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FERC allows use of battery storage as demand response [free access]

September 28, 2020

The Federal Energy Regulatory Commission (FERC) recently sided with the North Carolina Eastern Municipal Power Agency (NCEMPA), allowing the joint action agency to use energy storage as a demand response, under a contract between NCEMPA and Duke Energy Progress LLC — a subsidiary of Duke Energy.

 

In December 2019, NCEMPA had filed a petition for a declaratory order with FERC, asking the latter to interpret the Full Requirements Power Purchase Agreement (FRPPA), which the NCEMPA had signed with Duke Energy Progress LLC regarding the use of energy storage as demand-side management (DSM) and demand response tools under the agreement. Duke Energy was in a disagreement with NCEMPA, over whether the FRPPA permitted the use of energy storage for DSM.

 

NCEMPA had anticipated charging batteries during off-peak periods and discharging the stored energy during peak load periods to reduce the coincident peak hour demands of NCEMPA members. The Agency clarified that it, along with its members would use the discharged energy within their distribution system and would not inject it into Duke’s transmission grid.

 

To this, Duke interjected that NCEMPA’s interpretation of the FRPPA is flawed and that the proposed use of battery storage would distort the accurate measurement of NCEMPA’s metered coincident peak billing demand, thus violating the contract.

 

However, FERC rejected Duke’s interpretation, stating it as restrictive, and sided with NCEMPA, concluding that its proposed use of battery storage was consistent with its contractual right to engage in DSM activities. FERC reiterated that battery energy technology is a load-modifying device, to shift the incidence of load and manage customer’s demands, rather than reduce a customer’s overall load.

 

FERC also referred to its Order 841—designed to remove barriers to energy storage participation in the wholesale electricity markets—stating that the Order does not preclude electric storage resources from continuing to participate in demand response programmes.