Federal Energy Regulatory Commission Order No. 755, among its other provisions, requires regional transmission organizations (RTOs) and independent service organizations (ISOs) to fairly compensate frequency regulating entities.  In October 2011, the organized markets released their intended compliance dates, which range from late 2012 (PJM Interconnection and New York ISO) to early 2014 (ISO New England).

The FERC order attempts to increase the prevalence of non-traditional energy sources for frequency regulation services by compensating service providers who ramp quickly and accurately.  Prior to this ruling, RTOs and ISOs could compensate frequency regulation the same way they compensated generation: based on total electricity dispatched to the grid.  This promoted the use of traditional, fossil fuel based generation, which is very inefficient at frequency regulation because of the long ramp-up and ramp-down times.

Consider California ISO’s ACE “Smoothing” program.  This initiative began as a study conducted by CAISO and Beacon Power (which recently emerged from bankruptcy), and CAISO plans on an implemented system between 2013 and 2015.  While the ISO relies on larger energy storage mechanisms, such as pumped hydro and reserved generation at large power plants, for adapting to changes in forecasted load over a period of hours, ACE “Smoothing” employs flywheels to store and transmit hundreds of megawatts per minute.  This allows the ISO to quickly balance generation with load, reduce stress on the grid, and automatically minimize frequency regulation issues.

(Source: CAISO)

Regulation “mileage,” or the entire amount of energy added and subtracted from the grid to ensure proper frequency, is now compensated instead of net dispatch; this is represented by the green area on the ACE “Smoothing” figure above.  Batteries and flywheels are specifically mentioned as potentially ideal candidates for such applications, and manufacturers of such products will surely benefit from this FERC ruling.  Less obvious, though just as important, is the boon to software companies dedicated to developing energy management systems.

For example, San Francisco-based Growing Energy Labs, Inc., or GELI, is developing a web-connected software platform called Energy Operator System, which allows various storage points to interact with one another and the grid.  The hardware-software functions as a computer to manage large-scale, grid-level batteries at the cell level; the batteries are then connected to the grid via an inverter.

While CAISO’s study was developed as an exercise in feasibility, GELI’s system could be implemented to perform the necessary battery control automation.  Grid operators would be able to manipulate these site-specific computers to dictate electricity output or intake.  The software also allows for dynamic pricing models, where applicable.

Such a technological advance would affect energy storage across multiple installation scales.  Utility-scale renewables would obviously benefit, since excess generated electricity could be used to smooth output.  More important, especially considering the intent of FERC 755, would be the development of a larger market for batteries, flywheels, and other short duration technologies.  Several battery manufacturers, such as troubled A123 Systems, are developing new products to tap into the potential for performance-based compensation, and batteries energy storage projects are also sprouting up in South America.  Spider9 and Sendyne are developing similar products to GELI, and are well-positioned to enter this space as grid-connected battery storage becomes more widespread.