Client Alert
| November 15, 2011
Some Advanced Energy Storage Technologies Likely to Benefit from FERC's New Frequency Regulation Compensation Requirement
On October 20, 2011, the Federal Energy Regulatory Commission (FERC or Commission) issued Order No. 755, a final rule issued under the Federal Power Act that is intended to result in just compensation to energy storage and other resources that provide certain reliability services to the electric grid in FERC-jurisdictional organized wholesale electric markets. The rule is designed to ensure that resources that can respond quickly and accurately to instructions to inject or withdraw electric energy will receive additional performance-based compensation. As a result, Order No. 755 is expected to encourage the use of energy storage resources such as batteries, compressed air storage, pumped storage and flywheels, that can adjust their frequency regulation performance quickly and accurately in response to signals from the grid system operators, because superior performance will be measured and compensated for its "true value." FERC expects that centralized electric markets that compensate resources for their actual performance in providing frequency regulation service will promote and sustain the viability of existing advanced energy storage projects, encourage future investment in storage facilities, and enable the grid and consumers to experience the economic, reliability and environmental benefits that fast-responding resources can bring to the grid.
This memorandum is intended only as a general discussion of these issues. It is not considered to be legal advice. We would be pleased to provide additional details or advice about specific situations. For additional information on this important topic, please feel free to call upon your Dewey & LeBoeuf relationship partner. No part of this publication may be reproduced, in whole or in part, in any form, without our prior written consent.
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