In 2022, the Electric Reliability Council of Texas, Inc. (“ERCOT”) initiated and implemented several revisions to its policies, rules, and guidelines in an attempt to manage the growing integration of energy storage resources (“ESRs”) on the ERCOT System and mitigate reliability concerns. In pertinent part, these changes: (1) enhance requirements for Resources to provide certain types of ancillary services (“AS”); (2) provide ERCOT with authority to conduct unannounced testing on ESRs that provide those types of AS; (3) establish ESR state-of-charge (“SOC”) expectations; (4) attempt to give ERCOT the authority to determine when ESRs can charge during emergency conditions; and (5) attempt to create a deadline for ESRs to achieve commercial operation.

New AS Requirements

On May 1, 2022, the Public Utility Commission of Texas (“PUCT” or “Commission”) approved ERCOT-proposed Nodal Protocol Revision Request (“NPRR”) 1096, which: (1) increased the capacity responsibility duration requirement for Resources providing Non-Spinning Reserve (“Non-Spin”) from one hour to four consecutive hours (i.e., to provide Non-Spin, a Resource must now be able to sustain a capacity responsibility for four consecutive hours); (2) created a two-hour capacity responsibility duration requirement for Resources providing ERCOT Contingency Reserve Service (“ECRS”) (when that service is implemented—expected June 2023); and (3) gives ERCOT authority to conduct unannounced testing of ESRs that offer Non-Spin or ECRS.¹

ERCOT sponsored the new Non-Spin duration requirement to help ensure that Resources with AS responsibilities have sufficient capacity to remain deployed to “cover risks associated with net load forecast errors . . . [and] thermal Resource intra-day Forced Outages.”² ERCOT reasoned that a two-hour-duration requirement was adequate for ECRS because the AS was designed to meet North American Electric Reliability Council (“NERC”) frequency recovery metrics, which requires the Physical Responsive Capability (“PRC”) to be recovered within 90 minutes.³ Finally, in supporting unannounced testing of ESRs offering ECRS or Non-Spin, ERCOT noted that “the focus of the test is to verify the state of charge being reserved to provide the ECRS and/or Non-Spin responsibility that is being carried in Real-Time.”⁴

With respect to unannounced testing of ESRs offering ECRS or Non-Spin, ERCOT must follow the procedure set forth in the ERCOT Protocols.⁵ If ERCOT conducts an ESR capability test, the ESR must immediately demonstrate that the ESR can meet the target energy output level and “hold at that output level for a minimum duration required to verify ESR’s state of charge capability to meet the ECRS . . . and Non-Spin . . . Responsibility.”⁶ If an ESR fails to demonstrate that the ESR can meet its AS responsibilities, the ESR’s future AS capacity will be limited to the capacity the ESR demonstrated.⁷ ESRs can request up to two retests per month.⁸

ESR SOC Guidance

In December 2022, ERCOT staff adopted revisions to its Business Practice Manual (“BPM”) on “ERCOT and QSE Operations Practices During the Operating Hour” to describe ERCOT’s SOC expectations for ESRs. According to this BPM change, “ESRs are required to provide Real Time state of charge (SOC), maximum operating state of charge (MXOS), minimum operating state of charge (MNOS), Maximum Operating Discharge Power Limit (MXDP) and Maximum Operating Charge Power Limit (MXCP) telemetry information to ERCOT.”⁹ ESRs providing AS must have maintain a sufficient SOC to meet the ESRs’ AS responsibilities according to the following SOC-expectation formula:

SOC Expectation for AS = AS MWh Responsibility - (AS Energy Deployed since start of Operating Hour + [Primary Frequency Response] Energy Deployment since start of Operating Hour).¹⁰

Although the BPM is not a binding document, ERCOT has, in various ERCOT stakeholder forums, indicated that because the BPM provides supplemental information regarding ERCOT’s SOC expectations, ERCOT will rely on the BPM in evaluating and enforcing SOC.

ESR Charging During Emergency Conditions

Throughout 2022, ERCOT stakeholder groups, including the Protocol Revision Subcommittee (“PRS”), Wholesale Market Subcommittee (“WMS”), and Reliability and Operations Subcommittee (“ROS”), considered another ERCOT-proposed NPRR (NPRR 1143) that would allow ERCOT to decide when ESRs can charge during an Energy Emergency Alert (“EEA”) Level 3.¹¹ According to ERCOT, during extended EEA Level 3 events, “there may be times when grid conditions are conducive to, and may benefit from, allowing ESRs to charge.”¹² ERCOT ROS approved NPRR 1143 on December 1, 2022,¹³ but NPRR 1143 remains tabled at PRS and under consideration at WMS.

ESR Interconnection Timeline

On December 21, 2022, ERCOT proposed a Planning Guide Revision Request (“PGRR”) to require Interconnecting Entities to complete all conditions for commercial operation of an ESR “within 180 days of receiving approval for Initial Synchronization from ERCOT.”¹⁴ In PGRR 103, ERCOT identified numerous projects that received Initial Synchronization approval over a year ago but still have not received commercial operation approval.¹⁵ ERCOT raised concerns that delays in completing the resource interconnection process can create a reliability risk if there is “a significant amount of generation on the ERCOT System that is not providing system support services.”¹⁶

To address this reliability concern, ERCOT has proposed setting a 180-day limit for ESRs to complete the commercial operation requirements. ERCOT ROS tabled PGRR 103 on January 5, 2023, to allow ERCOT’s Operations Working Group and Planning Working Group to evaluate the proposed change.

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