In the second project, Project Number 39917, the Commission opened a rulemaking on energy storage issues in response to issues raised in the October 2011 workshop. In March 2012 the Commission adopted amendments to §25.192 relating to transmission service rates, and §25.501, relating to wholesale market design for the ERCOT region. The Commission determined that energy used to charge a storage facility is a wholesale transaction. Certain ancillary services are for the benefit of retail load and their costs are allocated to entities serving retail load on a load-ratio-share or per megawatt-hour basis.
The ERCOT protocols provide that generators are compensated for energy on a nodal pricing basis while loads pay for energy on a zonal basis. The nodal price, or the price of energy for any specific location, will change based on grid congestion. The zonal price is the average price of the nodes within a particular zone. There are currently eight zones in ERCOT. While energy storage acts as a load when it withdraws energy, the
storage facility does not ultimately consume this energy, and uses it for regeneration at a later time. Therefore, the Commission sought to treat storage load at the nodal price instead of at the zonal price that is applied to end-use consumption. This difference between nodal and zonal pricing could have diminished the economic efficiency with regard to the location and operation of storage technologies. Applying the nodal price to storage load would offer a locational signal for the efficient siting and economical operation of storage facilities.
The Commission recognized that a distinction of wholesale electrical load for storage devices was reasonable where a storage device, regardless of the specific technology, takes power from the grid, converts it to potential energy, and at a more opportune time transforms this potential energy back into electric energy, which is returned to the grid (less conversion losses). Storage devices thus differ fundamentally from other loads because the power taken from the grid is not consumed in the manufacturing of goods or the provision of services. In this respect, there is a clear distinction between storage assets and other types of load when taking energy from the grid. During the rulemaking it became evident that the concept of an ERCOT pilot project should be investigated.
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