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Why should FERC act on Distributed Energy Resource Aggregation (DERA) now?

Solar Grid

FERC should release order on DER Aggregation (DERA). Without a mandate from FERC, New York Independent System Operator (NYISO) and others will lead the industry with their dual participation models. If FERC storage order 841 is any indication, ISOs need time to work together with their stakeholders on compliance plans.

There are three reasons why FERC should release the DERA order now. First, technology-agnostic aggregators are the key to implementing DERs. They need a clear wholesale price signal. Second, big corporations like Google and General Mills are trying to figure out the ISO/RTO processes. They don’t want to invest in transmission. They want to invest in renewables and DERs. Third, without an order from FERC, unregistered DERs like we see at MISO will increase, leaving ISOs with little visibility on DERs.

FERC DER background

Federal Energy Regulatory Commission (FERC) issued both DERA and Electric Storage Resource (ESR) Notice of Proposed Rulemaking (NOPR) in November 2016, but only one ESR order 841 (released February 2018, re-affirmed May 2019). The last action FERC staff took on DERs was to send the data requests to ISO/RTOs on the interconnection of DERs in September 2019. FERC has a broad definition of DER that includes electric storage, distributed generation, thermal storage and electric vehicles and their supply equipment. It is time for FERC to issue an order on DERA for the following three reasons.

First reason – Technology-agnostic aggregators

Aggregators are essential to unlock distributed energy resources potential for the electric grid. They are technology agnostic; they optimize resources according to their system needs. If planned well, DERs provide reliability to the network. Utilities can be aggregators. Aggregators can manage Electric Vehicle (EV) charging equipment, long-duration storage, and microgrids.

States that have retail electricity and allow 3rd party aggregators have the most experience like California (Community Choice Aggregators), Texas (Retail Energy Supply Providers), Illinois (Aggregators of Retail Customers), and others. In some ISOs like MISO, there are barriers for the aggregator to aggregate across multiple Local Balancing Authorities (LBAs). Hence MISO started DER Workshops with stakeholders.

The second reason – Corporations like Google and General Mills

Corporations such as Google do not have a way to engage in organized wholesale markets. DERs provide them with that pretext to involve and interact with ISOs. But these corporations do not have the patience to follow and participate in ISO/RTO stakeholder committees for years at a stretch. General Mills just announced a worldwide commitment to 100% renewables by 2030. Distributed energy resources will be needed to attain these renewable goals.

Because businesses create jobs, if they are unhappy with ISOs – they will go directly to Governors and their legislators. This unhappiness sets up State vs. Federal jurisdictional issues. Instead, a FERC Order could provide a level playing field for distributed resources.

The third reason – Unregistered DERs

Without an order from FERC, the unregistered DERs will increase at ISOs, leaving them with no visibility. Each state is figuring out DERs on their own with IEEE 1547-2018, but they don’t have the “regional” mandate. ISOs do.

Unregistered DERs are resources that do not register with the ISO to participate in the market. The operator does not dispatch them. However, we know where they are on the system, thanks to utility distribution interconnection rules. Midcontinent Independent System Operator (MISO) estimates 30% of DERs (4,700 MW) of potential not-registered DERs in a recent survey.

Most states are pursuing grid modernization efforts, integrated distribution planning and distributed generation interconnection dockets. Without an order from FERC, they will lose sight of wholesale market opportunities for keeping retail rates affordable, reliable and equitable.

Conclusion

Finally, as we saw with the storage order – ISOs need some time to strategize and file a compliance plan. So, even with a DER prescription from FERC now, it will take some time for ISO’s to implement. With an order from FERC, ISOs have an opportunity to initiate dialogue with states. Otherwise, states like New York are leading, while others are lagging. The same applies to corporations. Aggregators and corporations are essential for DERs to provide reliability, a FERC order on DER Aggregations will enable wholesale rates to be just and reasonable.