December 15, 2020

Storage As a Transmission Asset is Gaining Traction in Many RTOs/ISOs

By: Sharon Thomas


Energy storage is a versatile resource that can help solve problems in all parts of the electric system. Energy storage today is regularly used as a source of energy supply, such as back-up power, a tool for improving renewable energy production, and a less expensive and lower emission alternative to fuel-based power plants. In the past few years, however, utilities and regulators have begun new discussions on using storage as a part of energy delivery—that is, as part of the electric transmission or distribution infrastructure. Of particular note, regional transmission organizations (“RTO”) and independent system operators (“ISO”) have begun discussing for the first time how to incorporate storage into transmission system planning and operation.

What is Storage-as-Transmission?

Storage-as-transmission (“SAT”) refers to use of an energy storage system for reliability service on the transmission system. By integrating a storage resource into transmission equipment, SAT can inject or absorb electricity to facilitate power flows on transmission lines over a certain period of time, like adding a lane to a highway just for rush hour traffic. Used in this way, storage can enhance existing transmission lines or even serve as an alternative to building new transmission projects.

The purpose of using storage on the transmission system is to provide reliability services and system efficiencies just as conventional wires resources do. However, there are still many RTOs and ISOs with planning and regulatory frameworks that either prevent or inhibit storage from being proposed and/or selected as a transmission solution that is eligible for the same treatment as other transmission assets. As a result, RTOs and ISOs may not choose SAT even when it is cost-effective, resulting in otherwise avoidable costs for electric customers. Moreover, storage providing transmission services is also capable of providing generator services, and such dual-use SAT can offer more cost-effective and much higher utilization.

To help address barriers such as these, ESA developed its official principles and policy positions on storage-as-transmission-only in 2019, which focuses on regional transmission planning. Some of the key elements of these principles are that energy storage should be considered as a transmission solution in the normal course of transmission planning processes; storage assets for transmission should not be penalized for its unique attributes or differences compared to conventional transmission solutions; opportunities to propose, develop, own, operate, and receive cost recovery for any SAT solution should be open to all qualified industry participants; and cost-recovery through transmission rates should be available to all providers of SAT.

Another way that energy storage can be used in the bulk power system is as a “dual-use” storage asset. Dual-use storage refers to a single energy storage resource’s ability to offer both energy market (i.e. generation) and transmission services and to receive compensation for the provision of those services. The ability of energy storage to provide both market and transmission service is increasingly recognized by power sector stakeholders and presents a large new potential market for energy storage technologies, while also potentially delivering new capabilities and savings in the transmission system compared to conventional wires solutions. ESA recently released its official principles and policy positions on dual-use energy storage resources that serve both transmission (“storage-as-transmission”) and energy market services functions (“dual-use storage”). The policy positions cover several important aspects of dual-use energy storage assets, including at the most fundamental level, the need for ISO/RTO rules to allow these assets to offer both transmission and generation services and receive compensation for the provision of such services. Additional topics addressed in ESA’s dual-use policy positions concern asset control, market mitigation, cost-recovery, and generator interconnection study requirements.

Taken together, these policy positions enable ESA to more effectively advocate for updating rules to better enable storage to serve as either SAT-only or as a dual-use asset.

Storage as Transmission Benefits*

SAT offers a wide range of benefits to asset owners and operators, end users, and the grid. The primary purpose for using storage in this way is for the asset’s reliability services through injecting or absorbing real and reactive power to avoid operational conditions that can disrupt or stop power flow across the transmission system. For example, if a transmission circuit or transformer experiences a fault that would ultimately lead to an outage, a battery could be used in this scenario to absorb or inject electricity rapidly to stabilize power flows. A second benefit of storage as transmission is congestion relief. Transmission line congestion occurs when there is insufficient transmission line capacity to deliver electricity. The traditional way to relieve congestion is to build new poles and wires to increase the transmission system’s capacity to support additional power flows to areas where it is needed. However, deploying traditional solutions such as this can be a lengthy and onerous process. Storage offers an alternative transmission solution for relieving congestion by replicating power line flows along a congested corridor.

