FERC Order 841 upheld on appeal, keeping energy storage in wholesale electricity market

A Federal Energy Regulatory Commission (FERC) Order that would expand opportunities for energy storage was upheld on appeal last week in the U.S. Court of Appeals for the DC Circuit, requiring wholesale markets to allow energy storage resources.

“Energy storage is a critical part of our clean energy transformation and will be a key part of solar’s goal to provide 20 percent of U.S. electricity generation by 2030,” Katherine Gensler, vice president of regulatory affairs at the Solar Energy Industries Association (SEIA), said of the decision. “Competitive markets drive innovation and lower prices for consumers. As customers demand more clean energy and more storage, we are pleased to see the Court preserve wholesale market opportunities for energy storage resources. Still, we have a long way to go in terms of creating fair and open markets for all generators.”

Order 841 was issued unanimously in 2018. It created a legal framework for storage resources to operate in wholesale electric markets, expanding their possibilities by directing regional grid operators to strip any barriers to their participation. This also meant that storage resources would have to be compensated for all of the services they provided, an effort to bring them more in line with other resources.

Utility groups attempted to fight the order and opt-out of allowing storage resources to participate. Yet the three-judge panel dismissed their concerns, affirming that by allowing all types of energy storage resources regardless of their interconnection points, technological advances could be realized and greater competition provided.

Groups like the SEIA have urged FERC to double down on the efforts begun with Order 841 and publish a final rule on wholesale market participation for distributed energy resources. Others, like the Energy Storage Association (ESA), were also pleased by the decision and the Order in general. However, it had in the past identified concerns among the six regional grid operators.

“This is an enormous step for energy storage, with the affirmation that energy storage connected at the distribution level must have the option to access wholesale markets, allowing homes and businesses to contribute to the resiliency, efficiency, sustainability, and affordability of the grid,” ESA CEO Kelly Speakes-Backman said. “This latest affirmation of Order 841 is especially important as it ensures energy storage can contribute all its values to the grid, regardless of its connection point. 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.”

Opposing the order had been groups like the American Power Association, National Association of Regulatory Utility Commissions, and the Edison Electric Institute.