The energy-storage industry won a significant victory when a U.S. appeals court upheld a 2016 Federal Energy Regulatory Commission order that effectively allows stored power to compete with traditional generation in the wholesale electricity market.
The National Association of Regulatory Utility Commissioners challenged FERC’s February 2018 order that prohibited states from barring electric-storage resources on their distribution and retail systems to participate in federal markets. “We find no foul here, so we deny the petition,” the U.S. Court of Appeals for the District of Columbia said in its July 10 ruling.
The decision sets up energy storage to be an interface for microgrids and newer sources of energy to access competitive power markets, industry observers said.
It allows homes and businesses to contribute “resilience, efficiency, sustainability and affordability” to the grid, Kelly Speakes-Backman, CEO of the Energy Storage Association, said in a statement. “As our electric system becomes more modernized and distributed, we are seeing the regulatory frameworks at both the wholesale and retail levels adjust to that reality.”
Utility commissioners argued that FERC exceeded its authority under the Federal Power Act by limiting states’ ability to regulate storage on distribution systems or in private homes or businesses.
The court said, however, it must “referee the Federal Power Act’s jurisdiction line” between FERC and the states. The FERC order does not “usurp state power,” the court said, adding that the agency is responsible for keeping wholesale power prices “just and reasonable.”
Allowing energy-storage units, regardless of their interconnection points in the electric system, ensures that technological advances are fully realized in the marketplace, leading to greater competition and lower wholesale power rates, the court said.
“If ‘directly affecting’ wholesale rates were a target, this program hits the bullseye,” the ruling said. The court also noted that regional transmission markets create participation models geared toward traditional power generation, which can limit how newly developed resources may participate.
But renewable energy proponents are less enthused about a more recent FERC ruling. Developers say the agency's July 16 decision to revamp the Public Utilities Regulatory Policies Act—a 1978 law meant to encourage clean-energy projects—removed the requirement for utility fixed-price contracts, which does not support the law’s goal.
Commissioner Richard Glick, FERC’s lone dissenter on the rule change, said that small generators relied on the fixed-price mandate to obtain project financing in some areas of the U.S.
“It is hard for me to understand how the commission can, with a straight face, claim to be encouraging [small-resource] development while at the same time eliminating the conditions necessary to develop [them] in the regions where they are being built,” he said.