Comments on Second revised straw proposal

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

ACP-California appreciates the modifications that CAISO has made to this proposal both to provide additional time for consideration of the Energy Storage Resource participation model (in a separate initiative) and to address concerns about grid charging restrictions for Co-Located storage resources. We thank CAISO for listening to prior comments, from a variety of stakeholders on these issues and putting forward a significantly improved proposal in this initiative.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

 As ACP-California has previous commented, it is critical that there be a solution to help mitigate ITC (and property tax) related grid charging concerns, and associated tax credit recapture risk, for Co-Located storage resources. We appreciate that the latest version of the CAISO’s proposal on this front eliminates the problematic restrictions included in the prior proposal. ACP-California supports the ability for Co-Located storage devices to be able restrict grid charging to address tax risks and CAISO’s latest proposal will allow them to do just that, which will ultimately benefit ratepayers in the state.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

AES appreciates the opportunity to provide feedback on the California Independent System Operator's (CAISO) Second Revised Straw Proposal on the Energy Storage Enhancements (ESE). AES recognizes the leadership of the ISO in addressing potential improvements to the modeling, treatment, and optimization of storage assets. AES supports the ISO's approach to prioritizing changes to the co-located model and reliability tools to develop them as quickly as possible, resulting in efficient market outcomes. The new Energy Storage model proposed by the CAISO in the first straw proposal is an essential tool in managing long-duration storage and addressing the need for variable ramping based on the state of charge. However, there is an immediate need to address CAISO's market functionality in managing charging restrictions driven by investment tax credits and the compensation for storage resources when they are exceptionally dispatched. AES has provided detailed comments for various sections of the second revised straw proposal below.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

Ancillary Services

AES recognizes that maintaining grid reliability is essential to building confidence in the CAISO's markets. There is a need to improve the current market processes to acknowledge the impact of Regulation awards on the storage resource state of charge. The CAISO has proposed a parameter to reflect the effect of the regulation up and regulation down awards on the end of the interval state of charge for storage resources. The current values for regulation up and down are 0.08 and 0.19, respectively. These values indicate that, on average, storage resources are being charged more than discharge when regulation. We request ISO to publish the methodology used to calculate this metric and then routinely provide the updated metric at the Market Planning and Performance Forum. Furthermore, we also request ISO to perform a more granular study by season and make these numbers available on OASIS.

The ISO has also proposed that resource-providing regulation in the market will be required to offer an energy bid range equal to 50% of the Regulation offers. AES support ISO's proposal to offer energy bids when a resource is offered regulation. We want the CAISO to provide clarification that, when the resource is charged or discharged to manage the state of charge for regulation, the market does consider the offer when co-optimizing energy and ancillary services.

Exceptional Dispatch

AES supports ISO’s proposal to extend the window of compensation to consider till the end of the day instead of the end of the hour horizon. Furthermore, AES also supports the calculation of two counterfactuals values to calculate compensation for storage resources that receive an exceptional dispatch.

AES requests clarification of whether the CAISO plans to eliminate the Minimum State of Charge constraints (Min SOC) after the CAISO implements the changes to exceptional dispatch as proposed in the straw proposal. Currently, the minimum SOC functionality used during the summer essentially holds the SOC similar to an Exceptional dispatch. In the future, will the CAISO remove the minimum SOC constraint and use-Exceptional dispatch? AES understands that the proposal of Exceptional Dispatch addresses the compensation issue for storage resources. Since the minimum SOC has the same effect as exceptional dispatch, naturally, the exceptional dispatch settlement should apply to a storage resource when the minimum SOC constraint constrains its SOC.

Tools for Local Areas

The CAISO has stated a growing need to rely on storage resources to manage local areas' N-1 and N-1-1 conditions. Currently, the CAISO may depend on the minimum online constraints in the market to ensure against further losses, which do not impact prices or congestion. The CAISO is proposing to enhance the logic for the second-tier constraints such that energy is available from storage resources to maintain reliability if a key grid element is lost to meet local reliability needs. We request the CAISO provide more details about how the CAISO plans to implement these tools. Would this implementation be done as exceptional dispatch in both the day-ahead and real-time markets? How will the CAISO notify scheduling coordinators when the CAISO implements these tools to manage local reliability? Suppose the CAISO restricts the discharge ability for storage resources to meet local area needs either manually or by using constraints in the market application during those intervals. Would the storage resource get compensated for lost opportunity costs similar to cases when the storage resource is exceptionally dispatched?

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

The Investment Tax Credits (ITC) and property tax credits have provided significant financial incentives for solar plus storage projects. The CAISO's current Hybrid model allows scheduling coordinators to manage their charging restrictions from the grid to meet the Investment Tax Credit requirements. AES appreciates CAISO providing flexibility to represent the various operating constraints for the projects supported by ITC and property tax credits. By introducing the flexibility to represent ITC, developers can build confidence in financing future projects. The ISO is proposing a market functionality that would ensure that market awards and dispatches for charging storage resources with ITC restrictions would not exceed the single on-site solar resource or multiple on-site solar resources. Furthermore, we also appreciate ISO providing the functionality of storage charging to follow the solar output, thereby allowing the storage resource to deviate from CAISO instructions. We appreciate CAISO recognizing the market need for this proposal and expediting this implementation. Although CAISO has provided high level details for these features, we request the CAISO to offer the full formulation for this implementation so that stakeholders can understand the full implication of this proposal. For instance, it is unclear if the rule applies only to the real-time market or if the Automatic Generation control would recognize the grid charging limitation. Furthermore, how does this feature interact with the new ancillary service enhancements in the day-ahead market? 

There are other concerns about this proposal. The ISO proposes that those storage resources that use the co-located feature to manage their ITC could be required to submit outages if the resource cannot charge from the grid, which may limit its discharge ability in the future. However, there is no similar restriction on the hybrid model. Similarly, there are no outage restrictions for those resources with a daily energy limit, which might have offers in the market but are limited due to daily energy limits. By requiring co-located resource resources with ITC to use outage cards to reflect gird charging restrictions, the CAISO is discriminating between different technologies. So we do not support implementing this aspect of the proposal.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

No comments. 

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

AES supports the CAISO's proposal to include opportunity cost in the storage resource DEBs. 

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

California Community Choice Association (CalCCA) generally supports the California Independent System Operator Corporation’s (CAISO’s) second revised straw proposal for the Energy Storage Enhancements stakeholder initiative. The CAISO has made significant improvements to the enhanced co-located functionality proposal by removing the qualifications and time restrictions on storage resources’ ability to utilize this functionality. The CAISO should modify one additional aspect of this proposal to remove the applicability of the Resource Adequacy Availability Incentive Mechanism (RAAIM) for outages submitted due to charging limitations from the on-site renewable. CalCCA thanks the CAISO for its modifications made to the co-located enhancements proposal thus far in response to stakeholder feedback. 

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

The example day within CAISO’s presentation on operational experience with storage ancillary service (AS) awards clearly demonstrates that storage resources are becoming a primary source of regulation. As such, it is increasingly important to ensure storage resources can deliver on their AS awards. That said, the CAISO’s presentation provides an analysis of one day, and shows that 92 percent of total storage deviations were attributed to only five units. Before moving forward with the proposed changes, the CAISO should first investigate whether or not these storage deviations consistently occur among only a small set of the same storage resources or if this really is an overarching issue for storage technologies. If the problem is one of a few units routinely not following their AS awards, the most logical next step to resolve the issue is for the CAISO to investigate these circumstances and potentially move forward with decertifying these specific resources from providing AS. If the CAISO can demonstrate this is an overarching issue, and not just a few storage resources not following their AS awards, then the CAISO’s proposals described below appear reasonable to ensure storage resources can meet their AS awards.

The CAISO’s first proposal is to consider regulation awards in the state-of-charge (SOC) calculation. The CAISO proposes to include a multiplier to the regulation component of the SOC charge formula to reflect the amount of regulation that will factor into the SOC for the next interval. The CAISO requested feedback on whether or not the CAISO should define the multiplier closer to the interval to reflect actual expectations or use the average so that market participants have more certainty about what multiplier the CAISO will use in the formula. CalCCA supports the CAISO defining the multiplier on a regular basis to better reflect actual expectations in the future as the historical data shows how season or time of day/hour impacts SOC differently.

The CAISO’s second proposal is to require upward and downward AS awards to have accompanying energy bids in the opposite direction. The CAISO proposes these energy bids cover 50 percent of the AS award. This percentage is reasonable as it aligns with the CAISO requirement that storage resources retain energy equal to 30 minutes in the real-time market. However, the CAISO should not enforce this requirement if the resource is already at a SOC that allows the resource to fully deliver on its AS award. Without making this modification, storage resources may be required, under this rule, to bid a range of charge or discharge capability that it cannot physically meet because of where it is currently situated. For example, assume a +/- 12 megawatts (MW) resource has an AS award to provide 9 MW of regulation up. Under the CAISO’s proposal, this resource would be required to bid a 4.5 MW range of charging capability. What happens if the resource is already fully charged and cannot charge anymore? What happens if the resource is already charged 9 MW, and therefore can fully deliver on its AS award, but only has 3 additional MW left of charging capacity?

Local Reliability Tools

CalCCA does not oppose the CAISO’s proposal to enhance the logic for second-tier constraints to ensure that energy is available from storage resources to meet local reliability needs. The CAISO should, however, consider in the Transmission Planning Process (TPP) how transmission upgrades could alleviate local area constraints and reduce reliance on the use of this tool and the minimum online commitment (MOC) constraint.

Exceptional Dispatch Tools

CalCCA supports the CAISO’s proposal to compensate storage for exceptional dispatches to hold SOC and the CAISO’s proposed change to the timeframe used to construct the counterfactual that covers the exceptional dispatch period and all the following hours of the same operating day.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

CalCCA appreciates the CAISO’s consideration of stakeholder feedback on this topic and the considerable improvements made in this iteration of the proposal. The CAISO’s proposal would allow all storage resources the option to enable market functionality that will prevent on-site storage from receiving dispatch instructions in excess of co-located renewable output. CalCCA strongly supports this proposal and the CAISO removing limitations on the use of this tool.

CalCCA agrees with commenters that the CAISO should use the renewable component’s day-ahead forecasts to schedule storage charging in the day-ahead market if no bids are available (rather than the storage component receiving no schedule to charge at all if there is no day-ahead bid from the onsite renewable). This will allow for more optimal day-ahead schedules based upon what the forecast predicts the resource will be able to do in real-time, rather than waiting until real-time for any charging schedule.

CalCCA does not support the CAISO’s proposal to apply RAAIM to resources with outage cards, submitted due to a lack of SOC and no ability to charge due to lack of generation from the on-site renewable. Use-limited resources are currently not subject to RAAIM.[1] The CAISO market optimizes use-limited resources in a manner that reflects the opportunity costs of using the resource’s limited availability. RAAIM does not apply here because the use-limited resource’s unavailability is not a function of the resource itself (e.g. plant trouble or some other operational issue) but rather the CAISO market’s determination of the resource’s optimal use through the market clearing process which includes consideration of the opportunity costs of using the resource now versus preserving its use for later. The same logic should apply for co-located storage resources limited in their ability to charge. Resources bid and the CAISO market dispatches resources based upon their limited ability to charge and discharge. If the CAISO utilizes the resource at one point in the day such that it cannot charge the resource later, for example, if the market dispatches the battery such that it is depleted at 8pm and there is no solar generation from the onsite renewable to charge the resource, this resource should not receive a RAAIM penalty for not being able to charge from 8pm to 9pm.  

[1]             Reliability Requirements BPM at 124.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

Section 5 of the second revised straw proposal indicates the proposed changes in this initiative fall within the scope of joint authority because Energy Imbalance Market (EIM) balancing authority areas will be able to use the energy storage resource model. Now that the CAISO has moved the energy storage resource model to a new initiative, the CAISO should update this section to describe the EIM governing body classification for the current scope: the reliability enhancements and the co-located enhancements.

