MSC: Storage as Transmission Asset to Provide Market Services (IR088) (MSC2021-7(20210610)

Savion, LLC (“Savion”) would like to thank MISO for bringing this item to stakeholders for discussion.  During the June 10, 2021 Market Subcommittee (MSC) meeting, MISO discussed Storage as Transmission and Market Assets potential issues.  MISO requested feedback on any elements required to address to allow a storage resource to provide market and transmission services.

Savion holds that a storage asset can be determined to be either a transmission asset or a generation asset.  This choice clarifies the issues MISO’s presentation seems to confuse.  For example, if an asset is transmission, we know that it must be owned by a TO, fully compensated from the tariff, and approved for interconnection through the transmission planning process.

The current process is just and reasonable.  But allowing TOs to bypass the GI process and earn market revenue gives them an unfair advantage in the energy markets.

Using the list of items on Slide 9 of MISO’s presentation, assuming that an asset is either an 841 Market Participant or a SATOA provides guidance for each point.

1)      Address Generator Interconnection issues

1. 841 uses GIP, SATOA uses transmission planning

2)      Address operating practices: how the resource can address the transmission need and also participate in markets

1. 841 participates in markets, SATOA is compensated via the tariff.

3)      Address which MISO markets the resource is allowed to participate

1. 841 participates in all markets, SATOA is compensated via the tariff.

4)      Minimize adverse market impacts

1. No adverse impacts if kept separate

5)      Address commercial and network model requirements

1. No changes to models required

6)      Address joint market compensation and transmission revenue requirements. Avoidance of double compensation

1. No double compensation possible, 841 participates in all markets, SATOA is compensated via the tariff.

7)      Address cost allocation for the resource use

1. 841 participates in all markets, SATOA is compensated via the tariff.

8)      Address emergency procedures: market obligations versus transmission obligations, which is dominant? Maintain RTO independence

1. 841 is responsive to market obligations, SATOA to transmission obligations

• Allowing TOs access to the market in an advantaged position causes all the problems detailed in Slide 9.  These are problems that do not exist currently.

Thank you for the opportunity to provide feedback on the elements that must be addressed to allow a storage resource to provide market and transmission services. As a threshold matter, DTE is concerned that the scope of policy development has shifted away from figuring out how to allow any electric storage assets (regardless of ownership) to participate in the MISO markets while resolving transmission needs when it meets appropriate criteria, to instead determining how to allow SATOA to also participate in the MISO markets. As DTE has said throughout this process, the manner in which the SATOA concept has been levered into the existing Attachment FF process provides undue advantage to incumbent transmission owners (“TOs”) in qualifying their storage assets as SATOA. FERC recognized that SATOA would “most likely” be the kind of transmission asset for which incumbent TOs have a right of first refusal. Midcontinent Independent System Operator, Inc., 172 FERC ¶ 61,132, at P 63 (2020). While the issue of whether the SATOA structure itself is just and reasonable continues to be litigated elsewhere and is not the subject of this feedback, DTE is concerned that limiting this next phase of policy development to SATOA participating in MISO markets raises significant concerns of undue discrimination because it carves out and extends a transmission owner preference in violation of FERC’s basic open access and comparability policies. It also unnecessarily limits the effectiveness of any proposal that may come out of these stakeholder discussions.

Instead, MISO and this stakeholder committee should include in phase II policy development a mechanism by which storage assets that are non-transmission assets (NTAs) can resolve near-term transmission needs while also participating in the MISO markets.[1] In February 2019, DTE introduced a Storage as a Non-market /Non-Transmission Asset (SANTA) proposal that would provide a level playing field for all potential storage owners interested in providing reliability services.[2] On April 17, 2019, prior to MISO filing its SATOA Proposal with FERC, DTE submitted a motion to the PAC for MISO to include provisions in the SATOA Proposal to allow non-transmission alternative storage projects to be exempted from the Generator Interconnection Procedures (GIP) and connect to the transmission system via Storage Interconnection Agreements (SIAs).[3] The motion garnered significant support,[4] and MISO stated that “[w]e will continue to address the NTA proposal - along with level setting on current NTA provisions. We also believe that enabling SATOA does not preclude SANTA from future development when better understood.”[5] MISO should develop a mechanism by which storage NTAs can resolve transmission needs and participate in the MISO markets in parallel with any mechanism to allow SATOA to participate in the MISO markets.

In addition, DTE offers the following issues that must be addressed in considering any proposal that allows SATOA to also provide market services.

Any proposal must ensure incumbent transmission owners cannot unduly discriminate in favor of their own resources.

A SATOA owned by a transmission owner has an unjust competitive advantage over new storage because it has already been permitted, sited, and installed, and infrastructure and installation costs have already been paid for by ratepayers.  This is the exact situation FERC sought to remedy when it issued Orders 888 and 890: preventing transmission providers from exerting undue discrimination in the use of transmission to prefer their own generation resources. 

Market participation by SATOAs raises significant concerns around violations of FERC’s Standards of Conduct that need to be addressed.

