| Independently Powered Energy News

The Federal Energy Regulatory Commission voted 2-1 to require grid operators to eliminate market barriers to aggregated rooftop solar, storage, energy efficiency and other clean energy resources on the distribution system.

Transmission operators must rework their tariffs within nine months of the new rule's implementation to include aggregated distributed resources as market participants in a way that credits them for the specific strengths they bring to the grid.

“Distributed energy resources can help keep the lights on,” FERC Chair Neil Chatterjee said at the agency's Sept. 17 meeting. Approval of FERC Order 2222 is a “seismic shift,” which “paves the way for the grid of tomorrow.”

The amount of power from behind-the-meter and other distributed resources—from grid-enabled water heaters to electric vehicles sold into the market in batches—is estimated to reach at least 65 gigawatts by 2025, and perhaps as much as 380 gigawatts.

The new 290-page rule states that it will produce just and reasonable rates. Barriers to aggregated distributed resources put into place by grid operators restrict competition, thus reducing market efficiency, often by dispatching more expensive resources, it points out.

Aggregators of these resources applauded FERC’s new rule for opening wholesale markets to resources referred to as “virtual power plants.”

“We are excited FERC continues to facilitate the use of distributed energy resources that support the grid,” Scott Murtishaw, California Solar + Storage Association senior advisor of regulatory affairs, said.

The rule was initially proposed by former FERC Chair Norman Bay in 2016 as part of the order to remove market barriers to energy storage. The issues were later split into separate rules.

CAISO is ahead but improvement needed

The California Independent System Operator is ahead of other transmission operators on accommodating aggregated distributed resources. But the new FERC rule should ease the way for more of these resources and players, say aggregators.

“Even though CAISO has the most advanced DER aggregation model in the country, there are still many ways in which DER aggregations cannot fully participate,” Ted Ko, vice president of Stem, an energy storage aggregator, told Current .

The industry has only scratched the surface of its potential, Ko said. Stem has provided power from these virtual power plants into the wholesale market for some six years , “including delivering critical help during last month’s rolling blackouts in California.” In 2014, the company launched a pilot storage project with Pacific Gas & Electric and CAISO. Three years later, it had signed contracts with three investor-owned utilities for large scale storage bids

CAISO largely allows aggregated distributed resources into its day-ahead, real-time, and ancillary services markets if they meet 0.5 MW minimum, grid operator spokesperson Anne Gonzales said.

Murtishaw said the rule will bolster distributed energy resources in California because it exempts them from having to interconnect in accordance with the federal standard as a condition of participating in DER aggregation. Interconnection difficulties have been a long-standing controversy.

Enabling energy efficiency, renewable and other distributed systems to offer capacity, energy, frequency control and other ancillary services will increase grid flexibility and bolster innovation, Chatterjee said. The “nimble nature” of distributed energy resources allows them to locate where price signals show they’re most needed, reducing congestion costs and lowering customer bills. They can both connect and send power quickly to the grid.

Commission staff said the new rule will create market transparency with respect to distributed resources in CAISO and other regional transmission operators. But it leaves intact their role in market aggregation, including ensuring there is no double counting of resources.

Commissioner Rich Glick, who also voted in favor of the new rule, said wholesale market barriers to distributed energy should have been addressed two years ago. “Better late than never,” he added.

Commissioner James Danley voted against it. In his dissent, he objected to governing “by fiat.” Commissioner Bernard McNamee left the agency earlier this month.