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

CalCCA also supports the proposed change to the storage default energy bid (DEB) calculation, issued in the Addendum and posted on July 18, 2022, that would incorporate opportunity costs into the day-ahead market DEB calculation. Because the CAISO market optimizes resource dispatch across the entire day in the day-ahead market, it is logical that when market power mitigation is applied in one period of the day but not the other, storage resources could be dispatched in a non-profit-maximizing manner if opportunity costs are not considered.

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

The California Energy Storage Alliance (CESA) appreciates the opportunity to provide feedback to the California Independent System Operator (CAISO or ISO) on the Second Revised Straw Proposal (SRSP) of the Energy Storage Enhancements (ESE) Initiative. CESA supports the scoping changes that the ISO has applied to the ESE Initiative. By focusing ESE on near-term improvements such as the reliability-related and co-located enhancements, the ISO will be better positioned to continue developing novel participation pathways in upcoming initiatives. In addition, CESA also welcomes the inclusion of default energy bid (DEB) enhancements to the scope of this initiative. Consideration of this issue is timely and certainly aligned with the spirit of ESE.

In these comments, CESA offers feedback on the SRSP’s approaches to mitigate unfeasible ancillary service (AS) awards, compensate storage resources that were issued state-of-charge exceptional dispatches (SOC ED), and consider unavailability of storage components participating under the electable co-located functionality. CESA’s comments can be summarized as follows:

• Incorporating the impact of regulation on the SOC calculation is preferred over requiring accompanying energy bids.
  • CAISO staff should focus on developing hourly µ values per month on a resource basis.
• SOC ED compensation should strive to consider 24 hours of data.
  • CESA supports the proposed extended horizon but considers SOC ED impacts could impact more than one trading day, especially if storage ED occurs in net peak period.
• The use of outage cards to reflect unavailability of the storage component for an asset using the electable co-located functionality is unwarranted considering the treatment of other energy-limited resources, the currently applicable qualifying capacity (QC) counting methodology, and the expected relative sizing of the components that make up the co-located resource.
• CESA welcomes revisions to the day-ahead DEB formulation.
  • CESA requests further clarity on the methodology that shall be used to calculate opportunity costs for the day-ahead DEB.  

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

Incorporating the impact of regulation on the SOC calculation is preferred over requiring accompanying energy bids

In the SRSP, the ISO notes that it has encountered situations in which storage assets that have AS awards, particularly regulation, are unable to meet said awards. The ISO underscores that this can be due to the storage resource having insufficient SOC, which would force a buy back of the real-time market’s AS award and a rescission of the day-ahead AS payment, resulting in incremental ancillary services procurement in the 15-minute market. This, in turn, has the potential to both increase the total costs associated with serving load, and hinder real-time reliability. In this context, the ISO proposes two distinct measures to ensure the feasibility and provision of AS from storage assets. First, the ISO proposes an enhancement to the equation that governs SOC so that the impact of AS awards is reflected. Second, the ISO would require that storage resources have availability of economic bids for energy while providing regulation up or regulation down.

CESA understands the importance of ensuring an adequate and reliable supply of AS. Moreover, CESA supports the CAISO’s exploration of alternatives that would minimize the likelihood of communicating unfeasible dispatch instructions to energy storage assets. Noting this, CESA favors further development of the ISO’s proposal to enhance the formulae that currently govern SOC for storage resources. This approach is preferred as it gets to the source of the problem by addressing a fundamental deficiency regarding the ISO’s visualization of storage resources today. Enhancing the SOC formulation represents a more lasting approach that would not only mitigate the reliability risks identified by the ISO within the SRSP, but more generally improve the modeling and optimization of these resources.

In the SRSP, the ISO notes that improving the SOC formulation entails development of two µ values that represent the material impacts of regulation up and down on SOC, on an hourly basis. For the purposes of the SRSP, the ISO has calculated µ values using three months of data from 2022. With this simplified methodology, the ISO proposes µ values of 0.08 and 0.19; nevertheless, as the SRSP notes, µ values vary by hour across the year. In light of this proposal, CESA urges the ISO develop hourly µ values per month using data from the past year. These should inform the first set of µ values to be applied to the SOC formula and be updated on a regular basis. CESA recommends updating these values every 12 months but welcomes ISO input on the optimal regularity of these updates.

In developing these values, CESA urges the ISO to consider the benefits of developing them on a per resource basis, not on a system-wide basis. This is desirable as the impacts of regulation on SOC are largely determined by the bidding strategy followed by each asset, as well as the unique marginal costs for each (e.g., cycle life, battery chemistry). So far, the ISO has not provided data that demonstrates we should assume all assets utilize the same or even comparable bidding strategies or have the same marginal cost structures. As such, we can assume that the effects of regulation on SOC are heterogeneous. CESA therefore recommends the ISO explore development of resource-specific hourly µ values per month.

Enhancing the SOC formulation will obviate the need to require all AS awards for storage resources to be accompanied with bids for energy. While CESA recognizes the ISO’s relaxation of the proposal, requiring energy bids equal to 50% of the AS award is still overly restrictive. In essence, this requirement would mean that a storage resource with equal Regulation Up and Down awards will be restricted to provide up to two-thirds of its Pmax with the remaining one-third reserved for energy bid. Thus, the proposal materially limits the amount of flexibility storage can provide to the grid. This limitation is also unfounded since the SRSP does not offer an explanation behind the proposed 50%, nor does it explain how it relates to the observed hourly µ values. In this vein, we agree with the concerns shared by Pacific Gas & Electric (PG&E) during the July 7, 2022 stakeholder meeting: the adoption of both of these proposals would be overly burdensome and unduly restrictive. Thus, CESA recommends the ISO pursue improvements to the SOC formulation to better reflects the impacts of regulation by developing hourly µ values per month on a per resource basis.

SOC ED compensation should strive to consider 24 hours of data

In the SRSP, the ISO notes that it has updated its SOC ED proposal to reflect comments regarding the duration of the timeframe considered for the revenue counterfactuals. Specifically, the ISO will now consider a window that extends through the end of the operating day of the SOC ED when assessing revenue counterfactuals, instead of a window equal to the duration of the storage resource. Importantly, the ISO notes that it is not proposing a longer timeframe as extending this into another operational day may be more burdensome in the settlements process.

CESA recognizes the ISO’s consideration of our comments. The expansion of the window considered for compensation of opportunity costs related to the SOC ED is a step in the right direction. Nevertheless, CESA remains concerned about the implications of the proposed approach, particularly considering the times in which SOC ED is likely to be used.

Given its energy-limited nature, energy storage is well-positioned to address peak and net peak needs. As such, SOC ED is expected to be used to hold SOC through the peak period and into the net peak period, likely resulting in traditional (i.e., discharging) ED instructions being issued between HE 18 through 22. Given this, using a timeframe that considers the entirety of the day when the SOC ED was issued offers little added benefit and ignores the fact that the economic decisions of the storage asset will be affected in all subsequent intervals, regardless of the arbitrary boundary between trading days.

Ultimately, the SOC ED is a tool that will allow retirement of the minimum SOC (MSOC) requirement. The MSOC requirement, a measure adopted as part of the RA Enhancements Initiative in 2021, limits energy storage market participation in the real-time market when the Residual Unit Commitment (RUC) process identifies an unfeasibility in meeting load. The MSOC is seldom activated; in fact, as of August 2, 2022, the MSOC has not been utilized in 2022. Considering the sporadic need for the MSOC and acknowledging that establishing a counterfactual window that exceeds the trading day may be overly burdensome at this time, CESA understands that moving forward with the proposed window is reasonable at this time. This being said, the ISO should monitor use of the SOC ED closely and report if a window that covers all of the trading day is sufficient to correctly identify the opportunity cost impacts of said ED. If said window is found to be insufficient following, ad maximum, 24 months of use, the ISO should continue developing a methodology to consider 24 hours of data when estimating compensation for SOC ED.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

In the SRSP, the ISO notes that several stakeholders have requested the introduction of a new mechanism for co-located resources that ensures revenue recovery if a storage resource seeking the Investment Tax Credit (ITC) were to incur costs due to grid charging. In essence, market participants have expressed interest in a participation pathway that ensures compliance with the requirements associated with the ITC, particularly those related to the charging of storage assets paired with on-site renewable generation. In response to these requests, the ISO proposes an electable co-located functionality that will be optional and would prevent the co-located storage from being dispatched above the scheduled output from on-site renewable resources. Moreover, this functionality would also allow co-located storage to deviate from its dispatch instructions to ensure real-time charging does not exceed actual real-time co-located renewable generation. As such, this electable functionality would eliminate the possibility of grid-charging, thus easing ITC compliance.

CESA appreciates the ISO’s consideration of stakeholder feedback regarding the need for an ITC-compliant co-located pathway. Furthermore, CESA, fully supports the ISO’s elimination of the eligibility requirements previously considered for this electable functionality. Optionality for co-located resources that envision capturing ITC benefits is particularly welcome considering the importance of this revenue stream for both existing paired resources, those in development, and standalone generation assets that seek to add energy storage. Thus, CESA fully supports the creation of this electable functionality and the elimination of any eligibility requirements associated with it.

While supportive of the proposal, CESA is concerned with the ISO’s requirement to have co-located storage assets submit outage cards when they cannot discharge as they have a depleted state of charge and there is no ability to charge the resource due to unavailability of the on-site renewable generator. Importantly, the use of outage cards would be subject to the ISO’s resource adequacy availability incentive mechanism (RAAIM). CESA opposes this element of the proposal for three reasons. First, the use of outage cards is inconsistent with the treatment of other energy-limited resources, such as hybrid resources. Second, the differentiated treatment of co-located and hybrid resources with regards to the use of outage cards is unwarranted considering the currently applicable qualifying capacity (QC) counting methodology. Third, the expected co-located configurations and the relative sizing of their components do not suggest that energy insufficiency will be an issue.

Today, paired assets participating under the hybrid pathway are expected to be able to limit their bids and dispatch instructions via the dynamic limit tool (DLT), a market functionality that has been delayed but is expected to be available by Fall 2022. After the Hybrid Phase 2-B functionality is available, the hybrid DLT will be used to transmit information to the ISO regarding real-time availability for these resources. Crucially, the DLT offers a way to communicate real-time unavailability of an asset without the use of outage cards. CESA is aware of the complexities behind developing the DLT and understands that the ISO might want to finalize and test it for hybrid resources before expanding its use. Nevertheless, the clear contrast between the communication and treatment of unavailability between these two pathways underscores that using outage cards is inconsistent and would represent a clear disadvantage relative to a hybrid configuration.

Today, both hybrid and co-located resources that provide resource adequacy (RA) have their QCs determined by the same counting methodology. This additive methodology makes no distinction between both of these participation pathways and assumes that only on-site renewable generation is utilized to charge the paired storage component. The potential for energy insufficiency is thus already contemplated within the methodology, which is set as follows:

• Total QC = Effective Storage QC + Effective Renewable QC
  • Effective Storage QC = the minimum of:
    • Energy production from the renewable resource until 2 hours before the net load peak, divided by four 
    • The QC of the storage
  • Effective Renewable QC = the remaining renewable capacity required to charge the battery, multiplied by the ELCC factor of the month

As observed above, the potential for energy insufficiency is captured by the fact that the effective QC of the storage component is the minimum of its standalone QC or the total energy production up until two hours prior to the net peak, divided by four. If the configuration of the components is expected to result in insufficient energy to fully charge the storage asset, the counting methodology already applies a “derate” to account for the expected level of unavailability. In this context, requiring the use of outage cards is unwarranted and could constitute a double penalization of the asset relative to its hybrid homologue.

