Comments on Workshop

1. Please provide a summary of your organization’s general comments on the workshop presentations.

The California Energy Storage Alliance (CESA) appreciates the opportunity to provide comments on the Storage Bid Cost Recovery and Default Energy Bids Enhancements.  The short notice for the meeting, posting of material just prior to the conference call, and limited time to provide written comments is inconsistent with CAISO’s stated stakeholder process objectives.  The CAISO’s Track 1 schedule is incapable of incorporating stakeholder comments into updated proposals given two business days between receiving stakeholder comments and posting of the next revision of the proposal.  Bid cost recovery (BCR) is a complex market design feature.  As demonstrated by CAISO’s emergency filing on the ancillary services state of charge constraint, there can be unintended consequences introduced by not considering the interaction between market rules and constraints with BCR.  The Energy Storage and Distributed Energy Resource initiative phases have proven to create more new issues by addressing narrow storage issues with new constraints versus addressing holistically the significant modeling enhancements and market design changes needed to use energy storage as the primary balancing resources to integrate variable energy resources to meet state policy goals. The CAISO must prioritize the Energy Storage Enhancements initiative on the approved roadmap which has not yet been scheduled.

CESA recommends that CAISO publish an issue paper/straw proposal and a final proposal versus the current planned approach for a paper roughly every week.  The issue paper/straw proposal should include numerical examples of how day-ahead and real-time bid cost recovery is calculated, a numerical example highlighting the CAISO and DMM concern of how a market participant can create unwarranted storage BCR, and CAISO’s proposed solution to address unwarranted BCR. From the discussions at the workshop, it is clear there is confusion on what state of charge (SOC) constraints exist that are driven by market SOC constraints versus resource-specific constraints that are registered or bid-in parameters. CAISO should specify which market constraint or resource-specific bid parameters it proposes to make ineligible for BCR when either the constraint binds or the bid parameter is utilized.  The CAISO could hold additional workshops prior to posting the final proposal to solicit stakeholder input to refine the final proposal.    

2. Please provide your organization’s comments regarding the scope of Track 1 – Addressing Unwarranted Storage BCR.

Track 1 should focus on identifying and addressing market participant behavior that creates unwarranted storage BCR.  It is premature to eliminate BCR for storage resources whenever the SOC constraint is binding.

3. Please provide your organization’s comments regarding the concept of reclassifying energy associated with binding state of charge constraints as non-optimal due to physical limitations, thus excluding it from BCR settlement. You may upload examples or data using the “Attachments” field below.

The approach does not assess if the BCR is unwarranted or not but assumes any time the SOC constraint is binding that BCR is inappropriate.  The CAISO must seek to identify if the state of charge limitation was caused by the CAISO market dispatch and market design shortcomings or by market participant behavior.

The following are examples where CAISO limitations result in the state of charge binding, but BCR is warranted:

• Storage resources are unable to reflect intraday opportunity costs in their energy offers which leads to dispatch inconsistent with day-ahead schedules.  The bidding rules pending at FERC address the energy bidding (except for hybrid storage configurations), but the issue still exists since default energy bids have not been improved.
• The real-time multi-interval optimization dispatches the resource out-of-merit based on advisory prices that don’t materialize because of changes in CAISO’s forecast.  
• Ancillary services are not reoptimized in the real-time market.  If ancillary services were reoptimized, the market could determine if it is more cost effective to buy back an ancillary service versus forcing a charge or discharge schedule through command-and-control constraints allowing better management of the state of charge by the resource.
• Prior market run could not see the future market conditions and determined the optimal solution was to utilize the storage differently than the day-ahead market solution and the state of charge remaining at the end of that horizon positioned the storage to be insufficient in a future horizon however its insufficiency was due to optimally solving in the prior run(s).
• Storage resources are limited to updating energy bids at 75 minutes prior to the operating hour.  This results in a 135-minute window where the SOC can change significantly, but the storage resource’s energy bids remain stagnant.  A similar issue existed for variable energy resources prior to using the 5-minute forecast to automatically adjust the upper economic limit of the wind or solar resource’s energy bid.  The energy storage enhancements initiative is planned to discuss how to address the need for more bidding flexibility or improved resource modeling.  For example, using the SOC to adjust the upper and lower economic limit of storage resources’ energy bids within the operating hour.

4. Please provide your organization’s comments regarding the topics scoped as part of Track 2 – Co-located BCR and Storage DEB Enhancements, as well as their prioritization.

The CAISO committed to the Board and Governing Body, that it would commence an initiative to develop a durable solution for storage bidding during high price conditions for Summer 2025.  All elements in Track 2 are required for the durable solution. 

5. Please provide any additional comments on the workshop presentations.

CESA requests the DMM provide an update to the chart on slide 6 of its presentation to show BCR per MW of installed storage capacity.  The storage fleet has expanded rapidly, and it would be expected that gross BCR data would increase because the number of eligible storage resources has increased.

CESA requests the CAISO include in scope of the BCR discussions following through on CAISO’s commitment to initiate a stakeholder process to discuss the circumstances justifying its ER22-2881 tariff amendment making storage ineligible for BCR when the Ancillary Service (AS) SOC constraint binds and explore possible additional market rule enhancements to address these issues. In its FERC filing, CAISO stated it was immediately initiating a stakeholder process to explore durable, more refined solutions it has yet to schedule.[1] This initiative should assess BCR rules in Track 2 holistically including in instances when the SOC constraint(s) bind to ensure that the ineligibility rules are not being applied overly punitively and only excluding intervals that would not constitute ISO commitments.

[1] CAISO Tariff Amendment under ER22-2881, https://www.caiso.com/documents/sep19-2022-tariffamendment-energystoragebidcostrecovery-er22-2881.pdf.

1. Please provide a summary of your organization’s general comments on the workshop presentations.

SCE supports the CAISO and DMM ability to prevent markets from the potential for abuse. As noted by DMM, the DA optimization should negate the need for BCR. Additionally, the RT behavior of storage regarding the buyback and sellback of DA awards, is concerning. SCE agrees that BCR should only be for limited instances, such as exceptional dispatch. Consequently, SCE supports the DMM proposal.

2. Please provide your organization’s comments regarding the scope of Track 1 – Addressing Unwarranted Storage BCR.

3. Please provide your organization’s comments regarding the concept of reclassifying energy associated with binding state of charge constraints as non-optimal due to physical limitations, thus excluding it from BCR settlement. You may upload examples or data using the “Attachments” field below.

4. Please provide your organization’s comments regarding the topics scoped as part of Track 2 – Co-located BCR and Storage DEB Enhancements, as well as their prioritization.

5. Please provide any additional comments on the workshop presentations.