According to statistics from the China Energy Storage Alliance’s Global Energy Storage Database, at the end of 2017, the United States possessed a total operational electrochemical energy storage capacity of 810.8MW. Storage added over the past three years represents 2/3 of the current total. Li-ion batteries account for 80% of total battery capacity. Regionally, the combined total capacity of PJM, CAISO, ERCOT, MISO, and ISO-NE made up over 90% of the country’s total storage capacity. The PJM region represented the country’s largest scale of energy storage in terms of power (MW), while the CAISO region represented the largest scale in terms of energy (MWh). Using information from the U.S. Energy Information Administration’s recently released “Battery Storage Market Trends” report, this article examines the characteristics of energy storage used in both the CAISO and PJM power markets.
Energy Storage in the PJM Region
PJM (PJM Interconnection LLC) became an Independent System Operator (ISO) in 1997, following the approval of the Federal Energy Regulatory Commission (FERC). PJM was later designated a Regional Transmission Organization (RTO) in 2001. As an RTO, PJM operates and manages the power system in 13 states and the District of Columbia. The region is currently the largest centralized dispatch in the United States, and the country’s most complicated region for energy control.
The PJM region controls the United States’ largest energy storage power capacity, with current projects totaling nearly 40% of all power and 31% of all energy capacity in the United States. Energy storage projects in the PJM region are geared toward power applications, with an average power of 12MW and an average charge/discharge time of 45 minutes.
In 2011 and 2013, the FERC released orders 755 and 784. Order 755 required that energy storage resources for frequency regulation be compensated according to their effectiveness. Order 784 defined the settlement and reporting policies for energy storage as a third-party resource. With the support of these policies, PJM formulated competitive pricing and payment settlement methods for frequency regulation, creating a fast frequency regulation market. PJM’s battery storage power capacity is largely controlled by Independent Power Producers (IPPs) who provide frequency regulation services.
Nevertheless, the rapid development of the PJM frequency regulation market also brings control system management problems. To combat such issues, PJM revised market regulations in 2017, requiring frequency regulation services to remain neutral between energy and power, and RegD resources to no longer limit frequency regulation to short-term services. Energy storage services were also required to lengthen their charge/discharge periods. These market regulation updates signify that energy storage systems need to deploy at larger capacities and with longer charge/discharge periods, while also slowing the speed in which energy storage systems are installed.
Energy Storage in the California Power Market
CAISO (California Independent System Operator) is the operator of the California power market and the dispatcher for the California power grid. CAISO provides service for 30 million California residents, controls 25,000 miles of transmission and distribution lines, and possesses a power generation capacity of over 500 million kW.
CAISO possesses the largest capacity of energy storage by energy (MWh) in the United States, with current projects covering 44% of the country’s total capacity by energy, and 18% of the total capacity by power. California’s energy storage is largely focused on energy services, with a more varied set of applications compared to PJM. CAISO energy storage projects have an average energy capacity of 5MW and an average charge/discharge duration of four hours.
The Pacific Gas & Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Edison (SCE), and other investor-owned utilities (IOUs) are the principle investors in California’s energy storage. IOUs actively promote the construction of grid-level energy storage stations and industrial-commercial customer-side storage stations while at the same time promoting shared benefit models with customers, integrating customer-side distributed energy storage resources into the power service. SCE and SDG&E procure and use 62% of California’s total energy storage capacity. This capacity has largely been used to counter power losses due to the Aliso Canyon gas leak, as well as to satisfy CPUC power generation demands for backup power supply of at least four hours. California therefore has begun to trend towards development of energy storage with greater energy capacity. In addition, California is still the primary region for the use of small-scale energy storage systems (<1MW). 90% of the United States’ energy storage systems are used in California, with commercial applications largely centered in SCE and SDG&E regions, and industrial applications concentrated mostly in PG&E regions.
In analyzing the trends in power markets such as PJM and CAISO, as well as developments in states such as California, Massachusetts, and New York, we find that revision of wholesale electricity markets and state government energy storage policies have been the two major factors in the promotion of energy storage in the United States. Apart from FERC order 841, the major trends in the wholesale electricity market have been to treat energy storage as an independent power resource, define the model in which energy storage should take part in the power market, decrease the minimum capacity limit for energy storage to participate in the power market, allow energy storage to connect with the grid, and define energy storage duration requirements. Among state governments, principal methods have been to create procurement plans, create economic incentives, and include energy storage as part of integrated resource plans for electric power services.