Finally, CESA considers that requiring the use of outage cards to signal unavailability of the storage component might be trivial in the context of meeting daily peak and net peak needs due to the expected configurations of future paired resources. According to the latest publicly available date on queue cluster (QC) 14, the Preliminary Cluster 14 Project List as of May 20, 2021, of the 105,995 MW seeking interconnection at the POI, 32,848 MW (~31%) are solar plus storage projects. While the shares of hybrid and co-located projects is not directly obtainable through this dataset, we can estimate that, across all solar plus storage projects, the ratio of generation to storage is 1.02. This essentially means that each solar plus storage project in QC 14 has, on average, 1.02 MW of solar for each 1 MW of storage. Studies evaluating the reliability contributions of paired assets have found that a hybrid configuration with this ratio of generation to storage are reliably able to provide adequate energy to consistently charge the linked energy storage resource. The 2020 Joint Investor-Owned Utility (IOU) effective load carrying capability (ELCC) Study found that a 1:1 solar plus storage asset with a 4-hour battery would have a marginal ELCC of 100% through 2026 and 96% by 2030.[1] This is largely due to the fact that ELCC is highly correlated with the ability to fully charge prior to the highest net load peak periods and that the coupled solar component is able to consistently charge the storage device with a 90% confidence interval across the highest CAISO net daily load peaks, with an average charging potential of roughly 7 hours.[2] As such, paired assets with such configurations are likely to readily contribute to grid reliability on a daily basis, minimizing the need for the use of outage cards as contemplated in the SRSP.

[1] Astrape Consulting, 2020 Joint IOU ELCC Study, 2021, at 4. Available at: https://www.pge.com/tariffs/assets/pdf/adviceletter/ELEC_6041-E.pdf

[2] Ibid, at 12-13.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

CESA offers no comments at this time.  

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

CESA appreciates the ISO’s consideration of issues related to the use of DEBs within the day-ahead market. The ISO’s identification of this issue and its quick inclusion to the initiative demonstrate a commitment to continuously improve the utilization of storage assets within the ISO’s markets. CESA is supportive of the proposal to modify the day-ahead DEB to be aligned with its real-time counterpart. By including consideration of opportunity costs within the day-ahead formulation, the enhanced DEB will ensure alignment between the principles of competitive bidding, profit maximization, and grid reliability.

This being said, CESA requests clarity regarding the methodology that shall be used to calculate the opportunity cost component of the day-ahead DEB. The way in which opportunity costs would be calculated is not included in the Addendum and, while Section 39.7.1.8 of the CAISO Tariff explains how the opportunity cost would be calculated for the real-time DEB, its language is not readily applicable to the day-ahead DEB as it states:

"The storage opportunity cost represents the opportunity cost of being dispatched during lower-priced RTM intervals, equal to the cost of Energy the resource could discharge during the highest-priced continuous RTM block, accounting for the resource’s discharge duration. To calculate this component in the Real-Time Market, the CAISO will use the lowest price of Energy during the highest priced period over which the resource could have discharged, based upon the LMP from the IFM at the relevant PNode on the Trading Day."

Thus, while CESA supports the proposal to enhance day-ahead DEBs to include opportunity costs, we request added clarity on the methodology proposed to calculate this factor, as well as an opportunity to provide feedback on said approach.  

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

Please see DMM comments in attached PDF.  DMM comments will also be posted in the following location, under the heading "2022 comments on policy initiatives": http://www.caiso.com/market/Pages/MarketMonitoring/MarketMonitoringReportsPresentations/Default.aspx#comments

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

Please see DMM comments in attached PDF.  DMM comments will also be posted in the following location, under the heading "2022 comments on policy initiatives": http://www.caiso.com/market/Pages/MarketMonitoring/MarketMonitoringReportsPresentations/Default.aspx#comments

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

Please see DMM comments in attached PDF.  DMM comments will also be posted in the following location, under the heading "2022 comments on policy initiatives": http://www.caiso.com/market/Pages/MarketMonitoring/MarketMonitoringReportsPresentations/Default.aspx#comments

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

Please see DMM comments in attached PDF.  DMM comments will also be posted in the following location, under the heading "2022 comments on policy initiatives": http://www.caiso.com/market/Pages/MarketMonitoring/MarketMonitoringReportsPresentations/Default.aspx#comments

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

Please see DMM comments in attached PDF.  DMM comments will also be posted in the following location, under the heading "2022 comments on policy initiatives": http://www.caiso.com/market/Pages/MarketMonitoring/MarketMonitoringReportsPresentations/Default.aspx#comments

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) provides comments on the proposed local reliability tools and the update to the formula for estimating storage state-of-charge (SOC) in the day-ahead and real-time markets.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

The CAISO proposes to implement local reliability tools in the day-ahead market that would impose “2^nd Tier constraints,” including monitored N-1-1 contingencies, on energy storage resources.[1]   This is in addition to imposing N-1 constraints as is currently the practice.  Today, 2^nd Tier constraints are used only to commit resources in the day-ahead market to provide capacity (e.g., to turn them on, such as for gas plants), but do not result in energy schedules.  Energy storage resources are always “on” but also require energy charging schedules to ensure a sufficient state-of-charge to meet reliability needs.  The CAISO proposes to co-optimize day-ahead gas plant unit commitment and energy storage energy schedules, subject to 2^nd Tier constraints, to find the most efficient market outcomes and prices.[2]

Imposing N-1-1 contingency constraints for energy storage in the day-ahead market may result in an increase in both the cost of storage operations and greenhouse gas (GHG) emissions if the resources are charged during periods with high GHG emissions intensity and Locational Marginal Prices (LMPs).  Co-optimizing gas unit commitment with energy storage schedules under N-1-1 constraints may lead to other unintended results, such as additional gas schedules in the real-time market to charge storage.  The CAISO should consider the trade-offs in costs and emissions when the N-1-1 conditions are imposed, relative to the reliability benefits.

These cost and emission-related impacts may be more pronounced in local areas that are more dependent on energy storage for reliability.  Before implementing the local reliability tools, the CAISO should determine how likely these outcomes are, and if there are ways of mitigating the consequences while maintaining reliability.

Cal Advocates recommends that the CAISO conduct market simulation studies for the proposed local reliability tools and assess the costs and benefits of imposing additional constraints in the day-ahead market, including both emission impacts and impacts on local day-ahead market prices.  The CAISO should incorporate results from the Local Capacity Requirement (LCR) technical studies to evaluate the impacts of the reliability tools for various levels of energy storage procurement in local areas. 

The CAISO also proposes to modify the formula for calculating energy storage state-of-charge (SOC) in the day-ahead and real-time markets to predict SOC more accurately.  The CAISO proposes to reflect ancillary service awards in the SOC calculation by multiplying the historical rate at which awarded ancillary service capacity results in energy charging or discharging. The CAISO proposes to initially use a single annual multiplier for each hour.[3]

Cal Advocates recommends that the CAISO develop a more granular set of ancillary service award multipliers, by season, month, location, and even by resource.  Based on analysis of the granular historical data, the CAISO should select the set of multipliers that most accurately estimates SOC by comparing the historical SOC to the estimated SOC.  After the set of multipliers are implemented, the CAISO should continually compare the estimated to the realized SOC across the levels of multiplier aggregation and regularly update and publish the set of multipliers used in the SOC calculation.

[1] Energy Storage Enhancements, Second Revised Straw Proposal, June 30, 2022, p. 14.

[2] Energy Storage Enhancements, Second Revised Straw Proposal, June 30, 2022, p. 14.

[3] Energy Storage Enhancements, Second Revised Straw Proposal, June 30, 2022, p. 7.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

The CAISO proposes to provide all co-located storage resources with the option to limit charging to energy produced only by on-site generation.  The CAISO may still issue exceptional dispatch instructions to charge from the grid when necessary for grid reliability.

Cal Advocates supports the proposed co-located enhancements.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

Cal Advocates has no comments at this time.

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

Cal Advocates has no comments at this time.

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

Calpine appreciates the CAISO’s diligent efforts to improve storage integration while ensuring a reliable grid.  Calpine supports CAISO’s decision to bifurcate the Storage modelling proposal from the Energy Storage Enhancement initiative. This approach will ensure a more focused, collaborative process to a very complicated market optimization that may allow us to avoid unintended consequences.

Calpine provides these comments as current owner and operator of battery storage projects as well as an active development pipeline of nearly 1000 MW of near-term projects.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

The critical attribute of a battery storage resource’s ability to assist in alleviating or enhancing grid conditions is its State-Of-Charge (SOC). If battery storage resources are awarded Ancillary Services (AS), Calpine agrees that the SOC calculations should take into account all AS awards as as a constraint in the overall optimization logic. This change will transparently observe the operational restrictions in future optimal dispatch and treat storage similarly to generating resources (non-storage resources.)

Having said that, the proposed change for Regulation awards (Section 4.1.1) includes an unexplained energy-bid requirement in the opposite direction (that is, SIBR would require a 50 percent decremental economic energy bid in order to award Regulation-up.)  This requirement is imposed, apparently, because  CAISO Operations staff has observed that storage units with Regulation awards tend to be dispatched to an SOC that no longer allows them to provide responses to 4-second AGC directives (e.g., units providing Reg Up are moved to min SOC, with no ability to charge.) The CAISO further clarifies that units unable to respond to AGC pulses must be replaced in RT but do so without exposure to the replacement cost (they may be subject to Regulation payment clawback and A/S disqualification.)

In the simplest terms this “opposite” economic energy bid requirement appears to be a condition to allow the CAISO to manage the SOC (as in NGR-REM resources) to ensure feasible Regulation capability. For example, a unit stuck at a min SOC because of Regulation dispatches but awarded Regulation up could be recharged (not via price-insensitive, 4-second AGC dispatch, but rather through RTD bids) to restore its capability.

Calpine seeks further clarification of how the CAISO would intend to use these “opposite” economic bids in FMM or RTD to manage the SOC.   Would the CAISO pre-position the resource (via a RT constraint) to ensure the SOC was sufficient to meet an upcoming the 30-minute performance requirement? IF SOC is exhausted int ehe first 5 minutes, would the CAISO force the uint to be recharged? Might the CAISO also require constraints on the ramp rate to ensure that the Regulation quantity is not exhausted prematurely?  Would the CAISO depend solely on the use of inframarginal economic bids or perhaps, does the CAISO propose to use Exceptional Dispatch if economic bids are out-of-market? And, if the CAISO uses Exceptional Dispatch, would the unit still be compensated (via BCR) for any lost opportunity costs? Might the CAISO consider charging the marginal replacement costs for non-performing resources in addition to other provisions?

Calpine is not necessarily opposed to such a requirement but asks the CAISO to provide data that supports this energy-bid requirement.  Such aggregated data would include the Regulation awards and the nature and sufficiency of bids or self-schedules in the opposite direction.

Similarly, Calpine asks the CAISO to explain why the proposed logic change should only apply to Regulation awards and not Spin and Non-Spin AS awards. Does the CAISO feel relatively comfortable that the current logic appropriately “protects” capacity reserved for these products? Or is a downward economic energy bid requirement required for these as well?

In Section 4.1.4, the CAISO proposes to “automatically secure state of charge for local needs.”  Further, that the selection of resources “will include an efficient procurement of resources that is factored into market prices.”  Calpine believes this proposal needs much more clarification and discussion[1]. 

Local area requirements are based on the possibility that transmission contingencies occur during periods of stressed system conditions.  In essence, the system is maintained on a pre-contingency basis so that if the contingency actually happens, there will be sufficient on-line capacity in the transmission-constrained region to meet peak local loads.  As indicated in the Revised Straw proposal, this capacity can be from a conventional unit dispatched to Pmin or from storage units with sufficient SOC.  The paper, however, does not describe in any detail the “efficient procurement” process nor does it describe how these actions will be “factored into market prices.”

Calpine understands that enforcing a local capacity constraint (commonly called a Minimum Online Capacity (MOC) constraint) is largely an operator-driven, manual process with the intent of minimizing the cost of resource commitment.  Historically, the Start and Minimum Load costs of alternative conventional resources were compared, and costs were minimized while meeting the capacity requirement.  The CAISO should explain how it will select between conventional and storage resources. 

Will the CAISO incorrectly assume that the cost of holding SOC for a local capacity constraint is zero?  If so, what would block the CAISO from always using storage resources to meet the MOC?  Perhaps the CAISO could use DA/FMM/RTD LMPs to calculate the charging and opportunity cost of creating and holding SOC for a local area storage resource?  This opportunity cost could then be compared to conventional resource commitment costs.  Once established in DA, how would the CAISO manage SOC in and through RT – would it become an invariant SOC constraint during the effected hours?  Again, if the CAISO uses Exceptional Dispatch to maintain a local MOC, would the unit be compensated for the lost opportunity costs and its Regulation awards??  Would other resources be compensated for their opportunity costs when held to an ED max that is below Pmax? If not, how would the CAISO overcome claims of undue preference? Should a resource bid into Regulation presuming it will not collect opportunity costs? Finally, could a storage unit “opt out” of providing capacity to meet a local MOC??

