FERC Order 2222 highlights - I/III
Distributed Energy Resources can participate in the wholesale energy markets.
I write below my interpretation of the Federal Energy Regulatory Commission Order 2222. There are a total of 10 major requirements.
Source - OpenAI. (2024). ChatGPT (4) [Large language model]. https://chat.openai.com
1. Interconnection
“Recognizing that distributed energy resources may already have interconnected pursuant to procedures that were accepted by the Commission prior to the effective date of Order No. 2222, the Commission stated that it is not requiring distributed energy resources that already interconnected under Commission-jurisdictional procedures to convert to state or local interconnection agreements. The Commission required each RTO/ISO to make any necessary tariff changes to reflect this guidance”
- if a DER is already participating in the market, it doesn’t need to convert to a state process.
“in Order No. 2222, the Commission declined to exercise jurisdiction over the interconnections of distributed energy resources to distribution facilities for the purpose of participating in RTO/ISO markets exclusively as part of a distributed energy resource aggregation.39 The Commission did not, however, decline to exercise jurisdiction over the interconnection of distributed energy resources to distribution facilities for purposes of participating in RTO/ISO markets outside of a distributed energy resource aggregation.”
If a DER is connected to distribution facilities to participate in a market, then, it falls under FERC jurisdiction.
2. Eligibility to Participate in RTO/ISO Markets through a Distributed Energy Resource Aggregator-
a) Participation Model
“The Commission explained that each RTO/ISO can comply with the requirement to allow distributed energy resource aggregators to participate in its markets by modifying its existing participation models to facilitate the participation of distributed energy resource aggregations, by establishing one or more new participation models for distributed energy resource aggregations, or by adopting a combination of those two approaches.42”
Market operators can modify their existing models or establish a new model for DER Aggregations to participate.
2 b) Types Of Technologies
“The Commission explained that requiring that RTOs/ISOs allow heterogeneous aggregations will further enhance competition in RTO/ISO markets by ensuring that complementary resources, including those with different physical and operational characteristics, can meet qualification and performance requirements such as minimum run times, which will help ensure that RTO/ISO markets produce just and reasonable rates.112”
“The Commission stated that, if the distributed energy resource participates as demand response, the requirements in Order No. 745 would apply, and the RTOs/ISOs are required to allow that distributed energy resource to aggregate with other types of distributed energy resources in a heterogeneous distributed energy resource aggregation. The Commission stated that, if the behind-the-meter resource participates as another type of distributed energy resource (i.e., not as a demand response resource), the requirements in Order No. 745 would not apply.”
Order 745 requirements apply to Demand Response resources participating in an Aggregation.
Source - MISO.
2 c) Double Counting of Services
“the Commission required each RTO/ISO to revise its tariff to: (1) allow distributed energy resources that participate in one or more retail programs to participate in its wholesale markets; (2) allow distributed energy resources to provide multiple wholesale services; and (3) include any appropriate restrictions on the distributed energy resources’ participation in RTO/ISO markets through distributed energy resource aggregations, if narrowly designed to avoid counting more than once the services provided by distributed energy resources in RTO/ISO markets.134”
DERs participating in retail programs can participate in wholesale markets. They can provide multiple services. Grid operators can place narrowly designed restrictions such that double counting is avoided.
“In Order No. 2222-B, the Commission clarified that payment of full LMP in the energy market to behind-the-meter distributed energy resources participating as demand response resources in distributed energy resource aggregations does not constitute double counting, so long as the requirements of Order No. 745, including the net benefits test, are satisfied.”
Paying full LMP to DERs that participate as Demand Response is not double counting.
2 d) Minimum and Maximum Size of Aggregation
“‘In Order No. 2222, the Commission added section 35.28(g)(12)(iii) to the Commission’s regulations to require each RTO/ISO to implement a minimum size requirement not to exceed 100 kW for all distributed energy resource aggregations.192 The Commission stated that it will consider any future post-implementation requests to increase the minimum size requirement above 100 kW if the RTO/ISO demonstrates that it is experiencing difficulty calculating efficient market results and there is not a viable software solution for improving such calculations.”
The minimum size of an Aggregation is 100 kW for now.