Allowing a SATOA, which by definition would be owned by a transmission owner, to engage in merchant functions on its face would appear to raise significant Standards of Conduct concerns. 

Under the current SATOA construct, Transmission Owners are tasked with maintaining storage state of charge such that the SATOA is available to provide the reliability function for which it was approved in MTEP.  In approving this construct, FERC noted that a SATOA market participant does not actually participate in the market since it merely exists to process settlements associated with the SATOA’s transmission function.  Thus, FERC found that the current construct prevents any violations of the Standards of Conduct. 

However, full participation in MISO’s markets will necessarily require an extensive level of coordination between the transmission function tasked with fulfilling the reliability need and the merchant function engaging in the market activities.  This level of coordination would likely result in the conveyance of non-public transmission information from the transmission function to the merchant function. 

For example, MISO will communicate to the MISO transmission owner the need to have the SATOA ready for use four hours from now or during part of the next day, which MISO transmission owner is then going to communicate with the market participant to make plans to charge the SATOA. If the market participant is the merchant function of the MISO transmission owner or an affiliate, that market participant is going to be provided with advanced knowledge of upcoming MISO transmission grid conditions that are not public. This is a strict violation of the FERC Standards of Conduct that would provide the MISO transmission owner’s merchant function or affiliate with an opportunity to benefit from this knowledge whereas all other market participants would not because they are not privy. This same violation would occur even if a MISO transmission owner were to contract with an unaffiliated market participant to undertake the supply of the charge. That market participant will have advanced information about conditions on the MISO grid.

FERC’s Standards of Conduct require merchant functions and transmission functions to operate independently and prohibit a transmission provider from disclosing non-public transmission function information to marketing function employees.  Given the level of coordination inherent in operating a shared asset with shared capabilities and a shared state of charge, it is imperative that this issue be thoroughly addressed before allowing a SATOA to participate in MISO’s markets. 

All storage assets, including SATOAs, will need to proceed through the Generator Interconnection Process in order to participate in the MISO markets

SATOAs that seek to participate in MISO’s markets should be treated comparably to other resources seeking to participate in MISO’s markets.  Today, any generation resource seeking to participate in MISO’s markets needs to obtain a Generator Interconnection Agreement.  Should a SATOA seek to participate in MISO’s markets, it too will need to proceed through the MISO GI queue, where its injection, deliverability, and impact on affected systems will be studied.  Similar to other generators, market-participating SATOAs would be responsible for any network upgrades triggered in this study. 

All SATOAs that provide market services will need to balance market participation with obligations to transmission customers

Additional revenues associated with full market participation have the potential to offset costs to transmission customers, and any revenues derived from market participation should be credited back to transmission customers.  However, the benefits of market participation must be balanced against the reliability service that SATOAs are designated to provide.  MISO’s SATOA construct implies that storage that qualifies as SATOA is first and foremost a transmission asset.  As such, a SATOA which would seek to participate in MISO’s markets must demonstrate that this participation will not harm or degrade the SATOA’s ability to provide the reliability service it was approved for and that transmission customers are paying for. 

Taking battery storage as an example, an excessive level of market participation could easily accelerate the depletion of the resource’s capacity.  This would result in the need for cell augmentation at additional cost and/or a diminished ability for the battery to provide the service it was originally approved for, compromising reliability.  Transmission customers should not be paying for the charging and discharging of a battery that ultimately results in fewer benefits than it was originally approved to provide. 

Balancing reliability and cost to the customer in this context will require careful consideration and study before a SATOA can be allowed to fully participate in MISO’s markets.  In addition to proceeding through the interconnection queue, a SATOA seeking to participate in MISO’s markets should be required to develop a comprehensive business case that demonstrates how SATOA market participation will balance both economics and reliability.  Some of the things that a SATOA owner may need to demonstrate include the following:

• Market revenues need to exceed the cost of the battery degradation (in other words, revenues from market participation should be sufficient to cover any all cell augmentation costs or other costs arising from market participation)
• Storage cycling will not interfere with the reliability function for which a SATOA has already been approved, including a commitment to periodic demonstration that resource capability and cycle life continue to be adequate for the reliability function

If a robust business case to demonstrate these items cannot be produced and validated, then a SATOA should not be allowed to participate in the market.

Consumers Energy agrees with and supports the feedback provided by DTE Energy.

At this early stage, WPPI offers the following initial feedback on storage as transmission asset also participating in MISO markets:

(1.)  Generator interconnection: In order to participate in MISO markets, Storage as transmission asset should be subject to the same generator interconnection process and studies as storage as market asset.

(2.)  Operating practices: Storage as transmission asset should only be able to participate in markets when it is not expected to be needed for its primary function (baseline reliability, economic, generator or transmission service related) as determined by the MTEP planning process.

(3.)  Which MISO markets: Storage as transmission asset should be eligible to participate in any market for which it qualifies that does not interfere with its primary function as a transmission asset. Further discussion is needed re the participation of storage as transmission asset in markets to ensure it does not have an unfair advantage over other resources.