Finally, the current market does not actively include the effects of MOCs in market prices.  If anything, MOCs are price-suppressive since they inject minimum load energy into the system with no bid price (commitment costs are protected by BCR but are not included in LMPs).  The CAISO Board has approved a proposal to price MOCs in the market (Contingency Modeling Enhancements), but that proposal has been placed on hold.  So how will storage resources, held to an SOC on a pre-contingency basis, be “factored into market prices”?  Is the CAISO considering reviving CME?  Would the opportunity costs of holding SOC somehow be incorporated into LMPs?        

Calpine requests the CAISO to elaborate further on these proposals and present the analytics behind the proposals.

[1] Using storage to address local capacity needs invokes some of the issues that arose in the now-stalled Storage as a Transmission Asset (SATA) initiative.  For instance, by taking control of storage resources to meet local transmission limitations, is the CAISO becoming a market participant?   

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

No Comment

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

No Comment

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

Thanks.  

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

The City and County of San Francisco (CCSF) appreciates this opportunity to comment on the Energy Storage Enhancements Second Revised Straw Proposal. We support the co-located enhancements and the Default Energy Bid addendum proposals, but offer additional suggestions, as further described below.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

No comments on this issue at this time. 

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

Co-located Enhancements

CCSF appreciates and supports the ISO proposal to have an alternate co-located model for storage that would not require charging in excess of on-site renewables. This enhancement will remove a significant risk for co-located storage resources with investment tax credit or property tax restrictions on grid charging. Currently, these resources must structure their bids to attempt to ensure their variable energy resource will be dispatched to support anticipated storage charging during periods when they might otherwise be economically curtailed and to avoid storage resource charging during periods when the variable resource might be unavailable. To reduce the risk of inadvertent grid charging, the resource owners must build in a margin to limit the amount of potential charging to the minimum solar output over the course of each hour, which means that the storage charging will be accomplished in a less efficient manner than would be possible with the ISO’s new co-located resource proposal. It also means that there could be instances when variable energy that could be economically curtailed during periods of overgeneration might continue to be dispatched as self-scheduled energy in excess of the amount that can be injected into the storage resource. The ISO’s proposal will benefit the co-located resource owners by removing the additional administrative burden of complicated scheduling procedures and by reducing the risk of prohibited grid charging, but it will also benefit market participants in general by resulting in a more efficient dispatch of all resources.

CCSF urges the ISO to include the new co-located resource functionality in both the Day Ahead Market (DAM) and Real-time Market (RTM) by allowing co-located resource owners to include a scheduling flag indicating their desire to limit storage charging to intervals that align with DAM and RTM forecast variable resource production, while allowing for economic dispatch of the variable resource beyond the storage charging capability. If the co-located functionality is only available in the RTM, co-located resource owners either will need to continue to attempt to anticipate the hours in which the DAM will dispatch the storage resource for charging and self-schedule the variable resource to that level, or they will need to bid or self-schedule variable generation that did not clear the market DAM in the RTM, which would create DAM vs. RTM price risk. Incorporating the new co-located resource functionality into both the DAM and the RTM will result in a more efficient dispatch in both markets.

Storage Unavailability

The CAISO noted in the 2^nd Revised Straw proposal that co-located storage resources that cannot charge in excess of on-site renewables would be required to submit outage cards if they have a depleted state of charge and there is no ability to charge the resource. Outage cards submitted because the resource cannot generate due to a lack of state of charge and no ability to charge would be subject to the CAISO’s resource adequacy availability incentive mechanism (RAAIM). CCSF opposes the requirement to submit outage cards and to apply RAAIM for storage resources for the circumstance described above. With the implementation of the co-located resources enhancement, the market software will automatically incorporate the charging constraint, and CAISO has visibility on the storage state of charge, so the CAISO will have visibility of the availability of the co-located resource without needing an outage card. CCSF does not believe it is appropriate for a use-limited resource that has been optimized for charging and discharging, including potentially to be fully discharged, to be subject to RAAIM. Similar to other use-limited resources that have met their short-term limits, RAAIM charges should not apply to storage resources under these circumstances. If these resources were to be subject to RAAIM, the resource owners would be incentivized to always maintain a small state of charge, but doing so would come at a cost to both the resource owner and the market overall.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

No comments on this issue at this time. 

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

Default Energy Bid Addendum

The CAISO issued an addendum on July 18, 2022 that identified a potential issue related to the Default Energy Bid (DEB), in which some Day Ahead Market (DAM) intervals had bids mitigated, while others did not. This could result in a storage resource being dispatched in intervals other than the highest value intervals. CCSF appreciates the CAISO pursuing a solution to this problem by incorporating opportunity costs into the DAM DEB. Based on the discussion during the July 28 stakeholder call, CCSF understands that CAISO will calculate the DAM DEB during the market power mitigation run to ensure inclusion of opportunity costs in any mitigated DAM storage prices. CCSF supports this approach.

CCSF suggests that the CAISO also consider adopting a default storage resource variable cost value that would apply to any storage resource that elected the Storage DEB option, but that has not provided supporting documentation. This approach would be similar to the use of default variable operation and maintenance adder values for most other resource types. CAISO has noted in the BPM for Market Instruments Attachment L.3 that many market participants find that the default values are sufficient for their resources, and thus obviates the need for individual negotiations. This approach should produce similar benefits if applied to the Storage DEB option.

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

Clean Power Alliance appreciates the changes made to co-located enhancements in the second revised straw proposal. The CAISO market will be considerably more hospitable to co-located storage operations and future investments when they are not required to grid charge on account of renewable forecast errors and curtailment orders.

Clean Power Alliance is hesitant to support CAISO’s requirement that outage cards be submitted for co-located facilities whenever there is insufficient renewable generation to charge. This requirement is somewhat unclear but seems like it would be unnecessary and highly burdensome.

Clean Power Alliance requests additional detail about the hypothetical circumstances that would call for an outage card due to insufficient on-site generation. Revised Straw Proposal states that, “Storage resources that are unable to charge because of insufficient on-site generation are required to submit outage cards to the ISO.” Since co-located storage and solar facilities run out of on-site generation every day at nighttime, would the proposed requirement call for at least one new outage ticket every day for every co-located solar and storage resource? Is the intended requirement to submit outage cards only when state-of-charge equals zero percent? CAISO should clarify why this is uniquely necessary at zero percent state-of-charge but not other low levels of state-of-charge. CAISO should also clarify whether this is an existing or proposed requirement for co-located resources. With the “Storage Unavailability” section of Second Revised Straw Proposal written in present tense, the requirement seems to be described as currently existing.

The proposed outage requirement as currently written is unnecessary because the unavailability of on-site generation does not necessarily impact the availability of the storage resource in the market. Scheduling Coordinators for co-located resources submit bid curves designed to clear the market with an optimal charging and discharging schedule each day. For example, for a 4-hour co-located storage resource, a Scheduling Coordinator will try to clear bids that lead to discharging in the 4 highest-priced hours and charging in the 4-to-5 least-priced hours. This process motivates resources to be utilized when they are most needed by the market to the fullest extent possible. Resources that cannot grid charge will not have charging segments in their bid curves for the hours where on-site renewable generation is unavailable and the market will not call on these resources to charge. Furthermore, the selection of optional co-located enhancements functionality to prevent grid charging will also signal that the resource depends on on-site generation to operate in the negative MW range. Therefore, creating a new outage to indicate lack of on-site generation would be superfluous.

Furthermore, the Resource Adequacy Must Offer Obligation requires that resources include bid curve points up to NQC for all of the RA Assessment Hours. Price forecasts and marketing strategy influence how aggressively resources attempt to clear the market during RA Assessment Hours. The RA program purposefully only requires that RA resources be offered – not that they clear or have a certain state of charge during those hours. So long as co-located storage resources comply with their Must Offer Obligations and attempt to maximize value-capture with their bid curves, creating additional outage reports would not improve system operation or reliability.

Finally, the proposed co-located outage reporting requirement would be not only unnecessary but also highly burdensome. Co-located solar and storage facilities run out of on-site generation every day regularly when the sun goes down. The requirement as currently written would necessitate a new forced outage at least once every day for every co-located solar and storage resource in the CAISO system. The additional volume of forced outages would be a burden on CAISO and Scheduling Coordinators alike while adding little value given that the market-clearing renewable generation and storage schedules are already known. The lack of on-site renewable generation at different times of day is only a threat to reliability for which RAAIM should be applied when resources are failing to meet their existing Must Offer Obligation. It is each Scheduling Coordinator’s responsibility to ensure that it submits bid curves that support its Resource Adequacy Must Offer Obligation. The Must Offer Obligation, the selection of RA Assessment Hours, and the calculations for NQC levels of co-located resources sufficiently factor in their charging limitations.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

EDF-Renewables appreciates the CAISO’s time and effort to improve the energy storage resource participation in the CAISO energy and AS markets. EDF-R applauds CAISO’s decision to continue work on the new Energy Storage model in a later phase.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

EDF-R supports the CAISO’s proposal to implement an optional constraint to prevent grid charging. We would like to confirm that this feature will be available to all storage resources, not just resources online prior to the policy effectiveness date and for a five-year period, as previously proposed. This feature is a critical item to the development community, and EDF-R supports the ability for all storage arrangements (Co-Located or integrated) to be able to restrict grid charging. These controls will help enable ITC, which is a to benefit ratepayers.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

EDF-R supports the WEIM classification.

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

EDF-R supports including the opportunity cost component in the day-ahead default energy bid and appreciates the CAISO holding a stakeholder call to discuss the addendum issued Jul 25. EDF-R supports including the opportunity cost component in the day-ahead default energy bid; the proposed change will help ensure bids, when mitigated, will reflect the opportunity cost arising from being an energy limited resource.

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

 Reliability enhancements for storage resources:  The CAISO should more closely document the frequency and extent of any energy storage non-compliance with Regulation signals, and identify the root causes of such non-compliance, before imposing solutions that may have unintended consequences.

Co-located Resource (CLR) enhancements 

• Grid-charge management option:  LSA strongly supports the CAISO’s decision to remove PPA-related requirements and term limits.  However, the program description should be clarified to state that the option applies both to forward scheduling and real-time operations, and the Day Ahead Market feature should be modified to allow charging schedules for storage even if generation is not scheduled in that market timeframe.

Also, as LSA stated in the most recent stakeholder meeting, this option will be most useful and attractive if a project owner can elect it in a flexible manner (e.g., by activating an hourly flag) instead of inflexible and cumbersome elections through Master File changes.

• Dynamic Transfer (DT) resources:  LSA strongly supports the CAISO’s extension of the Aggregate Capability Constraint (ACC) option to Pseudo Tie resources.  This extension should include the following, which is not clear in the Proposal:

• Qualification of Dynamic Transfer resources for ACCs also; and

• Qualification of both Pseudo Tie and Dynamic Schedule Resources for the new grid-charge management option.

In other words, all Dynamic Transfer resources (whether Dynamic Schedules or Pseudo Ties) should qualify to elect ACC and grid-charge management options, as long as both resource types are included in the DT arrangement.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

The information about storage resource non-compliance with Regulation AGC dispatch signals is certainly troubling, and LSA does not object per se to the types of solutions the CAISO has proposed.  It makes sense for the CAISO to address this issue while the number of storage resources in that market is still limited. 

However more investigation into the nature and extent of the non-compliance, and investigation of the root causes, is needed before the CAISO just jumps right to solutions.  The CAISO usually addresses such issues by first laying them out in an Issue Paper, then (once the problem is fully defined) examining potential solutions (including their benefits and costs) and only then selecting the most optimal solutions. 

For example, it is not clear whether the non-compliance is:

• For both Regulation Up and Regulation Down;

• More likely to occur under some conditions and not others;

• Typically exhibited by one or two units habitually, or all storage units generally;

• Frequent or occasional; and/or

• Caused by inability to comply (e.g., depleted or full State of Charge (SOC)) or intentional override of the Regulation signal by project operators.

