Three steps to take for a VDER to participate in NYISO’s capacity and ancillary services market

Electricity Storage

NYISO’s dual market participation model allows both retail and wholesale market participation. To encourage DER participation towards meeting N.Y. clean energy mandates, the Department of Public Service (DPS) approved compensation for the Value of Distributed Energy Resources “VDER” at wholesale LMPs. To participate in NYISO’s capacity and ancillary services markets, VDERs must follow three steps. First, VDERs must seek an interconnection request to NYISO to obtain Capacity Resource Interconnection Service. Second, VDERs must follow NYISO capacity market ICAP rules like any other technology and resource provider. Finally, storage VDER assets less than 5 MW enrolled in ConEd must pay close attention to NYISO’s ICAP and Ancillary Services market rules.


New York’s Green New Deal has ambitious renewable energy goals (70% by 2030) and a proposed target of 100% carbon-free electricity by 2040. To achieve these goals and objectives, N.Y. plans to deploy 1,500 MW of energy storage by 2025 (660 MW for ConEd) and 3,000 MW by 2030 (1,320 MW for ConEd).

Value of Distributed Energy Resources (VDER)

NY DPS approved compensating DERs at NYISO’s wholesale day-ahead Locational Based Marginal Prices (LBMPs) (Case # 15-E-0751). LBMP is the same as Locational Marginal Price (LMP) at other grid operators, the marginal cost of serving the next MegaWatt (MW), transmission congestion and loss cost components. To participate in NYISO’s capacity and ancillary services markets, VDERs must follow three steps.

The first step – Seek NYISO interconnection service (Manual 23)

There are two options to seek interconnection service: a fast track process applies for certified small generating facilities 2 MW or less and inverter-qualified systems less than 5 MW. The pertaining document is Section 32.2.1 of Attachment Z of NYISO OATT summarized in Manual 23. In this process, NYISO does the initial screening in consultation with the Connecting Transmission Owner (CTO) (which is ConEd in zone J) and provides results within 15 business days of completed Interconnection Request (IR). There are three likely outcomes if NYISO determines the project can be interconnected:

  1. VDER is interconnected without any modifications,
  2. VDER is interconnected with modifications to the small generating facilities, or
  3. VDER is interconnected with modification to the ConEd’s system.

In the fast track process, if NYISO determines the project cannot be interconnected, NYISO continues evaluation under the study process. A study process is followed for generating facilities greater than 2 MW up to 20 MW, and for those that did not qualify for the fast track. This process is an involved process with NYISO, ConEd, and the VDER asset owner. The outcome of this first step is granting of Capacity Resource Interconnection Service (CRIS). This first step identifies the transmission node at which the VDER is compensated.

The second step A – Understand ConEd dispatch and communication rules (for transmission connected VDER)

As a dual participant, a VDER must follow retail side rules and wholesale market rules. ConEd offered dispatch and communication guidance for NYISO’s market participants in the Bulk Energy Storage Request for Proposals. Specifically, in the contract between VDER asset owner and ConEd, for the duration of the contract, the VDER is responsible for receiving NYISO real-time dispatch signals and instructions. Still, ConEd is responsible for bidding, Day-Ahead Market (DAM) scheduling and NYISO settlements. VDER asset with Automatic Generation Control (AGC) capability responds to NYISO set point instructions. ConEd provides a DAM charging and discharging schedule to VDER owner by 5 pm the previous day.

The second step B – Understand NYISO ICAP market participant rules (Manual 4)

Capacity eligibility for 2021-22 becomes effective March 1st, 2021; however, VDER should tell NYISO by August 1st, 2020 that it intends to participate in the ICAP market. Participating in the wholesale capacity ICAP market, VDER is paid by the energy (MWh) injected during the peak window. Peak window is June 24-Aug 31, five hours from 2 pm to 7 pm on weekdays excluding holidays. ConEd pays VDERs based on the actual NYISO monthly spot auction price.

The third step – Understand NYISO Ancillary Services rules (Manual 2)

Storage resources are flexible, and they can switch from providing a capacity benefit in one hour to providing a frequency regulation benefit in another hour. To participate in NYISO’s Ancillary Services (A/S) market, VDER has obligations to provide timely notifications of any operational restrictions that may limit the voltage support capabilities. VDER is also required to change their level of output at the rate consistent with the regulation service; the VDER is scheduled to provide. The total energy and operating reserves provided by the VDER is accounted for its ConEd obligations. In the VDER DAM bid, this retail side obligation should be reflected. Finally, the New York Control Area (NYCA) has a 500 MW 10-min and 1,000 MW 30-min operating reserve requirement for zone J (ConEd). VDERs have responsibilities if scheduled to provide operating reserves in the DAM.

May 1st, 2020 start date

On March 1st, 2020, NYISO started accepting applications for Meter Service Entities who are a market participant or a third-party entity that provides revenue metering and data services, including the provision of telemetry data for a DER Coordinating Entity Aggregation. Starting May 1st, 2020, VDERs can start participating in NYISO. NYISO plans to publish its initial set of transmission nodes where VDERs interconnect in the fourth quarter of 2020. This list of transmission nodes is where VDERs settle LBMPs.

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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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