Independent System Operator (ISO) compliance plans for FERC Order 2222 are on their last stretch, with PJM and ISO-NE filing coming up here in February and MISO and SPP plans due in April. Voltus, an energy aggregator, petitioned FERC for a technical conference on these compliance plans. Stakeholders have until February 7th to support the need for this conference.
It is expected that FERC would grant this request because the last time FERC had a technical conference on this topic was in 2018.
FERC Order 2222 was designed to allow Distributed Energy Resources (DERs) to participate in the organized markets. DERs like rooftop solar and distributed storage currently participate only on the retail side. We all know there is much at stake on the net energy metering (NEM) in California on the proposed decision of the California Public Utilities Commission (CPUC).
Supply-side resources like coal, natural gas, and nuclear units participate in energy, capacity, and ancillary services markets where market operators exist. FERC has been trying to level the playing field for demand-side resources. Order 841 opened the wholesale markets for electric storage resource participation, which builds on earlier FERC orders for demand response compensation such as 719 and 745. As technologies mature, the common theme here is that the federal energy commission makes sure those technologies have a role in the wholesale energy market to keep rates just and reasonable.
FERC Policy Statement is needed
Voltus petition at FERC highlights the need to take a step back and think about the intent behind Order 2222. Now is the time to discuss the nuances in the Order because we have CAISO and NYISO plans filed at FERC and PJM and ISO-NE plans. So, both single-state ISOs and multi-state ISOs.
Because FERC gave flexibility to the ISOs, FERC got flexibility in these ISO compliance filings. There is no common theme apart from ISOs walking on eggshells for topics like interacting with distribution utilities and coordinating with aggregators on dispatching DERs. This DER dispatch is a thorny issue because ISOs will dispatch a market resource like DER in a day-ahead market, but the distribution utilities (under state jurisdictions) reserve the right to override that ISO dispatch. None of the compliance filings detail what those emergency conditions could be, hence the need for a FERC tech conference.
Hopefully, in response to a tech conference, FERC would issue a policy statement similar to the one on cost recovery for multi-use applications of storage resources. That FERC policy statement on storage led to ISOs like MISO working on Storage As a Transmission Asset Only (SATOA). That storage policy statement was issued a couple of months after the November 2016 technical conference.
Order 2222 ISOs proposed compliance plans don’t give flexibility to Aggregators
Utility dispatch override is not the only thorny issue in ISO compliance plans.
At MISO, under stakeholder discussions right now is the issue of fairness for storage resources. MISO exempts (per FERC’s direction) storage resources from being charged transmission when required for reliability purposes. But MISO is not planning to give that same exemption for DERs under 2222. This exemption is why we need a FERC technical conference to bring these nuances out for all ISOs to realize both the similarities and differences in the way they each propose to meet the same objective.
Added to this list are technological advancements in solar, storage, and other DERs such as electric school buses. And most ISOs like ISO-NE, PJM, MISO, and SPP do not allow multi-nodal aggregations even though FERC made it a requirement. Aggregators don’t have the flexibility to match DERs from different transmission nodes. But CAISO allows multi-nodal aggregation at the Sub-LAP level, Load Aggregation Point. Again, I hope the ISOs learn from CAISO.
ISOs are delaying consumers benefits from Aggregated DERs
As we have seen from the evolution of market designs in the wholesale markets with demand response compensation and storage compensation, ISOs need time to implement these FERC Orders. MISO’s storage model for compliance with FERC Order 841 goes live in June 2022, almost 4 years after MISO filed a compliance plan in October 2018. The point here is that ISOs are citing a lack of staff and software changes to delay consumer benefits from these DERs.
FERC can do more by issuing a policy statement after this technical conference setting the direction for consumers to benefit from DERs sooner than later. Otherwise, ISOs might adopt ISO-NE’s proposal of starting capacity market for DERs in 2027, nearly a decade after FERC issued Order 2222.
DER providers, aggregators, renewable developers, consumer advocates, and other stakeholders have until February 7th to comment in the docket FERC opened for this Voltus petition. If FERC grants this petition, we can expect a technical conference in the summer of 2022, followed by a policy statement in the fall.
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