3. Locational Requirements
“In Order No. 2222, the Commission added section 35.28(g)(12)(ii)(b) to the Commission’s regulations to require each RTO/ISO to revise its tariff to establish locational requirements for distributed energy resources to participate in a distributed energy resource aggregation that are as geographically broad as technically feasible.”
The requirements for an Aggregation can be as geographically broad as technically feasible.
“The Commission stated that each RTO/ISO must provide a detailed, technical explanation for the geographical scope of its proposed locational requirements.204 While each RTO/ISO must provide a detailed, technical explanation for the geographical scope of its proposed locational requirements, the Commission provided RTOs/ISOs with a certain degree of flexibility as to the technical aspects of a locational requirement that is as geographically broad as possible.”
The grid operators must give a detailed technical explanation for the locational requirements.
4. Distribution Factors and Bidding Parameters
“In Order No. 2222, the Commission added section 35.28(g)(12)(ii)(c) to the Commission’s regulations to require each RTO/ISO to establish market rules that address distribution factors and bidding parameters for distributed energy resource aggregations.260 Specifically, the Commission required each RTO/ISO that allows multi-node aggregations to revise its tariff to (1) require that distributed energy resource aggregators give to the RTO/ISO the total distributed energy resource aggregation response that would be provided from each pricing node, where applicable, when they initially register their aggregation, and to update these distribution factors if they change; and (2) incorporate appropriate bidding parameters into its participation models as necessary to account for the physical and operational characteristics of distributed energy resource aggregations.”
“The Commission stated that, in meeting the requirement to incorporate appropriate bidding parameters into its participation models as necessary to account for the physical and operational characteristics of distributed energy resource aggregations, each RTO/ISO must either (1) incorporate appropriate bidding parameters that account for the physical and operational characteristics of distributed energy resource aggregations into its one or more new participation models for such aggregations; and/or (2) adjust the bidding parameters of the existing participation models to account for the physical and operational characteristics of distributed energy resource aggregations.
261 The Commission noted that bidding parameters could include, for example, response rates, ramp rates, and upper and lower operating limits.262”
The bidding parameters for DER Aggregations must include operational characteristics such as response rates, ramp rates, upper and lower operating limits.
5. Information and Data Requirements
“the Commission required each RTO/ISO to revise its tariff to (1) include any requirements for distributed energy resource aggregators that establish the information and data that a distributed energy resource aggregator must provide about the physical and operational characteristics of its aggregation; (2) require distributed energy resource aggregators to provide a list of the individual resources in their aggregations; and (3) establish any necessary information that must be submitted for the individual distributed energy resources. The Commission also required each RTO/ISO to revise its tariff to require distributed energy resource aggregators to provide aggregate settlement data for the distributed energy resource aggregation and to retain performance data for individual distributed energy resources in a distributed energy resource aggregation for auditing purposes.”
Aggregators must provide aggregate settlement data for the DER Aggregation and retail individual performance data for individual DERs for auditing purposes.
“First, the Commission required each RTO/ISO to revise its tariff to include any requirements for distributed energy resource aggregators that establish the information and data that a distributed energy resource aggregator must provide about the physical and operational characteristics of its aggregation.”
“Next, the Commission directed each RTO/ISO to revise its tariff to require distributed energy resource aggregators to provide a list of the individual distributed energy resources participating in their aggregations to the RTO/ISO.280 The Commission stated that, if an RTO/ISO needs additional information beyond this list, the RTO/ISO should identify and explain in its compliance filing what additional specific information about the individual distributed energy resources within an aggregation the RTO/ISO needs. The Commission stated that each RTO/ISO should also propose how the information requested must be shared with the RTO/ISO and affected distribution utilities. As part of these tariff revisions, the Commission stated that each RTO/ISO must also require that the distributed energy resource aggregator update that list of individual resources and associated information as it changes.281 The Commission also found that the distributed energy resource aggregator, not an individual distributed energy resource in the aggregation, is the single point of contact with the RTO/ISO, and that the aggregator would be responsible for managing, dispatching, metering, and settling the individual distributed energy resources in its aggregation.282”
The Aggregator is the single point of contact with the grid operator, not the individual DER.
“The Commission found that aggregate settlement data for a distributed energy resource aggregation, as well as performance data for individual distributed energy resources in a distributed energy resource aggregation are necessary for the participation of any type of resource in RTO/ISO markets and to enable the RTOs/ISOs to perform necessary audit functions.283”