Several characteristics of SAT make it an attractive complement to traditional transmission infrastructure. SAT can be deployed quickly, as project assessment, procurement, build time, and regulatory approvals such as easement, permitting, siting, and rights of way for SAT can occur on a much faster timeline than traditional transmission solutions. With a significantly smaller physical footprint compared to traditional transmission solutions (as storage units are housed in shipping containers or similarly sized enclosures), they also have smaller environmental impacts and are more welcomed in communities that have concerns about altering the aesthetics of their surrounding areas with large infrastructure projects. Rapid declines in the cost of battery storage technologies over the past decade are also contributing to the cost-competitiveness of this technology for transmission. An additional feature of SAT that makes it a very versatile transmission solution is its scalability. SAT is an asset that can be augmented over time as well as repurposed and/or relocated if grid needs in a particular area change. This lowers project risk by reducing the likelihood of assets becoming stranded or underutilized further down the road if grid conditions change (e.g. congestion is alleviated) and the storage asset is found to no longer be needed in its original location.

*Benefits of SAT are drawn from Fluence’s Energy Storage as Virtual Transmission white paper.

US Examples of Storage as Transmission

A variety of real-world examples of how SAT is used to solve reliability problems in the U.S. are provided below.

  • ERCOT Presidio project: In 2010, American Electric Power (AEP) installed the first battery system to improve transmission reliability in Presidio, Texas by improving power quality and reducing momentary outages due to voltage fluctuations. 
  • APS Punkin Center: In 2017, Arizona Public Service (APS) contracted Fluence to deploy a 2 MW, 4-hour duration system for a lower cost than upgrading 20 miles of transmission and distribution lines to serve the town of Punkin Center, Arizona, to address local needs in areas experiencing population and load growth. The Punkin Center battery additionally provides benefits like local voltage regulation, system-level ramping management, and flexibility for incremental storage additions over time. 
  • National Grid Nantucket project: The island of Nantucket in Massachusetts traditionally receives its electricity from undersea supply cables from the mainland, but because of rapid growth on the island, summer energy demand has grown dramatically in recent years.  To ensure electric reliability for customers during peak summer months and defer the need for an additional expensive underwater supply cable to the island, National Grid installed a 6 MW/ 48 MWh Tesla battery–presently the largest battery storage system in New England.
  • OCEI Projects: In April of this year, PG&E entered into two agreements for third-party owned energy storage projects (totaling 43.25 MW and 173 MWh) as a part of the collaborative Oakland Clean Energy Initiative (OCEI). These OCEI projects offer an innovative solution for grid reliability, compared to traditional transmission wires solutions, and will replace fossil generation with clean energy in an area identified by the California Environmental Protection Agency as having one of the worst pollution problems in the Bay area.

International Examples of Storage as Transmission

There are also a number of noteworthy international examples of using SAT alternative to traditional wires solutions.

  • GridBooster Portfolio in Germany: In 2019, the German grid operator proposed a 1,300 MW portfolio of energy storage to maintain grid stability, lower network costs, and enable more efficient operation of existing key transmission lines that deliver power through central Germany. The storage portfolio is referred to as “GridBooster,” and it will provide backup transmission capacity as opposed to the grid operators maintaining an entire additional transmission line on standby.
  • Energy Storage Project in France: French utility RTE is planning its first 40 MW virtual transmission project called RINGO, with the goal of increasing grid integration of renewable energy and optimizing power flows on its network. RTE is proposing deploying two energy storage systems that will operate in tandem at each end of a line.
  • Energy Storage Project in Chile: In Chile, independent power producer AES Gener submitted a proposal for two 200 MW energy storage projects to the Chilean regulator, Comisión Nacional de Energía (CNE), for inclusion in Chile’s National Expansion Transmission Plan. If approved, the two virtual transmission projects will provide capacity to relieve congestion on the system, particularly at one location where 700 MW of renewable generation is set to come online on the constrained side of the transmission corridor.

Dual-use Energy Storage Benefits

Dual-use energy storage offers an array of benefits to project owners, the electric system, ratepayers, and the communities where these projects are sited. Dual-use storage can offer higher asset utilization when used for both market and reliability services as compared to an asset that only provides one of these services and is otherwise idle. This in turn can increase the cost-effectiveness of SAT and thereby reduce both transmission costs and supply costs to electric system users. Lastly, dual-use storge affords project owners the opportunity to earn more revenue if both earning market revenues for generation services as well as cost recovery for transmission service are permitted.

