Comment to MISO MSC on Pricing for Voltage and Local Reliabillity

Posted: April 14, 2016 - 16:02 / VLR / ESA Filings

ESA supports MISO’s initiative on Pricing for Voltage and Local Reliability (VLR) Commitments (Market Roadmap ID: 28 Issue ID: MR028). Pricing VLR will lead to transparent market prices reflective of marginal system cost, as well as cost allocation reflective of cost-causation and service beneficiaries.  As the IMM noted, pricing VLR will provide market signals to build fast-starting units that can satisfy the VLR needs at a much lower cost than conventional units.

Energy storage technology can provide VLR service to the grid effectively based on the instructions from the system operators. Transparent pricing in MISO will send a signal to storage developers to participate in MISO markets to cost-effectively provide VLR service to the grid. This would not be the first instance of energy storage providing VLR service. As a reference, in 2014, the Independent Electricity System Operator (IESO) of Ontario entered into a contract to procure 20 MW Reactive Support and Voltage Service (RSVC) service from three different energy storage projects for a three year period. These projects will start coming online in Q3/Q4 2016 and early 2017. While IESO’s contracts send a price signal via competitive bid, MISO can send a price signal as it does for many existing services, based on zonal or market-wide supply and demand.

We would therefore request MISO that when evaluating pricing mechanism for VLR commitments to ensure that the opportunities that get created are open for energy storage technologies and any other non-generator resources. I welcome your questions and hope to work with you in MISO to build an efficient market that delivers better reliability at lowest cost.