One of the key economic aspects related to the investment on energy storage solutions is their capability to provide multiple services through the same platform enabling the capture of multiple revenue streams. The Revenue Stacking is pursued as the Holy Grail for energy storage projects as they have the unique characteristic of being able to behave both as load and as generator, with multiple operation modes and response speeds, sometimes simultaneously.
However, the use of energy storage for multiple purposes is still not clear from the regulatory point of view, what is limiting their full potential from being deployed. Fortunately, in the last months there were some good news for energy storage supporters as some Energy Regulators are addressing this regulatory issue by defining a set of rules that allow the revenue stacking for energy storage projects.
The California Regulator (California Energy Commission - CEC) was the first that, in mid-January, provided a new regulatory framework that allows revenues stacking for energy storage projects. Although this framework is more a starting point than a final document, it lights up the path for this claimed need. In the same line, the UK energy regulator (Office of Gas and Electricity Markets - Ofgem) has also updated the regulations and market rules on energy storage in the past mid-February allowing battery storage revenue streams to include a mix of capacity market payments, TRIAD revenue (system's support benefit dedicated to small generators), frequency response and power supply payments.
In the case of the rules set by the California Regulator, they address the following issues:
• Rules 1 through 3 establish that system services provided by energy storage resources can only be provided within the network level in which they are connected or to a higher level. This means that distribution connected storage can provide services at transmission level, but the opposite is not allowed.
• Rules 4 through 8 address the use of energy storage for reliability services. These rules establish the priority of the use of energy storage for reliability services over non-reliability services as result of the importance that some of these services have for the system. Moreover, it allows that a single storage resource may contract for resource adequacy capacity and provide wholesale market reliability services using the same capacity and over the same time period.
• Rules 9 through 11 establish that an energy storage provider should inform about any additional services it's providing when responding to a solicitation as well as comply with availability and performance requirements. It will receive compensations only for incremental/distinct and measurable services.
The challenge now is to build energy storage facilities that can take advantage of multiple revenue streams and can deliver returns against capital expenditure to secure funding.
Bibliography:
Bird&Bird, "UK: Recent regulatory and market updates on energy storage", 12FEB2018:
https://www.twobirds.com/en/news/articles/2018/uk/energy-storage-recent-regulatory-and-market-updates-in-the-uk
UtilityDive, "California regulators first to allow multiple revenue streams for energy storage", 13FEB2018:
https://www.utilitydive.com/news/california-regulators-first-to-allow-multiple-revenue-streams-for-energy-st/516927/