In this case, the CAISO has already proposed solutions without first going through its usual thorough and deliberate process.  Moreover, the proposed solutions could have unintended consequences, e.g., restrict storage provision of Regulation even for units and/or under conditions when such restrictions are not necessary and/or market need is high.

Thus, while LSA believes that these issues, once properly confirmed and defined, should definitely be addressed more information is needed before optimal solutions can be identified and adopted.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

Grid-charge management option

• General support:  LSA supports the CAISO’s efforts generally to make operation under the Co-located Resource (CLR) configuration (which the CAISO has strongly preferred) more flexible, and to give resource operators the ability to control their storage charging with grid energy.  It is entirely possible for resource owners to design and construct CLR projects that do not have the physical ability to grid charge at all, and just modify those facilities later (e.g., after ITC expiration) to allow grid charging if they choose.  Those kinds of facilities would not provide the CAISO access to the storage charging capabilities even for Exceptional Dispatch or Operating Orders. 

Market features that give CLR owners greater grid-charge management control will incent them to include grid-charging capabilities in their projects and thus make the resources more valuable to the CAISO for grid-reliability purposes.

• Proposed changes here, generally:  LSA strongly supports the CAISO’s modifications to the program qualification criteria to eliminate the PPA and time-limit criteria.  Those proposed criteria were confusing and unnecessarily limiting, and the program will be much more useful without them.  These changes will also make the program more flexible, e.g., it will not have to be modified every time ITC or property-tax rules change. 

• Program details:  The Proposal seems to use terms related to scheduling and dispatch interchangeably.  The discussions at the recent stakeholder meeting clarified that the CAISO intends for the balance between generation production and storage charging to apply to both:

• Forward scheduling, where storage charging schedules would not exceed generation schedules; and

• Real-time operations, where storage could deviate from Dispatch Instruction to charge, to the extent needed to reflect actual generation production below the scheduled/dispatched level.

These two distinct elements were not clear in the Proposal, and the CAISO should better define them in the next version.

In addition, LSA recommends that the CAISO add/modify these features:

• Add a generation-forecasting element to the Day Ahead Market.  As discussed at the stakeholder meeting, the storage resource has a DA and Real-Time (RT) Must-Offer Obligation (MOO), while the generation resource (assuming it is Variable Energy Resource (VER) has only a RT MOO.  If no VER energy is scheduled in the DA market, then the proposed program would not award any charging schedule to the storage resource.

This is an unnecessary restriction.  The CAISO should use a forecasted (non-binding on the resource) value for the VER energy in the DA market to enable charging-schedule awards to the storage, then just adjust the charging schedule in the RT market to the extent that it differs from the VER energy schedule.  This will allow the storage resources to receive DA market charging schedules, instead of waiting until the RT market for that scheduling.

The CAISO already uses VER forecasts in the DA market to ensure that too much generation is not scheduled given likely RT VER energy bids to come later, and project-specific DA advisory forecasts are already available for the many VER resources that participate in PIRP. 

• Allow hourly election of the new option:  The CAISO has proposed resource election of the program through changes to the CAISO Master File.  However, as LSA said at the stakeholder meeting, participation may be improved if resources can select participation on an hourly basis.  There may be times or conditions when the owner may wish to allow the storage resource to charge from the grid, and the CAISO should provide that market flexibility through a more frequent status change, like an hourly flag.

Dynamic Transfer (DT) resources 

The CAISO’s current prohibition against Pseudo Tie (PT) resource use of the ACC feature was proposed to FERC in a cover note and was not reflected in the proposed (and adopted) tariff language.  LSA strongly supports the CAISO’s proposal to remove that limitation and allow PT resources to qualify for the ACC.

In addition, LSA believes that the CAISO should do the following:

• Expand ACC eligibility further to include Dynamic Schedule (DS) resources.  There is no apparent reason why all Dynamic Transfer (DT) resources – both PT and DS – should not have access to this important tool.

• Clarify that all DT resources would be eligible for the new grid-charge management option.  DT resources need this tool for the same reasons as inside-CAISO resources, and there is no apparent reason why they should not be able to use it.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

LSA has no comments on this proposal.

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

LSA has no comments on the Second Revised Straw Proposal Addendum.

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

MRP supports moving consideration of a new energy storage market model to a separate initiative.  MRP reiterates that a key consideration in an energy storage model must be how the model allows for cycling limits, including daily limits. 

MRP does not object to the CAISO’s proposal for providing compensation for energy storage resources exceptionally dispatched to hold state of charge but reiterates that not accounting the storage dispatch in the counterfactual dispatch will increase the compensation paid to such exceptionally dispatched resources. 

MRP supports the CAISO’s proposal to modify the formula for assessing a resources’ state of charge (“SOC”) to (1) incorporate physical limits and (2) account for reduction in state of charge due to the provision of ancillary services. 

MRP appreciates the CAISO’s concern that energy storage resources have adequate SOC to be able to provide ancillary services (in particular, the 2RSP focuses on regulation).  As MRP understands, the CAISO’s proposal that an energy storage resource submit energy bids for 50% of the award in the opposite direction of the award (i.e., submit bids to charge for 10 MW associated with a market award to provide 20 MW of regulation up) is intended to ensure that the storage resource has sufficient SOC to satisfy the award.  MRP would like the CAISO to better explain why it selected 50% of the award (is it based on the requirement in Tariff Section 8.4.3?).  MRP would also like the CAISO to clarify whether this energy bidding/SOC requirement would apply to storage resources providing ancillary services other than regulation.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

MRP supports qualifying storage resources to provide local area reliability subject to ensuring they have sufficient state of charge to provide the required energy in the event of a contingency.  This topic has been discussed as part of the CAISO’s Local Capacity Area Technical Study process for several years.  In that process, the CAISO has indicated that the ability to charge storage resources may be a limitation in certain constrained areas.  MRP requests the CAISO clearly define how it would choose which energy storage resources may not qualify or may only partially qualify to provide local area reliability service in areas in which there is insufficient charging capability to allow energy storage to meet the local area reliability need. 

MRP also requests the CAISO discuss how the CAISO will compare the costs of providing local reliability service from conventional gas resource and energy storage resources (e.g., will the storage resource used for local reliability be compensated for holding state of charge, a cost that presumably would not apply to the gas resource).   

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

MRP supports the proposed co-located model, which would limit grid charging by adjusting the battery’s charging schedule to match the variable energy resource’s output. 

While MRP notes that the primary purpose of the proposed co-located resource model is to limit grid charging – which the CAISO observes may be prohibited by some contracts with co-located resources – MRP also notes that in the past the CAISO has declined to accommodate contractual limitations in its market models.  For example, in the CAISO’s Commitment Cost Enhancements Phase 3 initiative, the CAISO proposed,[1] and FERC accepted,[2] a three-year limit on honoring contractual limitations.  Moreover, in the same proposed amendment, FERC rejected allowing market participants to submit a set of CAISO master file values that reflected contractual limitations.[3]   While the situation envisioned in what was proposed in ER18-1169 and what is envisioned in the CAISO’s co-located resource proposal may not be completely analogous, MRP respectfully requests the CAISO further discuss the implications of its proposal to honor contractual limitations for co-located resources in a later proposal in this initiative.

MRP supports the CAISO’s proposal to subject co-located resources that are unable to properly charge because of insufficient energy from the on-site co-located resource to RAAIM penalties (2PRSP at page 19).

[1] Filing to Implement Commitment Cost Enhancements Phase 3 Initiative, Request for Timely Commission Order, and Request for Waiver of Notice Requirement, submitted March 23, 2018 in Federal Energy Regulatory Docket No. ER18-1169, at pages 4, 24-26. 

[2] California Independent System Operator Corporation, 163 FERC ¶ 61,211 (2018) (“ER18-1169 Order”) at P. 35.

[3] ER18-1169 Order at PP 44-46. 

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

MRP supports the proposed WEIM classification (joint authority with the CAISO BOG).

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

While MRP does not object to the CAISO including opporutnty cost in both the storage resource's day-ahead DEB and its real-time DEB, MRP requests the CAISO fully discuss how opportunity costs are or are not factored into the DEBs for other kinds of resources.  

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

PG&E appreciates the CAISO’s efforts to address stakeholders’ concerns raised in comments to the Revised Straw Proposal dated June 30. While some implementation details require further definition, PG&E supports the direction the CAISO is taking with the initiative. A summary of PG&E’s key comments is summarized below:

1. PG&E agrees with the CAISO’s decision to develop a new storage model in a separate initiative.

2. PG&E requests additional clarity on ancillary service awards and the future state of charge formula multiplier. PG&E believes the CAISO should clarify how the day ahead energy bids intended only to support regulation can be differentiated from economic day ahead energy bids. PG&E would also like to understand why the CAISO should consider a methodology for developing an hourly multiplier in the future, even if initially only two values based an empirical analysis are used.

3. PG&E recommends CAISO adopt one of the approaches to the regulation energy issue before considering another potential solution to the same problem.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

On CAISO analysis on Reliability – Ancillary Services, Operational Experience:

PG&E appreciates the analysis shared during the stakeholder call showing how storage resources can deviate from ISO instructions. This supports the need for changes to enhance reliability.

On Ancillary Services – Changes of the storage state of charge (SOC) formula:

PG&E supports CAISO accounting for regulation energy in its procurement and use of regulation.  The second revised straw proposal refines one approach to this accounting and proposes another novel approach. PG&E recommends that the CAISO adopt and implement only one of these two approaches instead of implementing both concurrently, for reasons explained below.

• The first approach simply requires day ahead energy bids to accompany regulation bids to a level that allows CAISO to place a real-time must offer requirement on an amount of energy that is a fraction of the awarded regulation, in the direction opposite to the regulation awarded. 

• PG&E provides a list of items that should be addressed in the final proposal:
  • How can the day ahead energy bids intended only to support regulation be differentiated from economic day ahead energy bids? Especially considering cases where market participants would not be willing to offer day ahead energy, and the relatively low level of NGR default energy bid discharge prices in the day ahead market. 
  • Could the offered energy be distinguished from economic energy to ensure it is not awarded day ahead, but simply cause real time energy dispatchability to be reserved along with the awarded regulation?   
  • Would energy bids in real time be inserted by CAISO if not provided by participants awarded regulation? 
  • Would curtailment of dispatchability in one direction in real time result under this proposal in buy-back of awarded regulation in the other direction?
  • Should real time energy bids supporting regulation be subject to market power mitigation?

• The second, new approach to accounting for regulation energy effectively treats a fraction of awarded regulation capacity as real-time throughput energy. The fractions will (a) be based on historical regulation throughput data, (b) potentially vary across hours and (c) be updated by CAISO based on new data/analysis. 

• PG&E provides a list of items that should be addressed in the final proposal:
  • Because this approach necessarily would reduce available SOC capability (both minimum and maximum), it appears that this proposal would affect not only regulation awards but also day ahead energy awards for NGRs with regulation bids.  Could the restriction of day ahead energy have unintended consequences on the calculation of CAISO’s day ahead capacity availability?
  • Would the same factors used to restrict day ahead awards be used in the FMM and RTD market processes?  If yes, please explain why?
  • There is a very high likelihood that market participants would optimize their regulation bidding (both prices and quantities) considering the values of the hourly regulation energy parameters.  For example, participants could bid to attempt to ensure awards that yield no net effect on day ahead SOC accounting.  Such bidding might lead to unintended consequences in reducing the amount of regulation offered in the direction of highest need in some hours.
  • CAISO suggested starting with static values of the regulation energy multipliers (??1 and ??2 be set to .08 and .19, respectively): as discussed at the stakeholder and highlighted in the appendix of the Proposal, the preliminary analysis the CAISO performed clearly shows that regulation awards in different hours have different impacts on the state of charge.  
  • Based on PG&E’s observations, the regulation energy takes may vary widely from the values presented by CAISO. CAISO should determine whether the variability in regulation energy take is in some cases systematic due to locational differences.  If that is the case, system-wide regulation energy take multipliers could severely distort results for particular NGRs.

• PG&E recommends CAISO consider phasing-in implementation of the proposed changes.

