Enabling Versatility: Allowing Hybrid Resources to Deliver Their Full Value to Customers

Hybrid resources are growing dramatically. Energy storage-paired generators offer enhanced capabilities and can respond to economic signals differently than traditional generator resources. Yet, many grid planning rules overstate the cost of interconnecting hybrid resources, and operating rules unduly limit the flexibility and other services that these resources can provide. Industry practices, market rules, and regulations need to be updated to remove barriers to entry and allow these resources to offer their full value to the power system, which will enhance market competition and ensure just and reasonable rates.

The Federal Energy Regulatory Commission (FERC) and regional grid operators must act quickly to ensure the development of these resources is not stunted or driven in inefficient directions. Some changes can be made in the near-term to better integrate these resources by treating hybrid resources as two separate units and harmonizing the participation models of those separate units.

However, for hybrid resources to deliver their full value, they may eventually need to be treated as fully integrated single machines, able to optimize what they provide and when they provide it. Neither current market rules nor those being actively considered by regional transmission organizations (RTOs) and independent system operators (ISOs) allow them this flexibility to optimize their output. A much broader discussion involving grid operators, regulators, and the industry can consider different ways of operating the bulk power system and electricity markets, where what happens behind the point of interconnection of a supply facility is treated as the responsibility of its owner and where grid operators focus on providing accurate market price signals to encourage efficient and reliable behavior of all participants.

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