There’s been a lot of discussion recently about the potential impacts of NPRR (Nodal Protocol Revision Request) 1186 for battery energy storage in the ERCOT market. The intention of 1186 is to ensure that storage resources have enough ‘state of charge’ to fulfill their Ancillary Service obligations.
However, there has been pushback from energy storage stakeholders - and others. The proposal has already been watered down from its original form. Despite being unanimously approved by ERCOT’s Board of Directors in October, the Texas PUC (Public Utility Commission) has deferred voting.
But, if NPRR 1186 were to be approved in its current form, what would it actually look like? And how would it affect battery energy storage operations?
[Note: this article looks specifically at how NPRR 1186 would impact the physical operations and telemetry of battery energy storage systems. It does not discuss the proposed penalty charges for falling below required state of charge levels.]
What does NPRR 1186 mean for battery energy storage resources operationally?
NPRR 1186 was designed to give ERCOT insight into the total stored energy - or state of charge - that batteries hold at any given time.
This requires operators to provide additional information:
- Prior to the operating day, operators must provide additional Current Operating Plan (COP) data - to reflect planned state of charge at the beginning of each operating hour.
- During real-time operations, batteries must telemeter their active state of charge.
But what might this look like?
- If a battery has 5 MW of Ancillary Service responsibility, it needs to have at least 5 MWh state of charge at the beginning of the operating hour.
- Halfway through the hour, it needs 2.5 MWh - i.e. the energy to sustain 5 MW of output for the remainder of the hour.
- If the resource has 5 MW of responsibility again in the next hour, the required state of charge resets to 5 MWh.
ERCOT communicates the minimum required state of charge to storage providers. This is based on each asset’s current Ancillary Service responsibilities, and the time left within the operating hour.
The calculation functionally works the same way - just in the opposite direction - for Ancillary Services designed to bring frequency back down towards 60 Hz (like Regulation Down).
How battery energy storage operations might look under NPRR 1186
Let’s take a look at how NPRR 1186 might impact the operations of a 100 MW battery. The resource has won a contract to carry 90 MW of Responsive Reserve Service (RRS) responsibility in the Day-Ahead Market, for delivery across two operating hours - 12:00 until 14:00.
The first operating hour (12:00 - 13:00)
At 12:00 (the start of the first operating hour), the battery has 90 MWh of energy stored. Throughout the hour, frequency is relatively stable. This results in minimal automatic frequency response throughput from the battery.
- Over the course of the operating hour, the battery receives occasional instructions to discharge energy. In doing this, the battery’s state of charge drops below the level required to fulfill its obligations for the full operating hour - however, because time has elapsed, the battery hasn’t actually dropped below its updated obligations at any time.
- Because this battery also has an obligation for the operating hour beginning at 13:00, the battery restructures its offer curve to receive a charging base point (or dispatch instruction) - so that it has the required state of charge at the beginning of that period.
- To allow this to happen, ERCOT extends a ‘charging credit’. This means that state of charge requirements are actually lower (see 12:45) while the battery charges up, and the battery isn’t punished. (If the Ancillary Service were deployed while the battery was charging, the battery would simply stop charging - and still be partially fulfilling its obligation, by helping frequency move back towards 60 Hz.)
The second operating hour (13:00 - 14:00)
At 13:00 (the beginning of the second operating hour), the required state of charge returns to 90 MWh. A frequency event occurs during this hour. This results in the battery initially providing automatic frequency response.
- Following this, RRS is deployed to help restore frequency back towards 60 Hz.
- The resource then moves its RRS schedule from 90 to 0 MW. Doing this allows for the reserved capacity to be made available to the economic dispatch.
- The resource then receives discharging base points in line with its increased discharging capability. This reduces its state of charge.
- Rather than restoring this battery’s state of charge to 90 MWh, the QSE moves some Ancillary Service responsibility to another of its resources. This is done to avoid needing to charge the battery at an inopportune time.
- This is why - at the end of the second operating hour - the resource’s RRS responsibility decreases to 50 MW. Since RRS has been recalled and the resource is reserving less of its capacity for Ancillary Services, the HASL increases (essentially, the resource has less of its capacity reserved for providing Ancillary Services).
Will battery energy storage capacity be held back in the case of an energy emergency?
The short answer is no. On a true tight capacity day, when ERCOT has low operating reserves, it’s likely that Ancillary Services would be deployed. Therefore, battery energy storage capacity that has been reserved for Ancillary Service responsibilities would still be available to the economic dispatch. This capacity would thus be able to receive base points - and help to stabilize the grid.
On September 6th 2023, ERCOT declared an energy emergency. This was due to declining frequency and low operating reserves. Before the emergency was declared, all Ancillary Services had been released. This meant there was no BESS capacity left unavailable during the most critical portion of the operational day.
Even with the implementation of NPRR 1186, this would still be the case. In fact, situations like this are what the NPRR was/is designed to support.
So, what does it all mean?
Under NPRR 1186, operations would become more difficult - but resources wouldn’t be restricted from procuring the same quantity of Ancillary Services they do now. Much of the increased complexity regarding battery energy storage operations already existed (in ERCOT’s Network Operations Model, and current telemetry expectations).
At times when the grid is under potential duress due to a lack of capacity, NPRR 1186 would not limit the ability of batteries to contribute to stabilizing the grid - in theory. This is because - when supply is limited and reserves are low - ERCOT will deploy its Ancillary Services before reaching a state of energy emergency. This ensures that additional reserved capacity will not go unused during emergency operations.
However, there are some risks associated with this potential legislation. In certain circumstances, the proposed financial punishment ($25,000 per dispatch interval deemed short) could potentially send the wrong signal to batteries, causing them to do the opposite of what the grid theoretically needs during multi-hour scarcity events in order to avoid fines. During a multi-hour deployment, it could also force resources to charge during highly volatile price periods in instances where a battery operator has obligations across multiple assets and multiple hours.
All in all, NPRR 1186 certainly introduces some additional risk for battery energy storage assets, particularly in how they operate presently and in the near future. It’s likely that this would result in batteries needing to be more conservative with their bidding behaviors in the Ancillary Service markets - at least on days where a multi-hour scarcity event is potentially in play.
Ultimately, we don’t even know if NPRR 1186 will be approved by the PUC. If implemented, it does have the potential to affect the way that batteries participate in the Ancillary Service markets, particularly in regard to potentially high volatility operating days. It’s likely that these types of changes were already on the horizon with Ancillary Service saturation coming in 2024, but the additional risk introduced by potentially onerous punishments does potentially further incentivize a shift towards Energy Arbitrage for battery operators.