Multi-nodal aggregation discussion at SPP gets serious.
Multi-nodal aggregation limited to 100 MW in SPP East and 20 MW in SPP West. No max size limit for single node aggregation but multi-nodal aggregation size limited to 10 MW.
This blog is based on Voltus presentation to SPP’s Market Working Group, July 24, 2024. Since then, SPP has presented tweaks to its July proposal to the MWG on August 20, 2024. I will highlight SPP’s proposal from August meeting below.
SPP also stated at Aug MWG meeting that SPP intends to schedule workshops with distribution utilities and state regulatory staff in October and November leading upto FERC filing date on December 26, 2024.
In recent years, the electricity market has undergone significant transformations driven by technological advancements and regulatory shifts. One of the most promising developments is the integration of Distributed Energy Resources (DERs) into the wholesale electricity markets. To fully leverage the potential of DERs, it is crucial for grid operators like the Southwest Power Pool (SPP) to adopt multi-nodal aggregation. This blog aims to advocate for multi-nodal aggregation at SPP, emphasizing its benefits, challenges, and the path forward.
The Future of DERs and the Need for Multi-Nodal Aggregation
DERs, such as residential smart thermostats, batteries, and electric vehicle (EV) chargers, represent a rapidly growing segment of the energy market. These resources offer flexibility, resilience, and environmental benefits. However, their integration into the wholesale market has been limited by the current aggregation rules that require geographical proximity within a single pricing node.
Multi-nodal aggregation, as envisioned by the Federal Energy Regulatory Commission (FERC) Order 2222, allows DERs from different pricing nodes to be aggregated into a single resource. This approach is essential for creating a reliable and scalable system that can adapt to the evolving grid landscape. Voltus, a leading aggregator, highlights that without multi-nodal aggregation, the future participation of DERs in the wholesale market is severely constrained.
The Benefits of Multi-Nodal Aggregation
Enhanced Reliability and Scalability: Aggregating resources across multiple nodes enhances system reliability by ensuring a diverse and geographically distributed resource base. This reduces the dependency on any single node and mitigates the risk of localized disruptions.
Equitable Market Participation: Limiting aggregation to a single node disadvantages consumers in less densely populated areas. Multi-nodal aggregation provides equitable opportunities for all consumers to participate in and benefit from the wholesale market, regardless of their location.
Optimized Resource Management: Aggregating DERs across multiple nodes reduces the complexity of managing numerous small resources individually. This streamlines operations and improves the efficiency of optimization engines used in market processes.
Challenges and Proposed Solutions
The current proposals for multi-nodal aggregation at SPP include predetermined pockets of similar nodes and system-wide aggregation limits. However, these proposals have significant limitations:
Administrative Feasibility: Predetermined pockets may become administratively infeasible and require regular re-evaluation. As the grid evolves, the criteria for similar nodes must adapt to ensure continued feasibility. SPP discussed predetermined pockets (“Pockets defined based on historic binding, creating a process delay, potential intra-month Operational issues, and does not incorporate future system conditions (ie future outages)”) at the July MWG but not at the Aug MWG meeting.
Restrictive System-Wide Limits: Setting a system-wide limit for multi-nodal aggregations of 100 MW for SPP East and 20 MW for SPP West is overly restrictive. The potential for DERs in SPP is estimated to be upwards of 38 GW. Such a low cap stifles competition and innovation by limiting the number of possible aggregations. SPP stated a limit of 50 MW but didn’t specify the SPP East and West limits at the July MWG, but has since specified 100 MW limit for SPP East and 20 MW limit for SPP West at the Aug MWG. See map below for SPP East and West footprint.
Node Size Limits: A maximum node size limit of 1 MW hampers the effective aggregation of resources. At the July MWG SPP stated in a presentation, “Multi-Nodal DERs cannot total to more than 1 MW at a single POI per Market Participant. If the DERs total to more than 1 MW at the POI per Market Participant, it must register single-nodal at that POI” But at the Aug MWG, SPP shared an “Aug Tariff” that does not mention this node size. Instead SPP mentions there is no maximum size limit for single nodal aggregation but there is a 10 MW maximum size limit for multi-nodal aggregation. Enrollment and monetization of small customers become challenging, delaying revenue generation and market participation.
Same Settlement Area - The requirement to have all component DERs (yes, SPP borrowed this term from PJM but does not define what a component DER is) within a multi-nodal DER aggregation located within a single settlement area did not change since the July MWG meeting. If you are curious about PJM’s definition of Component DER - “any resource, within the PJM Region, that is located on a distribution system, any subsystem thereof, or behind a customer meter, and is used in a DER Aggregation Resource by a DER Aggregator to participate in the energy, capacity, and/or ancillary services markets of PJM through the DER Aggregator Participation Model.” (Source: PJM’s Compliance Filing)
Source - SPP
Learning from Other Markets
Other Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) have implemented successful multi-nodal aggregation models. For instance:
MISO: Allows multi-nodal aggregation with no size limit for individual DERs, enabling the enrollment of thousands of residential customers with a significant combined capacity.
CAISO: Uses sub-LAPs (sub-Load Aggregation Points) to aggregate resources, providing a balance between granularity and market efficiency.
Voltus Recommendations for SPP
To unlock the full potential of DERs in SPP, Voltus recommends the following:
Equitable Opportunity for Aggregation: Ensure all resources across the SPP footprint have an equal opportunity to participate in aggregation.
Implementation of Zones: Create flexible zones that allow for aggregation across broader geographical areas while maintaining grid stability.
Flexible Aggregation Criteria: Develop criteria that can adapt to changing grid conditions and technological advancements.
Diverse Aggregation Models: Allow for heterogeneous, homogenous, and single-asset aggregations to maximize the impact of DERs on the grid.
Conclusion
Multi-nodal aggregation is a critical step towards a more reliable, equitable, and efficient electricity market. By adopting flexible and forward-thinking aggregation policies, SPP can harness the full potential of DERs, leading to lower costs, increased reliability, and a more sustainable energy future. Voltus's experience and recommendations provide a clear path forward for SPP to become a leader in DER integration and market innovation.