Why renewable developers should pay attention to the Voltus FERC complaint

Voltus, a demand response program aggregator, issued a formal complaint to FERC in October 2020. The complaint states that the ability for MISO states to “opt-out” of wholesale demand response programs is harming the company. This Voltus complaint may look like it pertains mostly to demand response, but if renewable developers look closely they might learn that they could be in the same position as Voltus. The aggregation of resources at MISO is at the heart of this complaint. Distributed renewables could be aggregated under FERC Order 2222 and FERC Order 841.

Regional Transmission Organizations (RTOs) energy, capacity, and ancillary market opportunities are open to anyone with technical capabilities to participate, including distributed renewables. Therefore, the renewable industry should closely follow this Voltus complaint.

Voltus FERC Complaint

Voltus is basing its legal argument on the fact that FERC Order 2222 on Distributed Energy Resource Aggregation (DERA) and Order 841 on Electric Storage Resource (ESR) participation does not allow state opt-outs, but FERC demand response Order 719 does. When FERC allowed states to opt-out of wholesale demand response participation, all MISO states except Illinois opted out.

Voltus is also seeking fast track status for its complaint because of the MISO auction timeline. For the 2021/22 MISO auction, MISO Load Serving Entities (LSEs) start lining up their resources in December 2020 as soon as capacity credit for wind and solar is announced.

Aggregation is at stake

If MISO utilities continue to control who gets to aggregate resources, clean energy advocates must continue to show up at state Integrated Resource Planning (IRP) proceedings. Because while big utility announcements carry much press, the details are in the utility IRP capacity models. However, if third-party aggregation were allowed, competition for capacity would lead to price transparency and a better customer outcome, as we saw with all-source IRP in Xcel Colorado.

Distributed renewables are in the same position

The capacity price opportunity of participating in MISO’s voluntary capacity auction is at stake for renewables. MISO’s 2020 auction cleared 850 MW of solar. MISO’s planning models forecast more than 3,000 MW of distributed PV in the 2021 transmission expansion plan, which means that while Voltus is focused on demand response aggregation, distributed renewables will soon be in the same position as Voltus if third-party aggregation is not allowed at MISO.

Utility-scale renewables alone cannot solve the carbon-free goals of any state. That’s why states across RTOs have behind-the-meter targets for solar and storage. The energy output from small-scale developers serves as a hedge against the curtailment risk that large-scale utility solar projects face. The transmission needed to interconnect utility-scale solar under the best-case scenario is 2030 and beyond. Aggregated distributed renewables are going to save the day for grid operators.

Expected MISO response

MISO wants FERC to reject the Voltus complaint. Instead of pointing to MISO state’s desires, MISO categorically placed Voltus’ complaint as a “collateral attack” on FERC Order 719 and 719-A. As an independent grid operator, and one that insists on being a “policy taker, not a policymaker,” MISO should have responded that it is implementing state and federal policy — not making up a policy.

SPP RTO tipped their hand

In the Voltus compliant, there is a section where a Southwest Power Pool (SPP) RTO email is provided as evidence to suggest SPP RTO is playing favorites with its transmission owner Nebraska Public Power District (NPPD). SPP RTO said that allowing Voltus to bid into the ancillary services market would result in NPPD revenue loss. This is not something the renewable industry expects from an Independent System Operator (ISO).

SPP RTO evidence is especially relevant for Google and Walmart. Both are itching to play a more active role at RTOs. Walmart has an application at the Arkansas state commission to become an aggregator, which led to Arkansas reopening the docket on the demand response aggregation. This Arkansas development is applicable because FERC Order 2222 on DERA picked up on an idea initiated by Arkansas commission Chair Ted Thomas which allows state regulatory authorities to qualify small DER aggregators participation in RTO markets. This idea is called the Relevant Electric Retail Rate Authority (RERRA) deference.

Public Interest Organizations on the side of Voltus

The organizations on the side of Voltus are Environmental Law and Policy Center (ELPC), Citizens Utility Board of Michigan, Citizens Action Coalition of Indiana, Natural Resources Defense Council (NRDC), Clean Wisconsin, and Sustainable FERC Project. Collectively these 6 organizations are called Public Interest Organizations (PIO).

PIOs provide ample evidence to FERC on why FERC should take up the Voltus complaint by focusing on Iowa, Wisconsin, Michigan, and MISO demand response program participation.

AEMA, AEE on the fence

Both Advanced Energy Management Alliance (AEMA), whose members have found a way to work with MISO states and utilities, and Advanced Energy Economy (AEE), whose members are corporations who buy renewables in bulk, agree that Voltus has raised a legitimate issue with MISO demand response opt-outs. And both suggest a FERC technical conference for all stakeholders to present on this topic.

AEMA’s response points to its support of the Relevant Electric Retail Rate Authority (RERRA) deference in FERC Order 2222.

Next Steps

What FERC would do with this Voltus complaint is unknown. If FERC accepts Voltus complaint and provides relief, then MISO can gain the operational experience needed to integrate distributed energy resources in time for the new MISO market platform to go live in mid-2022, which would benefit the renewables industry.

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Rao Konidena of Rakon Energy LLC is an independent consultant focused on providing policy and testimony support, business development, and training in wholesale energy markets. Rao likes helping solar and storage developers and consumer and environmental advocate clients. Most recently, Rao was with Midcontinent ISO (MISO) as Principal Advisor for Policy Studies, working on energy storage and distributed energy resources. At MISO, Rao worked in management and non-management roles around resource adequacy, economic planning, business management, and policy functions. Rao volunteers as an engineering mentor for middle school students participating in the Future City competition. Rao is Co-President of the Finnish American Chamber of Commerce – Minnesota (FACC-MN), and on the Board of Ever Green Energy and Minnesota Solar Energy Industries Association (MnSEIA).

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