid is suddenly scarce, the batteries reverse the flow and start pumping the electricity back out onto the grid (that is, selling it back). According to Irvine Company, a real estate developer which has installed energy storage units like this one at 21 of its buildings across southern California, these 16 batteries can supply up to 25% of the nearby office building’s peak electricity demand, or supply up to 10 megawatts to help the region’s grid operator, Southern California Edison (SCE), supply enough power to meet local demand.
But rules limit just how much these batteries can do. Their operator, Advanced Microgrid Solutions, is required to sell the electricity directly to SCE, which in turn will sell the power onward to households and other customers. The batteries could be more efficient, and make more money, by selling the power directly to end users in the market on their own.
Other rules effectively prohibit energy storage sites like this one from tapping juicy payments that utilities sometimes hand out to power generators just to remain online during certain parts of the year in case of an emergency demand spike, called capacity market payment. Rules vary, but they frequently require any power generators vying to bid for these payments to be able to output power for six or more hours, which is slightly too long for today’s storage technology.
FERC’s Order 841 bars regulators and utilities from imposing such prohibitions. In the D.C. Circuit Court case, National Association of Regulatory Utility Commissioners vs. Federal Energy Regulatory Commission, regulators and utility associations argued that Order 841 unlawfully curbed their legal authority over “distributed” or small-scale energy units under the Federal Power Act. But in a unanimous ruling the court rejected that argument. It said that FERC did not intrude upon state jurisdiction because Order 841 targets solely the manner in which storage technology can participate in markets, and therefore would may curb state authority merely as an indirect consequence.
In the wake of the ruling, those who disliked the outcome were few and far between. Indeed, Order 841 and FERC’s energy storage push, championed as it has been by Donald Trump appointee and coal bailout advocate Neil Chatterjee, enjoys bipartisan support.
That may be because, as technology develops, it was inevitable that batteries would eventually mature into a full-fledged method of power generation. When FERC published Order 841, many probably thought: better sooner than later.