FERC Order 2222
In keeping with the recent past’s trend of addressing emerging technologies and their impact(s) on the Bulk Electric System and wholesale energy markets, FERC has defined Distributed Energy Resources (DER) and the opportunity for DER services to participate in energy markets, to a larger degree than they are currently allowed.
So, what does FERC Order 2222 do? It determines the aggregate kW threshold (100kW) for DER resources to participate in energy markets. While the facilitators and operators of the wholesale energy markets are to allow DER to participate alongside conventional generation resources, as stated above, it does leave a lot of the “how” decisions to ISOs and RTOs, which must complete compliance filings and revise their tariffs within 270 days of the Order taking effect (60 days after the Order’s publication). This means, with the exception of legal appeal, this decision is going to move forward, potentially allowing for a plethora of DER aggregators, representing substantially more GW of energy to participate in energy markets as early as next year. Presently, it is estimated that 50-100 GW of DER services in use, but we anticipate a much broader increase in DER services once this order opens the markets to allow for a more robust participation factor. What doesn’t FERC Order 2222 do? Well, it doesn’t allow for the current market oversight entities to broadly deny DER services in their wholesale energy market structures. This further solidifies the statement in the paragraph above that DERs are going to experience a new presence in energy markets, moving forward.
It is expected that new rule changes will be contemplated by the various sates’ Public Services Commissions, Public Utility Commissions, ISOs and RTOs that operate and manage wholesale energy markets. It will be important to monitor how the stakeholder groups and committees at the ISO/RTO levels address DERs and their participation factor(s) in these markets. This rule is intended to result in lower energy costs for ratepayers, increase reliability and resiliency on the grid, as well as fostering a more innovative approach to addressing generation resources in wholesale energy markets. Overall, this is an impactful filing and it poses a great opportunity for DER owners and aggregators.