(4.)  Compensation: Any market revenue/charge storage as transmission asset receives/incurs from its market participation should be applied to its transmission revenue requirement.

(5.)  Cost allocation: Cost allocation applicable to storage as transmission asset should be determined by its primary function as a transmission asset and unaffected by its participation in markets.

(6.)  Emergency procedures, market vs. transmission obligations, which is dominant: A storage as transmission asset’s transmission obligations should always take precedence over its market participation. However, if its transmission obligations are relevant only if a given market issue is resolved, then it may be used to resolve the market issue if is the only option.

Transmission Owner Feedback on Storage as Transmission to Provide Market Services

The Transmission Owners[1] appreciate the continued discussions at MISO regarding the use of storage as transmission assets and allowing them, per FERC policy, to also provide market service(s). Such an approach will provide Transmission Owners more options for using these assets to the benefit of customers.

In response to MISO’s feedback request at the June 10, 2021 meeting of the Market Subcommittee (MSC) concerning the general topics included in MISO’s presentation, we agree that all of the general topics on slide nine of the presentation need to be addressed, as these have been identified thus far in the stakeholder process about storage as transmission, FERC proceedings related to the storage as Transmission Only Asset (SATOA) tariff language, FERC’s 2017 policy statement for using storage that receives cost-based rate recovery for multiple purposes (PL17-2) and Western Grid docket (EL10-19). However, we request that the following specific topics also be addressed in developing rules allowing storage as transmission assets to also provide market services, and note that some of these, along with those identified by MISO, may also need to be addressed at MISO’s Planning Subcommittee or in the Interconnection Process Working Group: 

• The process for coordinating with the TOP, Market Participant, the MISO Reliability Coordinator, and MISO market administration for when a storage as transmission asset is available to provide market service and the process for calling it back from the market when needed (immediately and further out in time);
• The market, settlement and other financial implications associated with providing both market and reliability services;
• Availability of operational information about a storage as transmission asset that is also used to provide market service and what information should be required (e.g., MW injection/withdrawal, state of charge, whether it is currently providing a market service);
• The degree to which intended market use of a proposed storage as transmission asset should be considered in the evaluation of the device in the MTEP planning process, and if so, the degree to which costs of and revenues from using the device in the market should be taken into consideration;
• How to ensure the benefits (i.e., revenues) and operating costs of using a storage as transmission asset to provide market services are being assigned/allocated to the appropriate set of customers depending on the transmission project type (and corresponding cost allocation methodology);
• How to ensure that providing transmission service and addressing the transmission needs identified in the planning process that a storage as transmission asset addresses remains the priority use of the device and that the device to the full capability as studied is available for resolving the issues for which it was chosen to resolve;
• Revisions to the Generator Interconnection Process and Interconnection Agreement that may be needed for storage as transmission assets to be used to provide market services to reflect the distinction between those assets, generation, and other resources.
• How the costs for the inverters and other traditional transmission facility infrastructure necessary to connect a SATOA that is used to provide market services will be recovered.  

The undersigned TOs appreciate MISO’s continued focus on the issue of storage as transmission and collaborating with stakeholders to develop rules that provide options for using these assets to the benefit of customers. Please let us know if there are any questions on our feedback. 

Alliant Energy supports the comments submitted by DTE.

Clean Grid Alliance Comments to the MSC on Participation of SATOAs in the MISO Market
June 30, 2021

Clean Grid Alliance appreciates the opportunity to submit comments to MISO on the market participation of SATOAs. We strongly oppose MISO putting any resources whatsoever into this topic given the urgent need for resources to implement Order 841 and the 7500MW of projects in the MISO queue, which entered the queue on MISO’s commitment to implement Order 841 at the date it said it could implement, June 2022. It is a costly endeavor to enter the MISO queue and at the end of the day, equates to a very minimum of $7.5B in investment that can provide reliability to the MISO system. These projects have proceeded past the point where they can withdraw “penalty free” and will receive significant financial penalties if they do not complete the MISO interconnection process. Because of this there is urgency in meeting the June 2022 timeframe, while there is absolutely zero urgency in allowing transmission assets to participate in the market, especially since it is such a complex and controversial topic with many issues to resolve, as noted in DTE’s comments to the MSC on this topic, which CGA also agrees with.

To conclude, we oppose MISO dedicating any staff resources toward this topic until Order 841 has been fully implemented. With 2 delays to Order 841 already approved and a third very recent request for an additional delay premised on the of a lack of resources, combined with the urgency of over 7500MW having entered the MISO queue due to the June 2022 Order 841 implementation date, and many issues to address as (detailed in DTE’s comments) regarding the concept of transmission owner participation in the MISO market via transmission assets, it seems prudent that MISO prioritize Order 841 implementation and table this topic until that is complete. 

Sincerely,

Rhonda R. Peters, Ph.D.
Technical Consultant for Clean Grid Alliance