FERC is in the process of gathering information and building a public record on technical and market issues that are prompted by the growing interest in “hybrid resources.” FERC held a technical conference in the summer of 2020 (Docket No. AD20-9), followed by written comments from conference participants. In mid-January 2021, FERC directed RTOs and ISOs to submit reports on specific information requests. Those reports are due in July 2021 and will likely provide valuable RTO and ISO specific facts and information for developers seeking to build, own, and operate hybrid resources in FERC-regulated RTOs and ISOs.
This technical conference proceeding could imply that FERC sees a basis or need to revise regulations or tariffs to address issues limiting hybrid resource development. While FERC is not mandating any new requirement at this time, it could foreshadow a rule making proceeding for new regulations that facilitate and perhaps incentivize hybrid resources.
Generally, “hybrid resources” are projects that are comprised of more than one resource type at the same plant location. For purposes of the Technical Conference, FERC focused on hybrid resources that consist of “a generation resource and an electric storage resource paired together.” In industry vernacular, “hybrid resources” are also referred to as “Co-Located Resources,” “Combination Resources,” or co-controlled resources that share a single point of interconnection (“POI”).
Takeaways from the Technical Conference & Comments
FERC emphasized that hybrid resources warrant continued attention, specifically regarding four issues of (1) terminology; (2) interconnection; (3) market participation; and (4) capacity valuation. The following provides general takeaways from the technical conference and subsequent written comments:
- There is no industry-wide consensus on what constitutes a hybrid resource.
- A broad definition may be preferable so it can accommodate future combinations of resource types.
- Current interconnection modeling may not account for a hybrid resource’s full capability due to their complex and varied operating modes.
- The path for proceeding through the interconnection queue as a hybrid resource can be unclear. Adding storage once a resource is already in the queue could be considered a “material modification,” a finding of which requires the developer to abandon the storage addition or lose its existing queue position.
- RTOs and ISOs offer some form of market participation for hybrid resources, but there are many barriers, including software used to run and manage markets and limitations and difficulty with scheduling charging hours as it relates to dispatch obligation.
- RTOs and ISOs generally use existing methods for determining resource capacity values. Some commenters stated that new valuation methods are not necessary, while others emphasized that valuation calculations need to be adjusted.
The RTO & ISO Reports will address the four issues identified above, focusing on: (1) a description of its current practices related to the four issues; (2) an update on the status of any ongoing efforts to develop reforms; and (3) responses to specific requests for information.
The specific requests for information include:
- Explain how hybrid resources are currently participating in markets;
- Detail the interconnection process for new hybrid resources, and resources seeking to add storage once they are already in the queue;
- Describe how hybrid resources currently participate in wholesale energy, ancillary services, and capacity markets, including a description of the unique modeling and bidding provisions with respect to market participation; and
- Describe the method for calculating capacity values and methods that are being discussed in the RTO and ISO stakeholder processes.
While rules and tariff revisions are not being imposed at this time, the technical conference indicates that change could be on the horizon. The forthcoming RTO & ISO Reports will be very informative for developers and industry participants. Specifically, the information will be coming straight from the RTO or ISO so it will be reliable and could even be a type of road map for hybrid project developers.
For more information on the technical conference proceeding or “hybrid resources” contact Sylvia Bartell (email@example.com) or any member of Husch Blackwell’s FERC practice group.