FERC advocates for better DER participation in energy markets


[quote] The Federal Energy Regulatory Commission (FERC) has set out to remove existing obstacles so that electric storage resources and distributed energy resource aggregations can better participate in the capacity, energy, and ancillary services markets operated by Regional Transmission organizations (RTOs) and independent system operators (ISOs).

The Notice of Proposed Rulemaking (NOPR) called for comments on what types of market rules should be established to provide DERs with more certainty and to remove barriers to entry. [DoE issues $2.5m grant to simplify DER integration]

The California Independent System Operator (CAISO) is said to be one of the largest ISOs in the nation, responsible for managing about 80% of California’s electricity flow.

FERC has recently granted CAISO the approval for its own DER aggregation participation model, giving the operator a head start on incorporating DER aggregations into its energy and ancillary services markets.

CAISO DER aggregation model

According to the National Law Review, in 2016, CAISO adopted tariff provisions that created a new market participant category called a distributed energy resource provider.  Under CAISO’s definition, a DER provider is “a market participant that aggregates one or more small distribution-connected energy resources totalling at least 0.5 MW.”

The aggregated resource may be either in front or behind a customer meter. Resources currently participating in retail net energy metering programmes are similarly unable to also participate in DER aggregation. [DERs drives up demand for substation automation tech]

Furthermore, CAISO’s DER aggregation programme recognises the challenges in incorporating small distribution-connected resources into a market run by the transmission-level operator.  DERs interconnecting at the distribution level are subject to the interconnection requirements and operational limitations of local distribution utilities.

National Law Review adds that because the transmission and distribution systems have inherently different structures, characteristics, and functions, communication to coordinate real-time operations remains limited between CAISO and the distribution-level utility.

“CAISO recognised that its DER aggregation model contained good ‘first steps,’ but identified a need for closer coordination at the ‘transmission-distribution interface,’ where power has historically flowed only one-way.”