New York Utility Seeks Approval To Dispatch Utility-Owned Storage Output Into NYISO Wholesale Market

January 13, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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Niagara Mohawk Power Corporation d/b/a National Grid ('National Grid' or the 'Company') petitioned the New York Public Service Commission ('Commission') for approval to dispatch and wholesale market the output from a Company-owned energy storage system ('ESS') project located at National Grid’s East Pulaksi Substation (the 'Project') to the New York Independent System Operator ('NYISO'), "in order to aid the Company’s understanding of such transactions in advance of the deployment of two larger-scale, bulk ESS projects in National Grid’s service territory with requested year-end 2022 in-service dates."

"National Grid is seeking Commission approval to bid energy, capacity, and/or ancillary services available from the Project into the NYISO markets15 which will provide a valuable learning opportunity for Company personnel in advance of the requested year-end 2022 in-service dates of the bulk ESS projects to which the Company will have dispatch rights. National Grid plans to use the bulk ESS projects in response to the Energy Storage Order directive to both support local grid reliability and participate in the NYISO wholesale markets. However, complying with the recent NYISO dual participation market rules16 is a complex process that requires careful navigation. Therefore, National Grid seeks to gain critical experience, knowledge, and customer value by bidding the Project, which is smaller and simpler but nonetheless similar to the bulk ESS projects, into the NYISO wholesale market. The lessons from this experience will inform the process ahead of registering and bidding the larger and more complex bulk ESS projects into the NYISO wholesale market," NiMo said

The Pulaksi storage project consists of a single 2 MW/3 MWh ESS unit within the existing footprint of the Company’s East Pulaski Substation to provide peak load reduction to mitigate thermal overload of the substation’s 115-13.2 kV transformer during normal peak system conditions

"[T]he Company sees significant ancillary benefits to having the Project participate in the NYISO wholesale markets. National Grid plans to hire the same power marketer company it selected for the two bulk ESS projects18 to provide technical advisory services to the Company in regard to participating in the wholesale market with the Project. This early engagement with the power marketer will also faciliate [sic] the development of key working relationships ahead of the power marketer’s responsibilities to bid the two larger bulk ESS projects into the wholesale market on behalf of National Grid," NiMo said

National Grid is currently finalizing the contract with the power marketer company and did not identify the power marketer by name

"National Grid’s initial plan focuses on Project participation in the energy and ancillary services markets and does not include participation in the ICAP market. Bidding into the ICAP market will introduce additional complexity including: active management of the Project as well as additional obligations when participating in the DA and RT energy markets; semi-annual capability testing and reporting; compliance with North American Electric Reliability Corporation ('NERC')-GADS reporting requirements; and daily de-rating reporting that matches the submitted DA schedule. To the extent that National Grid determines that pros outweigh the cons of future participation in the ICAP market, the Company may additonally [sic] pursue participation in that market," NiMo said

"The [Pulaksi] Project was installed to meet peak load reduction needs during the summer months to mitigate at-risk load and, consequently, during most of the year the Project is idle. The financial gains from any such market transactions would accrue to the benefit of National Grid’s customers and allow the Company to more effectively utilize the capabilities of the Project during those times of the year when the Project is not needed for local reliability. National Grid respectfully urges the Commission to grant this request for the reasons articulated in this petition," NiMo said

Specifically, National Grid proposes to allocate revenues and costs associated with the dispatch and wholesale marketing of the Project to the NYISO through the Company’s Legacy Transition Charge ('LTC') mechanism in the P.S.C. No. 220 Electricity Niagara Mohawk Power Corporation d/b/a National Grid Schedule for Electric Service ('Electricity Tariff'), which is applied to all delivery customers.

Unlike the Commission’s authorization in the Energy Storage Order where the wholesale revenues of the bulk storage assets, when revenues exceed contract costs on an annual basis, are to be shared by allocating 30 percent of the net revenues to utility shareholders and 70 percent to utility customers, National Grid’s instant proposal will allocate 100 percent of the net revenues from the dispatch and wholesale marketing of the Project to the Company’s customers through the LTC mechanism.

Case 18-E-0130 et al.

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