ESA’s policy positions on dual-use storage provide guidance to RTOs and ISOs on ways develop rules that enable the realization of these benefits.

Policy Context

Several policies dating back to 2005 provide the foundation of storage as a transmission technology, both as an alternative transmission-only solution and a dual-use asset on the bulk power system. 

When Congress passed the Energy Policy Act of 2005, energy storage was included in the definition of an “advanced transmission technology… [which] means a technology that increases the capacity, efficiency, or reliability of an existing or new transmission facility.” The legislation directed FERC to encourage the deployment of advanced transmission technologies through its authority over transmission system regulation. This legislation forms the statutory basis for energy storage as a technology for use on the transmission system.

In 2010, FERC issued an order that said Western Grid Development LLC’s battery storage devices are wholesale transmission facilities and thus subject to FERC’s jurisdiction (now referred to as the Western Grid precedent). Additionally, FERC allowed these projects to receive incentive rate treatment. However, FERC also noted that because energy storage does not clearly fit into the traditional categories of generation, transmission, and distribution, subsequent storage cases would need to be assessed on a case-by-case basis. Western Grid was the first order by FERC establishing how storage can serve as transmission.

In 2017, FERC issued a policy statement on Utilization of Electric Storage Resources for Multiple Services When Receiving Cost-Based Rate Recovery. In this policy statement, FERC clarified that electric storage resources are allowed to provide services and seek to recover their costs through both cost-based and market-based rates concurrently, leaving the implementation details up to RTOs/ISOs. While lacking the formal authority of an order, nonetheless FERC’s statement put forward a framework by which dual-use storage would be considered in regional wholesale markets.

Most recently, in August 2020 FERC approved a proposal by MISO for rules and processes by which storage will be treated as a transmission asset for transmission planning and project selection. The key issues that FERC ruled on were that: (1) MISO’s rules for SAT evaluation under the annual MTEP process and its proposal to develop unique operating guides for each asset were fair; (2) MISO’s proposed evaluation criteria will result in choosing SATs that are eligible for cost recovery in transmission rates; (3) MISO’s proposal ensures that SAT will be subject to adequate scrutiny to ensure that SAT is the preferred solution to an identified transmission need; and (4) MISO is only required to consider proposed non-transmission alternatives as alternatives to transmission solutions, while SATs will be considered transmission solutions themselves.  FERC required MISO to add to its Tariff certain clarifications provided by MISO through its post-technical conference comments, such as providing more explanation on SATs’ impact on the interconnection queue, special commercial pricing nodes for the resources, and instances when storage would not be used to solve transmission reliability issues. MISO additionally proposed a new section to its tariff that includes the evaluation process for SAT, market impacts of a storage as transmission-only asset, cost recovery, and storage as transmission-only impacts on resources in the generator interconnection queue.  The order represents the first time that FERC has approved an RTO/ISO’s storage-as-transmission framework.

Status of Storage as Transmission in RTOs/ISOs in the U.S.*

RTOs and ISOs are in very different stages of addressing SAT in their respective regions. Among the RTOs and ISOs working on developing rules for storage as transmission, the priority is to address storage-as-transmission only (as opposed to dual-use SAT). To date, only MISO has put forward new rules on SAT. PJM is in the process of finalizing SAT proposals with stakeholders. Other RTOs/ISOs such as SPP are in earlier stages of discussions on this topic, while CAISO has currently put this topic on hold. While NYISO, ISO-NE, and ERCOT are not pursuing this topic at all at the present time. More detail on the progress being made in each RTO and ISO is below.

MISO: FERC approved MISO’s storage as transmission framework in August 2020. This SAT Order is first of its kind and precedent-setting. Going forward, any entity will be able to pursue these projects. Regarding dual-use storage, this topic was identified in MISO’s Integrated Roadmap 5-year workplan in June of this year, and the workplan identifies the current status as pending and being dependent on the completion of the SAT work. MISO has indicated that it will hold stakeholder discussions on dual-use storage in 2021.