  • PG&E recognizes the operational needs that compel CAISO to present restrictions on regulation awards due to regulation energy takes, in the particular the case of SOC NGRs.  However, the final ESE proposal must address concerns about comparable treatment of resources, in particular the disparity between treatment of SOC managed NGRs and hybrid resources (unless the hybrid resource model is to be made available to all NGRs).  Hybrids will have no restrictions placed on their regulation awards due to SOC management (it has previously been established that will be subject to no a priori restrictions on energy awards except those established in their energy bids).

  • Finally, PG&E has a concern with “too many moving parts” in this aspect of the ESE proposal.  NGRs are already attempting to manage SOC issues via bidding processes.  Would the changes proposed mean that NGRs would be immunized against the performance penalties they are currently experiencing when regulation is bought back, awards are curtailed, or no-pays are issued due to CAISO difficulties with managing both regulation needs and NGR SOC limits?  Or would such penalties continue and perhaps even be exacerbated under the proposed changes (for example, when the deterministic regulation energy takes yield SOC management in exactly the wrong direction due to regulation being used counter to the CAISO multipliers)?

  • CAISO should consider phasing-in implementation of the proposed changes to determine whether it has solved the problem adequately with one change before rolling out the next. On first glance, PG&E recommends the first approach (day ahead energy bids accompanying regulation bids) since it is inherently more flexible than the regulation energy take approach. However, more details regarding implementation (see questions above) would be helpful to make a more informed recommendation. Since both of the proposed changes address the same CAISO operational issue, it’s likely that implementing both simultaneously will make it difficult to assess the effects of either change individually.

On the compensation for Exceptional Dispatch to hold SOC:

• Assuming the Exceptional Dispatch (ED) to hold SOC is based on reliability needs, the compensation methodology seems reasonable for ED SOC.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

PG&E generally supports the proposed co-located enhancements.

PG&E has concerns with whether NGRs that are considered co-located under the proposal would be receiving benefits (in particular, relaxation of bidding rules and must offer requirements) not comparable to those received by standalone NGRs.

On storage unavailability, PG&E believes further discussion is needed on the definition of the nature of work for the outage cards and the RAAIM exposure.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

As raised in previous comments, PG&E believes some part of the proposal (e.g., the enhancements on internal tools to ensure local reliability) are limited to day-ahead market applications and the WEIM GB should not have joint authority over them. 

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

In an addendum to the Second Revised Proposal, the CAISO proposes that the default energy bids for storage be updated, so that the day-ahead formulation includes an opportunity cost.

PG&E supports the proposal that will result in the same formulation for default energy bids for storage resources in the day-ahead and real-time markets.

PG&E requests the CAISO provides clarification on the calculation of the opportunity cost in the day-ahead timeframe in the final proposal.

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

PNM found it difficult to determine which sections apply to EIM participants and which sections apply only to full-market ISO participants.  PNM would like this and future similar documents to explicitly identify which type of market participant each section applies to.  Similarly, PNM would like to know which sections would likely be applicable to future EDAM participants. 

PNM suggests that the CAISO add a table or matrix to the top of each section identifying which type of market participant will be affected. An example is shown below:

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

N/A

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

In Section 4.2.1, PNM would like clarification on how the enhanced co-located functionality will result in different market operations than what would be expected with the Aggregated Capability Constraint in place.  What do the proposed enhancements offer that are not covered by defining an ACC for each resource at a point of interconnection? 

Additionally, within Section 4.2.1, PNM sees the proposed requirement to submit outage cards for co-located storage resources that are unavailable due to a current state of charge and no ability to charge via on-site renewables as overly burdensome.  This requirement seems to be written in context of the ISO’s RAAIM, which should not result in a burden for WEIM participants.  PNM believes the logic that would be required to manage these outage cards would be complicated and hard to define.  CAISO should find a different way to inform the market of storage unavailability that does not rely on outage cards. 

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

None

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

N/A

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

CAISO should defer Energy Storage Resource (ESR) model development, but include dynamic charging limits in the Non-Generator Resource (NGR) model in this initiative.

REV Renewables (REV) supports CAISO’s recommendation to defer further development of the ESR model to a new initiative. REV also supports CAISO’s increased consideration for enhancements to the NGR model, which supports operating energy storage resources today. However, REV advocates for moving issues that have consensus support and solutions to the current ESE initiative if possible. Specifically, we support the addition of dynamic charging limits to the current initiative as this issue continues to present challenges to both resource owners and CAISO and has both broad stakeholder support and a largely agreed-upon, simple solution. The NGR model should include this important feature as soon as practicable.

REV strongly supports including an opportunity cost component in the day-ahead Default Energy Bid (DEB). REV also strongly supports the proposed revision to the day-ahead DEB to include an opportunity cost. While CAISO notes its example is for only one day, REV has experienced this phenomenon for many days in 2022. During these days, market power mitigation triggered in earlier hours and caused the resource to dispatch during early- to mid-afternoon hours at lower prices as a result of the DEB. REV agrees with CAISO that including an opportunity cost in the day-ahead DEB should better align dispatch to higher priced hours when storage is needed most.

REV supports the proposed bid cost recovery enhancements for exceptional dispatch

REV also supports proposed bid cost recovery enhancements for exceptional dispatch. The proposed changes better reflect the opportunity costs of being withheld from the market and should compensate the resource appropriately.

REV supports the proposed ancillary service enhancements, but suggests that they be implemented in a staged approach to evaluate their impacts on the market. REV requests more detail on local reliability enhancements.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

Real-time ancillary service enhancements – REV supports the proposed requirement that resources provide real-time energy bids to allow CAISO to protect state of charge in real-time. However, further discussion is needed to determine how much offsetting real-time energy capacity is required to ensure real-time ancillary service deliverability.

Day-ahead ancillary service enhancements – REV supports day-ahead state of charge requirements for ancillary services that more accurately reflect how many MWh will be associated with each MW of ancillary service awards. However, any model of state of charge requirements for ancillary services should be dynamic by hour and time of year. At a minimum, they should be as dynamic as ancillary service procurements. In the appendix, CAISO reviews data for only a three month period. While REV understands this is the most recent data, it is unclear whether these values would be different at other times of the year. REV also supports greater transparency into when regulation resources are called upon by CAISO to better inform what the dynamic state of charge requirements should be and to allow resource owners to factor this information into their bids.

Exceptional dispatch and compensation – REV supports allowing either a MW or MWh exceptional dispatch. REV also strongly supports CAISO’s proposal of a different methodology than traditional resources for compensating storage on exceptional dispatch. Given that storage is a duration limited resource, it is particularly sensitive to opportunity costs and dispatching at different times in the day. Therefore the traditional 24-hour view of bid cost recovery is not appropriate. REV supports CAISO’s proposal to do a counterfactual dispatch analysis using the time window through the end of the operating day of the exceptional dispatch and using realized locational marginal prices in the analysis.

Local reliability – REV requests additional details on the proposed local reliability enhancements. How will these measures produce results different from a situation where resource bids are followed? Will CAISO follow submitted bid curves or issue awards and dispatch instructions outside of their submitted bid curves? While CAISO states that the imposed constraints will be in the day-ahead market and therefore factored into market constraints, it is unclear if this would always be the case or whether there are potential exceptions to this statement. REV views compensation for out-of-market reliability instructions as essential to any local reliability initiative.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

REV has no comment at this time

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

REV has no comment at this time

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

As stated above, REV strongly supports including an opportunity cost component in the day-ahead DEB. While CAISO notes its example is for only one day, REV has experienced this phenomenon for many days in 2022. During these days, market power mitigation triggered in earlier hours and caused the resource to dispatch during early- to mid-afternoon hours at lower prices as a result of the DEB. REV agrees with CAISO that including an opportunity cost in the day-ahead DEB should better align dispatch to higher priced hours when storage is needed most. REV suggests that it may be helpful to do a test run counterfactual with the proposed DEB changes to ensure that including the opportunity cost fix the identified issues.

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

The Six Cities support the CAISO’s proposals regarding the co-located resource model and do not oppose the proposed reliability enhancements for storage resources. 

The Six Cities also do not oppose the CAISO’s proposal to address issues with the previously-proposed energy storage resource model and potential changes to the non-generator resource model in a separate stakeholder process.  The Six Cities assume that the CAISO’s earlier proposal relating to the application of market power mitigation to energy storage resources will be taken up for further consideration as a part of this future initiative. 

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

The Six Cities do not oppose the proposals to (i) require ancillary services awards from storage resources to be accompanied by bids for energy at 50% of the ancillary services award; (ii) implement exceptional dispatch authority for storage resources to hold their state of charge; (iii) use an opportunity cost-based compensation approach for storage exceptional dispatch; and (iv) enhance the modeling of constraints in CAISO market processes to improve use of storage, including to manage local reliability.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

The CAISO’s proposed co-located enhancements are consistent with policies for which the Six Cities have been advocating in this and related initiatives and resolve the concerns identified in the Six Cities’ comments on the CAISO’s Revised Straw Proposal.  Therefore, the Six Cities support this element of the CAISO’s Second Revised Straw Proposal, and the CAISO’s responsiveness to stakeholder concerns is noted and appreciated. 

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

The Six Cities do not have comments on the proposed EIM classification.

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

The Six Cities do not have comments on the addendum at this time.

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

SEIA is generally supportive of the second revised straw proposal. SEIA supports CAISO’s decision to work on the new Energy Storage Resource model and consider enhancements to the existing NGR model in a separate stakeholder initiative. SEIA believes it is important to dedicate the time needed to work through these model updates to ensure that the models are effective and useful when implemented. SEIA is also supportive of the change to the co-located enhancements to make the alternate co-located model available to all co-located resources. 

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

No comment.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

SEIA supports CAISO’s proposed revisions to the co-located enhancements, namely the removal of restrictions to utilize the alternate co-located model. SEIA appreciates CAISO’s responsiveness to stakeholder feedback and believes that expanding access to all co-located resources will support co-located resource development and market participation without harming system reliability. 

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

Support.

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

No comment.

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

Southern Power Company (“Southern Power”) supports the CAISO’s decision to prioritize changes to the energy storage co-located model and reliability tools.  Creating a separate initiative for the development of an energy storage resource model and potential changes to the existing non-generator resource model will allow for greater efficiency in advancing energy storage needs, and additional time to carefully consider storage resource model enhancements.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

Southern Power generally supports the proposed reliability enhancements for storage resources and offers the following comments to further refine the proposal.

First, Southern Power prefers modeling the expected impact of regulation awards on storage resources’ state of charge over requiring energy bids with ancillary service awards.  Both concepts attempt to ensure that storage resources have sufficient state of charge to respond appropriately to dispatch instructions, and Southern Power believes implementing both would be duplicative.  Accounting for regulation awards in the state of charge formula will result in more accurate state of charge values, and Southern Power believes that CAISO’s reasoning behind the initial proposed multiplier values is reasonable.  If the CAISO elects to move forward with the proposed energy bid requirement, Southern Power requests that CAISO further clarify its proposal with details and examples.  Would the accompanying energy bid requirement apply to both Day-Ahead and Real-Time Markets?  Must the energy bid be submitted in the same interval or a prior interval as the ancillary service award?  Is the requirement to submit an energy bid rather than an energy bid actually clearing?

Second, Southern Power supports (1) the new form of Exceptional Dispatch that would instruct storage resources to hold a specific state of charge and (2) compensating storage resources according to estimated missed market revenues due to the Exceptional Dispatch requiring holding state of charge.  Southern Power requests that CAISO clarify if the proposed timeline for counterfactual comparison is through the end of the operating day on which the Exceptional Dispatch is issued or through the end of the operating day on which the Exceptional Dispatch ends since it is possible for Exceptional Dispatches to span more than one operating day.  In addition, we would support further review of the counterfactual timeline to consider future resource characteristics.

Third, SPC requests that the CAISO provide further details on the proposal to commit storage resources for local reliability needs.  It is not clear if CAISO’s proposal applies to Storage as a Transmission Asset specifically procured to address a local reliability need, to storage resources participating in CAISO’s energy and ancillary services markets, or to both.  Cost recovery rules should differ (i.e., cost-based recovery for Storage as Transmission vs. market-based recovery for market-participating resources).  SPC believes that if a market participating storage resource received an Exceptional Dispatch to address a local reliability problem, this storage resource should be compensated according to CAISO’s proposed counterfactual analysis described in the straw proposal.

