How Advanced Energy Companies Can Navigate RTOs/ISOs to Business Success
- Nov 19, 2020 10:35 pm GMT
One of the simplest concepts governing the electric power system for more than half the country – competitive wholesale markets deliver reliable power at the best price for customers – is also among the most complex in practice. Our nation’s system of Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) proves that. Navigating the world of RTOs and ISOs can be challenging, but participating in the markets they manage is critical to the success of advanced energy companies. AEE’s recent webinar, “Everything You Wanted to Know about RTOs But Never Could – Until Now,” moderated by AEE General Counsel and Managing Director Jeff Dennis, dug into how RTOs and ISOs operate and how to utilize AEE’s PowerSuite platform to track, navigate, and participate in RTO/ISO processes.
RTOs and ISOs are independent entities that are charged with providing non-discriminatory access to electricity transmission across broad geographic regions with the purpose of delivering the lowest-cost energy to consumers, regardless of the source. Dennis noted these seven wholesale markets serve two-thirds of U.S. consumers. And more could be coming.
“Looking at areas not served by an RTO today — in the Southeast and in the West — it’s notable that we are seeing a lot of interest in expanding toward RTO/ISO-like markets in those regions as well,” said Dennis.
Most RTOs/ISOs date back to the 1990s, but the rules governing the markets they operate are ever-changing. These changes come about through a stakeholder process with sector-weighted committees and subcommittees that develop and modify market rules and tariffs. For RTOs/ISOs other than ERCOT – the power grid self-contained within the state of Texas – the market rules and tariffs they develop must be approved by the Federal Energy Regulatory Commission (FERC).
These rules can either enable or hinder advanced energy technologies, voluntary corporate buyers, and states implementing particular energy policies. For instance, Dennis observed, there are markets that reward the ability of fast-response energy storage to meet system reliability needs more quickly and efficiently than aging traditional technologies. No-fuel options like renewable energy have competitive advantages too, if only market rules value them and allow them to compete on a level playing field with fossil-fuel resources.
Influencing RTO/ISO market rules is crucial for advanced energy development. But that’s not easy, given the complicated and time-consuming process for developing them. In ERCOT, for instance, a stakeholder who wants to change a market rule must navigate myriad committees, subcommittees, and working groups. For example, explained Suzanne Bertin, managing director of Texas Advanced Energy Business Alliance, a single ERCOT subcommittee, the Wholesale Market Subcommittee, has eight working groups alone.
If ERCOT itself identifies a pressing issue, it creates a special task force to address it, like the Battery Energy Storage Task Force (BESTF) that TAEBA is actively engaged in now. Once ERCOT’s Technical Advisory Committee approves Key Topics and Concepts (KTCs) essentially documenting an issue under review, staff develops Nodal Protocols Revision Requests (NPRRs), or proposed rules, that go through the stakeholder process. Currently, dozens of battery storage KTCs are being distilled into NPRRs for consideration in ERCOT’s standard protocols revision process. That’s a lot for any advanced energy company to navigate.
But success is possible. Betty Watson, senior director of policy and market design at Modern Energy, a company involved in a range of technologies from renewables to efficiency and energy storage, gave one example. Modern Energy felt that PJM Interconnection’s requirement for 10-hour minimum energy storage duration as a condition of participation was unreasonable, so the company organized a coalition to protest these rules with FERC. FERC ultimately ordered PJM to change these regulations. The process then went back to PJM, which had to develop an alternative that was satisfactory to the majority of PJM stakeholders and in compliance with the FERC order. It was an intense, five-month process that required Modern Energy to be engaged in coalition-building, coordination with committees, and negotiations right up to the day of the vote. But it was worth it.
“As a policy person, I rarely get to put a dollar figure on this kind of work,” said Watson. “But in this specific case the impact was worth $27,000 per MW-year or more” to the company.
For most companies, it’s hard enough even to keep track of what’s happening at these regional grid operators. The seven RTOs/ISOs have more than 330 committees or task forces, each managing a number of complex issues. As of September 29, these committees had produced more than 16,000 documents this year alone – that’s 55 new documents each day, said Eric Fitz, general manager of PowerSuite, AEE’s online platform for identifying, tracking, and managing energy legislation and regulation across the country.
For that reason, PowerSuite launched a new RTO/ISO feature – included in PowerSuite Essential Plus and PowerSuite Pro plans – that allows users to track committee activity in all seven wholesale markets. It also provides automated notifications of committee developments on things that matter to advanced energy companies.
Between AEE’s engagement at the RTOs/ISOs as well as FERC, and PowerSuite’s new RTO/ISO feature, advanced energy companies stand a fighting chance of getting the market rules they need to let them compete – and win!
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