CAISO: Since early in 2019, the topics of SAT and dual-use storage have been on hold in CAISO, pending policy development to address various gaps. CAISO indicated that it may restart this initiative in 2022 after completion of its Energy Storage and Distributed Energy Resources Phase 4 (ESDER 4) and Resource Adequacy Enhancements work, which are required to provide sufficient tools and policies to preserve and manage state of charge.

SPP: In August, SPP staff began to look at this topic. A new policy concern was identified, which was to evaluate the impact of SAT usage on locational marginal prices. SPP has included 9 issues in an energy storage whitepaper that are considerations for SAT and critical to being in compliance with FERC Order 841. In the same whitepaper, SPP has included 5 issues for transmission and energy. SPP has also begun an Energy Storage Resource Task Force that will be specifically focused on evaluating the extent to which SPP will permit storage devices sited for transmission purposes to be used as energy and capacity resources.

PJM: In May, PJM endorsed the SAT issue charge. Between June and fall 2020, education, fact-finding, and a review of FERC precedents took place. At the 11/4 Planning Committee (PC) meeting, PJM provided a first read of the proposed solution package. This was followed by an update of the proposed solution package and approval of it by the PC on 12/1. The next steps are for PJM to do a first read of the proposed solution package and supporting operating agreement (OA) language at 1/27/21 Markets & Reliability Committee (MRC) meeting, followed by endorsement of the solution package and OA language by the MRC on 2/24/21.

ISO-NE: In 2019, discussions ensued in the Transmission Committee about storage being able to provide transmission services. However, at the July 2019 Transmission Committee meeting, ISO-NE stated that storage is ineligible as SAT on the grounds that allowing this would be in conflict with competitive solicitation paths afforded by Order 1000 (despite guidance FERC has provided to enable SAT as well as progress on SAT done in other ISOs). Rather, ISO-NE said that storage devices (in the same manner as generation) are considered non-transmission alternatives obtained through the markets.

NYISO: Storage as transmission in either form is not being pursued in NYISO due to a lack of interest that was expressed from transmission owners many years ago.

ERCOT: Storage as transmission in either form is not currently an issue in the stakeholder process. Current law in ERCOT (SB 943, 2011) prohibits SAT.

Storage as Transmission Status
Speeding AheadMoving SwiftlyEarly DiscussionsOn HoldNo Action
*Status of SAT section compiled with research support from Customized Energy Solutions.

Key Policy Issues

As noted above, progress on the development of SAT is happening at varying paces in many RTOs and ISOs, and dual-use storage discussions have yet to take place for the most part. Several key issues still need to be addressed to ensure that either form of storage-as-transmission solutions can be pursued. One issue is eligibility. Market rules need to be written to allow storage resources to provide both transmission and generation functions, although policies may prohibit some stakeholders from owning SAT who are otherwise capable of offering it. A second need is for storage-as-transmission to be included in the transmission planning process for both transmission-only purposes and dual-use purposes. This is a challenge if storage is not deemed eligible by an RTO/ISO to provide these services in the first place, which is the case in three RTO/ISOs as noted above. Third, energy storage resources that provide transmission services need to be eligible for cost recovery, just as other traditional transmission assets are. Another contentious topic has been regarding dual-use storage and concerns that a SAT that later also becomes a generation asset could bypass the generator interconnection queue process, putting the SAT-owner at an unfair advantage over other market participants or complicating the interconnection of subsequent resources. Lastly, concerns have been raised regarding SAT’s interaction with market price formation. Both SAT injections and withdrawals can alter energy market prices, and some stakeholders have raised the issue of the potential for this to distort competitive electricity market prices since transmission owners’ activities are not supposed to have any impact on market prices on their transmission lines.


ESA’s policy positions on SAT and dual-use storage are driving our organization’s advocacy engagement these issues and will contribute to developing RTO/ISO rules that enable storage resources to provide both services and be fairly compensated for the provision of such services. ESA has been engaged in SAT proceedings in the two RTOs/ISOs that have been addressing this topic most actively—MISO and PJM.

If your company wishes to join ESA as a Policy Partner or Leadership Circle member, please contact Brenda Lovell, Membership Director, at

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