California ISO studying market reforms to ready for incoming commercial-scale storage growth

In preparation for a record surge of commercial-scale storage technology expected over the next few years, the California Independent System Operation (ISO) has launched the Energy Storage Enhancements initiative to investigate market reforms and support the transition to zero-carbon power grids.

By the summer, the ISO projects a four-fold increase in the amount of battery storage in operation. While last year, the operator covered around 250 MW of storage resources on the grid, it has since reached 500 MW and expects to reach 2,000 MW by August. Of even more pressing concern is that it doesn’t expect such growth to slow in years to come.

“California’s drive for decarbonization has placed the ISO on the leading edge of the energy storage revolution,” ISO President and CEO Elliot Mainzer said.“Beginning with 4-hour lithium-ion batteries and ultimately expanding into longer durations and new chemistries, energy storage is going to play a critical role in maintaining reliability and providing essential grid services. We are excited to work with our industry partners to further evolve our market rules and fully unlock the value of energy storage technologies.”

To meet these challenges, the ISO recognizes that changes to its market will be necessary. Price signals and cost recovery mechanisms will be examined to bring everything into better balance with the grid’s reliability and operational needs.

Feedback will be taken from various industry sectors. Findings will be shared through other initiatives.