On November 30, 2021, FERC issued and order accepting a California Independent System Operator Corporation (“CAISO”) tariff filing designed to clarify its market rules for hybrid and co-located resources. CAISO proposed two areas of revisions: 1) enhancing market participation for hybrid and co-located resources; and 2) allowing for the use of multiple aggregate capability constraints by co-located resources at a single generating facility in CAISO. Commissioner James Danly wrote separately questioning whether hybrid resources should continue to be exempted from CAISO’s resource adequacy requirements, but agreed the revisions were just and reasonable.

CAISO’s proposed revisions were the product of the second phase of its Hybrid Resources initiative, responding to significant growth in energy storage development (see January 28, 2021 edition of the WER). Prior to the filing, CAISO’s rules lacked specifics related to hybrid resources and required CAISO to model combined generation and storage resources as either as separate co-located resources or as a single integrated hybrid resource that possessed one bid curve and settled under a single Resource ID. With respect to specifics, CAISO proposed to require hybrid and co-located resources to provide a “high sustainable limit” as a real-time estimate of the instantaneous maximum output capability to improve forecasting accuracy, a hybrid dynamic limit to specify upper and lower operational limits when scheduling in real-time, and clarified the application of its resource adequacy and capacity rules to these resources.  On modeling, CAISO proposed to allow multiple sets of co-located resources to use distinct aggregate capacity constraints simultaneous within a single generating facility, which allows CAISO to nest a set of constraints that are subordinate to the master aggregate capability constraints while still observing the interconnection limit.

FERC found the proposed tariff revisions just and reasonable and noted that CAISO’s multiple aggregate constraint concept balances the need to enforce physical and interconnection limits with the flexibility to meet contractual obligations. In response to comments suggesting that the dynamic scheduling limits should be automated to guard against potential withholding, FERC noted that CAISO’s stakeholder initiative is still ongoing and encouraged CAISO to evaluate whether further revisions are warranted.  Likewise, FERC decline to re-examine CAISO’s capacity and resource adequacy rules, which largely exempt hybrid resource from resource adequacy requirements, and instead accepted CAISO’s offer to submit informational reports providing resource adequacy capacity and encouraged CAISO to continue studying these issues.

Commissioner Danly wrote a concurrence questioning CAISO’s exemption of hybrid resources from its resource adequacy requirements, given the ongoing reliability challenges in the West. As Danly explained, however, FERC’s standard of review was whether the proposal is just and reasonable and not whether there is a better idea.

A copy of the order is available here.