Distributed energy resources (DERs) will be able to participate in US wholesale energy markets following a “landmark” new ruling from the Federal Energy Regulatory Commission (FERC).
FERC Order 2222, approved late last week, enables DERs to participate in regional organised wholesale capacity, energy and ancillary services markets, competing against more traditional power resources.
Numerous installations of DERs, such as residential solar and battery storage systems, will be able to aggregate together to reach minimum size and performance requirements, with FERC commissioner Neil Chatterjee commenting that there was “no doubt” that investment in DERs would accelerate in the coming years.
“By relying on simple market principles and unleashing the power of innovation, this order will allow us to build a smarter, more dynamic grid that can help America keep pace with our ever-evolving energy demands,” he said.
The latest ruling builds on FERC Order 841, which states that barriers to distributed and behind-the-meter energy storage participating in wholesale electricity markets should be removed. It orders regional transmission operators (RTOs) and independent system operators (ISOs) to reconfigure wholesale markets to accommodate storage resources to allow them to provide capacity, energy and ancillary services.
While that order ruled that states cannot opt-out, Order 2222 establishes a small utility opt-in whereby grid operators are prohibited from accepting bids from the aggregation of customers of small utilities whose electric output was 4 million MWhs or less in the preceding fiscal year. It also allows retail regulators to continue prohibitions against distributed energy aggregators bidding the demand response of retail customers into the regional markets.