Fourth, Southern Power requests that the CAISO clarify in the body of Section 4.1.3, paragraph two, that “concerns about hypothetical calculations" were for discharging when prices are below bids from resources.  The counterfactual discharge dispatch instructions should only occur when locational marginal prices exceed bids.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

Southern Power is generally supportive of the proposed co-located enhancements and believes further exploration of curtailment optimization would strengthen storage resource state of charge across the grid.  We appreciate that the CAISO has listened to stakeholder feedback and has proposed a mechanism for co-located resources that would reduce the overall risk for grid charging, provide flexibility for storage resources to deviate from real-time charging instruction when needed, and eliminate the restrictive eligibility requirements included in the prior proposal.  To further clarify the co-located enhancements functionality is available to all co-located resources, we recommend that CAISO reword the title on page 18 from “Allow Storage to Charge at Output from Solar” to “Allow Storage to Charge at Output from Co-located Renewable.”

In addition, Southern Power recommends the CAISO prioritize a future policy initiative that explores the feasibility of adopting a procedure that would further optimize the dispatch of co-located resources so that curtailed energy output could charge co-located storage resources.  A distinction could be made between fuel limitations and curtailment instructions causing a resource to generate real power output less than forecast.  For example, if a co-located renewable resource’s output is less than forecast because of fuel limitations, then CAISO would cap the charging instruction sent to the co-located storage resource based on the dispatch operating target (e.g., the renewable resource’s forecasted output) of the co-located renewable resource.  In contrast, if a co-located renewable resource has a curtailment instruction, it could be instructed to operate according to its forecasted output as long as the co-located storage resource is capable of absorbing the renewable energy output.  In either scenario, the co-located storage resource could deviate down to match the energy output of the co-located renewable resource and be exposed to imbalance charges.  This approach would recapture otherwise lost energy and increase the overall state of charge across CAISO’s storage fleet.

Finally, Southern Power requests that CAISO clarify the timing associated with the functionality that will prevent storage resources from receiving charging instructions in excess of the dispatch operating target of the co-located renewable resource.  Will this functionality be implemented in both the Day-Ahead and Real-Time Markets? 

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

No comment. 

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

No comment. 

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

Vistra applauds the CAISO for being receptive to stakeholder requests to defer the storage participation model work to another initiative. We appreciate the CAISO’s being receptive to this ask from the stakeholder community and focusing on near term, immediate needs. Vistra generally supports the elements of this initiative. However, Vistra seeks commitment from the CAISO to include solution to foldback modeling limitations in this initiative, as it is a near term, immediate need, and to include outage management enhancements in an upcoming initiative. Additionally, Vistra seeks additional clarity in the elements of the proposal in the next iteration of the paper to resolve concerns that stakeholders cannot effectively evaluate the proposals.

Vistra continues to urge the CAISO to take action to address a pressing need to improve the physical modeling of storage resources in the non-generator resource model to account for foldback and for outage management enhancements for energy storage resources, which we have submitted details on at very workshops and in prior written comments. We request the CAISO:

• Include foldback modeling improvements in this initiative - Vistra believes the CAISO still has time in this track of the initiative to pursue modeling enhancements to the existing non-generator resource model to account for foldback issues. We urge the CAISO to include modeling enhancements in this phase to accurately capture the physical reality of storage resources. Given the increasing levels of storage operational, it is not prudent to defer a solution to better represent the physical reality of the assets in the market model. The CAISO should include a proposed solution to model foldback in NGR model in the next iteration of its paper.

• Commit to addressing outage card issues for storage resources including overlapping outage cards and storage specific definitions in the business practice manual in an upcoming initiative - At this time, it appears clear to Vistra that the CAISO will not move on proposals to revise nature of work types to better capture issues that storage resources face nor to allow overlapping outage card submissions to reduce the burden on storage and CAISO operators. We request the CAISO make an affirmative commitment to include this issue in an on-going effort or upcoming effort that could be pursued and implement as soon as possible. This will allow us to focus on the merits of this proposal with assurance that this pressing concern will be discussed in a timely manner and in what effort. 

The second revised straw proposal lacks sufficient description to allow us to evaluate the merits of the policy proposals. For example, in the various sections of the paper it is not clear whether the proposed elements would apply to the day-ahead market or real-time market processes nor is it clear how the market and price formation would be impacted by the proposals. We request the CAISO release a third revised straw proposal because this initiative is not sufficiently developed to move to a draft final proposal, where the CAISO should at a minimum:

• Add additional design details including market formulations for the various market functionality including the different functionality between day-ahead and real-time for the state of charge calculation, ancillary service state of charge constraints, nomogram changes to implement minimum “online” constraints that include thermal (MW) and storage (MWh) values, etc.
• Add descriptions of how the proposed change to state of charge calculation in day-ahead and/or real-time will interact with other storage functionality such as the day-ahead and real-time ancillary services state of charge and real-time end-of-horizon constraint.
• Add description of how adding energy offer to support a percentage of ancillary service awards would impact market modeling, specifically we understand the value to be that the AS state of charge constraint can send energy instructions to move the resource into the state of charge levels needed to meet that constraint and ask for discussion on this.
• Add explanations on how the proposals would impact price formation in the markets, specifically how the use of hold state of charge exceptional dispatches or nomograms would impact price formation.
• Add explanations for why more durable biddable state of charge solution is not feasible such that the CAISO feels it must use nomograms to ensure minimum capacity/energy online in local areas.
• Add clearer description of the electable co-located model and how the policy proposals would interact with existing Tariff sections and exposure to non-conformance rules.

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

Vistra provides feedback on the proposals to improve state of charge management, add a hold state of charge exceptional dispatch and compensate for its lost opportunity costs, and to expand the use of minimum online constraints to include storage resources in addition to thermal resources.

State of charge management improvements

Vistra is supportive of the CAISO’s proposal in concept, however we believe more details need to be developed to support the conceptual proposal. We are generally supportive of adding the probability of ancillary services being deployed to the state of charge calculation if the ancillary service state of charge constraints are similarly modified to only constrain AS awards based on whether there is sufficient state of charge to meet the expected use of those awards (i.e.  , ).

In the next iteration, we request the CAISO:

1. Please propose revisions to the Ancillary Service state of charge constraints to apply the multiplier to the ancillary services on the left and right hand of the AS constraints.
2. Please provide details on how the multipliers would be determined.
3. Please explain the rationale for only including impacts to state of charge from regulation and not spinning reserves, non-spinning reserves, or flexible ramping product.  In the event, that day-ahead market enhancements is implemented, we also seek an understanding of whether imbalance reserves would be included in the day-ahead formulation and whether the multiplier would apply.

First, the CAISO only provides changes to the state of charge calculation and not the ancillary service state of charge constraint[1]. Practically, changes to the day-ahead and real-time AS state of charge constraints consistent with the policy to reflect the expected lost or gained state of charge from a storage asset providing ancillary services should also be reflected in the AS state of charge constraint. The change to state of charge calculation to include ancillary service’s expected use of state of charge drives a need to adjust the percent of the ancillary service awards that the AS state of charge constraints limit the AS awards to given that state of charge constraint. Similarly, to the state of charge calculation assuming only a portion of the ancillary services are likely to be used and impact state of charge values, the ancillary service awards should not be constrained to between 50-100% of the award in real-time and day-ahead respectively but instead the AS awards should be constrained to require the multiplier’s percent of that ancillary service award in both day-ahead and real-time. We are supportive of the state of charge calculation change, only if the AS state of charge constraint is also modified.

Second, we believe that high-level policy on how the multiplier(s) are formulated needs to be in the Tariff and vetted through this policy process. The multiplier will impact how storage assets receive DA awards or are dispatched in real-time. We believe not including important policy details on how the multiplier will be calculated in the Tariff will not ensure the Tariff includes rules that have meaningful impact on price formation. In the past, FERC has been sympathetic to the position that methods for protecting state of charge while a resource is on regulation are Tariff matters, not business practice matters. A non-exhaustive list of potential policy matters that merit inclusion in the Tariff are:

• Will there only be multipliers applied to regulation awards expected use or also to other ancillary services or flexible ramping products?
• Will there be individual multipliers for each ancillary service type or one multiplier for all ancillary service and/or imbalance reserve or flexible ramping that result in discharges versus charges?
• Would the metric apply to all hours or vary be that hour’s historical performance?
• Would the historical performance metric be a class value or unit specific?
• Would the metric be a rolling metric recalculated daily for use in the next day’s market or calculate and fixed for a set period such as a week or month? If the latter, what would be the period of time before the historical value would be re-estimated?
• Would the metric be an average or based on a percentile point, e.g.?

These questions and their resulting proposal are not implementation details, but policy matters that need to be proposed and vetted. Vistra requests the CAISO propose how the multiplier(s) will be calculated and propose which elements of that formulation the CAISO is seeking greater flexibility and discretion to adjust in the next iteration. Without this information, it will be difficult to assess if the multiplier will be an improvement over status quo. While we generally support this proposal, we can only fully support it if these details are vetted, and we are comfortable with the accuracy of the multiplier(s).

Third, the CAISO only proposes to include expected impacts to state of charge from regulation awards. It is unclear to Vistra what the principle is that there is a need to reflect the expected impact from regulation but no other ancillary services or even imbalance reserve/flexible ramping product. Please explain why only regulation is being contemplated and not the other services and imbalance/flexible products. We believe additional conversation is needed with the stakeholder community to coalesce around what issue this is trying to solve and to coalesce around how the state of charge calculation and AS state of charge constraint should be improved to better achieve the issue needing resolved.

Add a hold exceptional dispatch for storage and compensate at lost opportunity cost

Vistra supports the CAISO propose to explicitly add a hold state of charge exceptional dispatch to its market rules and procedures. This support is contingent upon the hold state of charge constraint being made whole for its lost opportunity costs due to the CAISO limiting its dispatches and the need for these exceptional dispatches being on an “exceptional” basis.

We would like to remind the CAISO that exceptional dispatches should be an exception to market dispatches and that if operators need to frequently issue hold state of charge exceptional dispatches this is indicative of a policy gap and market design inefficiency. If the frequency of the use of the hold SOC ED reflects a need for a durable solution, we believe a biddable state-of-charge product should be designed and implemented. An in market instead of out-of-market solution will be more efficient for the market in the event hold SOC Eds are frequently needed. We request the CAISO monitor and report on the use of the hold state of charge in its standard reporting and if it is being used frequently then prioritize designing a biddable state-of-charge product to replace the exceptional dispatches.

With that context, we are generally supportive of the direction the CAISO is taking with its proposal for the lost opportunity cost uplift payment for the hold state of charge EDs. We agree with the CAISO that it should not calculate counterfactual prices to use in the proposed compensation proposal. The CAISO proposal appropriately balances practical approach with the concerns raised by others on impacts to long duration storage and including ancillary service lost opportunity costs.

Next, Vistra believes the discussion needs to progress to explore:

• Whether hold state of charge ED might occur in advance of the day-ahead market or not.
• If there is a possibility of hold state of charge exceptional dispatches prior to day-ahead market being issued and impacting day-ahead market results, the lost opportunity cost should be calculated for integrated forward market and residual commitment as well. Also, whether the lost opportunities should be netted across markets would need to be discussed.
• If there is no expectation of this occurring prior to real-time, and consequently the compensation mechanism is not designed to include lost opportunities in day-ahead or real-time then the Tariff should limit hold state of charge exceptional dispatches to post day-ahead.

Revising minimum online constraints to include state of charge in local areas

Vistra strongly believes this proposal is in lieu of designing and implementing a biddable state of charge product. We believe the CAISO should be pursuing a market-based product if it is anticipating the need to procure state of charge to mitigate its reliability risks.

