OPINION

FERC Pushing for Energy Innovation Over Status Quo

One of the few things people in Washington can agree upon these days is the need for a smarter, more resilient energy grid. Our technology-driven, connected lives make power outages that much more difficult to navigate. Just ask the 44 million people in Argentina what it’s like to work in the dark when their electric grid went out on Sunday.

In the United States, the good news is that the Federal Energy Regulatory Commission, under the leadership of Chairman Neil Chatterjee (R), is taking bold steps to help make sure this never happens at home. If we want a smarter grid, we need energy storage to make the electric system flexible, efficient and resilient.

Last month, FERC finalized the standards in its Order 841 that remove barriers to deploy energy storage technologies. In doing so, this rule opens the door to market competition.

Last week, the Trump administration reiterated its support for energy storage. There is strong interest in Congress, as well, as shown in the recent House Energy subcommittee hearing where storage was a focal point. However, despite this sentiment, some incumbents are still pushing back against FERC’s policy action.

Energy storage provides unique flexibility to the electric grid, which saves consumers money and diversifies the supply of clean generation. Thanks to innovation, consumer demand, state policy and FERC’s guidance, energy storage is being installed in every part of the electric system: paired with solar, wind and natural gas power plants; directly tied to electric grid infrastructure; or sited at homes and businesses. FERC realizes this is what makes storage so beneficial: It provides value anywhere you put it on the grid.

Order 841 demonstrates that policy can catch up to this game-changing technology. The present electric system was designed decades ago, before energy storage became cost-effective and widely available. Not surprisingly, outdated regulatory barriers stand in the way of incorporating more storage into the electric system.

Modernizing policy can be thwarted, though, when beneficiaries of the status quo object to changing the way business is done. As this dispute continues, a number of parties have objected to Order 841 allowing distributed energy storage in businesses and homes to participate in regional markets, arguing that the federal government is reaching into state and local authority — with some implying that the popularity of storage has clouded FERC’s judgment. Contrary to precedents set out in prior FERC rulings backed by the Supreme Court, those parties prefer gatekeepers to the wholesale markets who can determine when distributed energy storage may or may not be allowed to compete.

FERC rightly prioritizes its duty to ensure just and reasonable rates for wholesale electric service. As the American economy has demonstrated time and time again, competing technologies and providers ensure service is affordable. To this end, FERC has twice said that all energy storage resources are fundamental to meet its public duty — even when the outcome is changing the way business is done.

The recent decision to re-affirm Order 841 demonstrates that consistent and independent thought is commendable in public service. It lays out a well-founded legal basis to create a pathway for distributed storage to compete in electricity markets, including reminders of FERC’s respect for the numerous authorities that state and local regulators retain.

This opinion is shared not only by fellow Commissioners Cheryl LaFleur (D) and Richard Glick (D), but also by state regulators. The Arkansas Public Service Commission told FERC that “competitive wholesale markets deliver consumer benefits and drive technological innovation, and [the Arkansas PSC] is eager for [distributed energy resources] to be able to access [wholesale] markets on equal footing with traditional generation and demand-side resources. … The APSC hopes that market access will further competition, enable new business models, and provide consumers with more choices.”

Members of Congress from both parties have shown equal support for energy storage and the benefits it provides. Multiple bipartisan pieces of legislation in the House and Senate are under consideration that would boost support for energy storage further, as the storage market continues to reach new heights.

Chatterjee’s legacy looks to be a robust defense of competition and energy grid modernization. Given careful reasoning and the nonpartisan nature of Order 841, FERC’s decision should stay in place, despite continued challenges from those who prefer the status quo.

 

Kelly Speakes-Backman is CEO of the U.S. Energy Storage Association in Washington, D.C.

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