As an alternative to a biddable state of charge product, the need and functionality to better represent N-1-1 contingencies in the market was identified and stakeholder in the Contingency Modeling Enhancements initiative. A technical market-based solution was identified in that initiative to ensure that resources were dispatched to be able to perform through N-1 and N-1-1 conditions, while providing price transparency into the value of market decisions to position resources to do so. We understand the CAISO has had concerns with implementing CME broadly. It seems like the best short-term solution unless a biddable state of charge product is developed for the CAISO to seek approval and implement CME functionality for the narrow use case here. Instead of supporting a biddable product (ideal) or including storage in a nomogram (sub-optimal), the CME functionality could be enforced in the single local area the CAISO has a concern with as a compromise approach.

If neither a biddable state of charge product nor narrowly implemented CME is feasible, we request the CAISO revise its proposal to make storage resources whole for their lost opportunity costs. If the CAISO enforces a nomogram to ensure minimum “online” or state of charge the storage resource should still be compensated for its lost opportunity costs. The uplift compensation being proposed for hold state of charge exceptional dispatches should also be applied to dispatches while the resource is being included in a nomogram enforced in the market.

If nomograms are the preferred tool and a more durable solution is not viable, Vistra also requests the CAISO provide additional details on how the nomogram definition would be revised in these local areas. Please confirm that the proposed expansion of the use of nomograms to enforce a minimum online constraint uses the existing left hand side limit ≤ to the sum of all generators defined within the nomogram’s outfit and the sum of all storage defined within the nomogram’s state of charge values. We also assume the resource’s coefficient will be binary representing if the resource is effective under that nomogram for that market run or not once defined. Please confirm whether these assumptions are accurate or if there is another formulation being considered. We believe the nomogram should be indifferent to whether the left-hand side limit is met by the generators or the storage resources within the nomogram and appreciate the additional details being provided to evaluate this proposal more fully.

[1] Market Operations Business Practice Manual Section 7.8.2.5 on Page 354 of the Market Operations Business Practice Manual. The day-ahead formulation can be found in version 78 in Section 6.6.2.3.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

Vistra provides feedback asking for additional details and explanation on the new co-located model option and supports the CAISO's direction for pseudo-tie co-located resources.

New electable co-located with variable energy resource and non-generator resource model

Vistra requests the CAISO provide the following clarifications:

• Request clarification on the following proposal: “This functionality will include two components: 1) market rules that ensures that storage charging schedules do not exceed solar generation schedules, and 2) allowances that ensure that actual real-time charging does not exceed actual real-time co-located renewable generation”. Please clarify that the CAISO new co-located electable model is only eligible to co-located resources that have a variable energy resource component. Please also clarify that when using “solar” or “renewable generation” in this section, that the CAISO is meaning to refer to the variable energy resource component, which could be wind or solar.
• The CAISO titled the section on the second proposed item above, “allow storage to charge at output from solar”. Please see above our clarification request that this is actually “allow storage to charge at output from variable energy resource”, where the proposal is agnostic to what type of renewable component.
• Vistra asks the CAISO to make clear what the practical implication of this proposal means. For instance, Section 34.13.3 of the Tariff includes co-located resources and dispatch instructions, which already permit a co-located resource with a non-generator resource component to deviate down from its dispatch when the variable energy resource component is producing above its dispatch operating target (generally forecast) to respect the point of interconnection.
  • Practically, is the CAISO proposing a modest change to Tariff Section 34.13.3 to also allow co-located resources with non-generator resource to deviate when variable energy resource is producing either above or below its Dispatch Operating Target.
  • Vistra believes that the deviations described in Tariff Section 34.13.3 are permissible deviations not subject to Section 34.13.1 prohibition against resources’ requirement (g), “not intentionally generate above or below Dispatch Operating Target.” Please confirm.
• Vistra would like a clearer understanding of how the policy will change the rules that co-located resources are subject to in Tariff Section 34.13.2, Failure to Conform to Dispatch Instructions.
  • Please confirm that the permissible deviations for co-located with non-generator resource that we believe will now include deviate when VER component is below forecast or unavailable will not be considered non-conforming.
  • For non-conforming resources, the CAISO requires forced outages affecting ability to follow dispatch, assesses uninstructed imbalance energy for non-conformance to dispatch, and suspend eligibility for Ancillary Services and Uncertainty Awards for persistent deviations. Please confirm the CAISO’s proposal related to these three elements, for example:
    • Storage unavailability section appears to only require outage reporting for full charge capability changes where the non-generator resource has “depleted state of charge and there is no ability to charge the resource”.
      • We interpret this as any deviations to reduce charge levels commensurate with the actual output of the variable energy resource does not require submitting an outage card, where the existing outage reporting requirement will need to be revised to account for this change. Please confirm only full charge capability outage is a reporting requirement.
      • Please confirm that the CAISO intends for these outages to be submitted using the Nature of Work type “Ambient due to Fuel Insufficiency”. The Ambient due to Fuel Insufficiency card requires substitution or else it is subject to RA availability incentive mechanism, which aligns with the CAISO’s proposed RAAIM treatment, and appears to be the most relevant NOW type.
    • Allow storage to charge at output from solar [variable energy resource] section proposes that the second non-conforming treatment will apply where the deviations will be assessed uninstructed imbalance energy. Can the CAISO confirm that these UIE settlements are not pursuant to the non-conforming rules but instead revisions to permissible deviations for co-located and its settlement rule contained in Section 34.13.3.
    • Please explicitly clarify along with the above confirmation that the non-compliant procedures would not apply to these types of deviations contained in Section 34.13.3. We believe the persistent deviation test where “The RTM assumes the resource to be “non-compliant” if it is deviating its five (5)-minute Ramping capability for more than N intervals by a magnitude determined by the CAISO based on its determination that it is necessary to improve the calculation of the expected imbalance energy as further defined in the BPM” will not apply to these types of deviations. Consequently, we believe implicitly that there will be no flagging these deviations as non-compliant such that there will be no need to suspend eligibility for ancillary service awards during these permissible deviations. Please confirm.

Pseudo-tied resource functionality

Vistra believes that for this proposal to feasible it is necessary that the host BAA will need to give prior written approval affirming the co-located resource can use this functionality and attesting that:

• There is firm transmission to support the maximum capability being modeled under the aggregate capability constraint.
• The resources have physical controls in place to prevent co-located resource from exceeding Point of Interconnection service with the host BAA.

Vistra supports this proposal with the caveat that these protections and attestation from the host BAA are necessary elements to ensure that the co-located resources being afforded this functionality will not undermine reliability either to the CAISO or to its host BAA.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

Vistra supports joint authority for this initiative as these proposals will apply to WEIM participants with storage resources. 

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

Vistra supports the CAISO proposal to include opportunity cost in the day-ahead default energy bid calculation. This is a positive improvement to the existing design.

We are concerned that it still does not address the concern that the difference between the highest charge offer and lowest discharge offers will not be reflected in the mitigated bid curve, which can lead to irrational market awards or dispatches. Vistra asks the CAISO to consider whether revising the day-ahead and real-time further to only include the Opportunity Cost element on the discharge side would result in mitigated bid curves better approximate the relative value between moving from charge to discharge modes. We believe there is a modest revision that can be made to ensure the “opportunity cost” from moving from charge to discharge mode can be retained in mitigated bid curves in any proposed changes being made. Please provide a revised proposal for storage DEB that accomplishes this policy goal in the next iteration in both day-ahead and real-time.

As we noted on the call, we have some additional concerns with mitigation in real-time causing storage to be dispatched out of sync with its day-ahead awards not as a function of a change in market fundamentals but instead because of market power mitigation. We are exploring what design changes might be feasible to address this concern. At this time, we ask the CAISO to explore whether it believes mitigation should not be driving charge and discharge patterns in real-time meaningfully different than the day-ahead awards or if it is comfortable with this market outcome. If the CAISO is comfortable with this market outcome, please share additional insights into why real-time dispatch patterns are appropriately altered relative to day-ahead awards largely, or solely, due to market power mitigation instead of change to market drivers.

1. Please provide a summary of your organization’s general comments on the second revised straw proposal presentation for this initiative:

WPTF appreciates the CAISO’s proposal to streamline this initiative and continue work on the new Energy Storage model in a later phase. WPTF is generally supportive of the direction of the second revised proposal but seeks additional clarification on a few aspects. WPTF is disappointed the CAISO has not moved forward with enhancing the NGR model to reflect physical characteristics of storage more accurately. We support at a minimum adding a proposal to enhance the NGR model to address the well-known foldback issue where Pmin and Pmax levels change as a function of State of Charge (SOC).

2. Provide your organization’s comments on the proposed reliability enhancements for storage resources, as described in the second revised straw proposal:

WPTF supports the CAISO considering a resource’s potential state-of-charge in awarding DA regulation and believes this change should be implemented and monitored for success before imposing any energy offer constraints in the market. We would like to better understand how the proposed state-of-charge constraint will interact with the other day-ahead constraint that constrains ancillary service awards. Thus we ask the CAISO to provide some examples of the two constraints and how they will interact with a storage resource providing both energy and ancillary services. We appreciate the CAISO providing transparency around how it proposes to calculate the multiplier along with the initial estimated multiplier. We do also wonder if the CAISO considered using the actual mileage of storage resources as another means for estimating the multiplier and would be interested in seeing a comparison between the two approaches. As discussed during the workshop, the day-ahead energy offer requirement for storage resources offering to provide regulation serves no specific purpose thus WPTF recommends the CAISO eliminate this proposal aspect completely.

WPTF would like to take this opportunity to gain additional clarification on a constraint currently in the real-time market as it relates to the state-of-charge of storage resource’s providing regulation. It is our understanding that the CAISO currently requires a storage resource providing regulation to have sufficient state-of-charge to provide at least 30 minutes of the day-ahead regulation award in real-time. Given this understanding, as the real-time market starts clearing intervals in the second half of a trade hour (i.e., less than 30 minutes remaining in the trade hour), we are unclear why the market needs to require a storage resource to hold more state-of-charge than would be needed even if the market leaned on its full regulation award for the rest of the trade hour. It seems like the CAISO could adjust the constraint such that the resource is only required to hold enough SOC to support providing its regulation award for the lower of 30mins and remaining minutes in the trade hour; or alternatively, given the proposed update to how the day-ahead market will consider the potential state-of-charge when awarding regulation, remove the constraint entirely.

WPTF requests a more detailed description of the local reliability constraint and potential impact on LMPs. Based on the information provided in the paper and during the stakeholder meeting, it is unclear to WPTF if this constraint will (1) result in a new LMP component, (2) impact the SMEC, (3) be priced separately, or (4) impact prices in another way.

3. Provide your organization’s comments on the proposed co-located enhancements, as described in the second revised straw proposal:

WPTF supports the CAISO’s proposal to implement an optional constraint to prevent grid charging. We would like to confirm that this feature will be available to all storage resources and not just resources online prior to the policy effectiveness date and for a five-year period, as previously proposed.

4. Provide your organization’s comments on the proposed WEIM classification for this initiative, as described in the second revised straw proposal:

6. Provide your organization’s comments on the addendum to the second revised straw proposal:

WPTF appreciates the CAISO holding a stakeholder call to discuss the addendum issued Jul 25. We support including the opportunity cost component in the day-ahead default energy bid; the proposed change will help ensure bids, when mitigated, will reflect the opportunity cost arising from being an energy limited resource. Based on the discussion during the call, it is our understanding that the CAISO plans to use the nodal prices coming out of the day-ahead MPM run to set the opportunity cost component of the day-ahead DEB. The MPM run prices are based on unmitigated energy offers and, as such, could reflect inflated prices as a result of market power. Thus, WPTF asks for further discussion regarding what prices should be used for setting the day-ahead opportunity cost component in the DEBs for storage resources.

While we appreciate the CAISO discussing the observed suboptimal use of storage resources as a result of the current day-ahead DEB formulation, we do wonder if there are other cases, such as (1) when the DEB is flat across the charging and discharging range and (2) a storage resource is providing counterflow on a binding constraint, that could still result in an unexpected discharge schedule for storage resources. Thus, we ask that the CAISO continue discussing the effectiveness of the DEB and the cases mentioned above as part of the Energy Modeling Enhancements initiative. This will provide the CAISO and stakeholders additional opportunities to better understand how the market may discharge storage resources under these conditions and evaluate if other enhancements are warranted.