FERC Approves Rule Enabling Wholesale Competitors for DER Aggregators
The Federal Energy Regulatory Commission (FERC) has passed a final regulation, Order 2222, that allows Distributed Energy Resource Aggregators (DER) to compete in any regionally organized wholesale electricity market. te
This approval allows new technologies to go online and create a level playing field, further improve competition, promote innovation and reduce costs for consumers.
DERs are located in the distribution system, a distribution subsystem, or behind a customer meter. They range from electrical storage and intermittent generation to decentralized generation, demand response, energy efficiency, heat storage and electric vehicles and their chargers.
The last rule enables these resources to participate alongside traditional resources in the regionally organized markets for wholesale capacities, energy and ancillary services. Multiple DERs can be aggregated to meet minimum size and performance requirements that they may not individually meet.
“FERC has broken new ground in creating the network of the future by removing barriers to entry for new technologies,” said Neil Chatterjee, chairman of FERC. “With this final rule for DERs, we are building on the significant advances already made by Order 841 and expanding our ability to realize the full potential of these flexible resources. By relying on simple market principles and unleashing the power of innovation, this order allows us to build a smarter, more dynamic network that can help the US keep pace with our ever-evolving energy needs. “
Under the new rule, regional network operators will have to revise their tariffs in order to establish DER aggregators as a kind of market participant that would enable them to register their resources under one or more participation models that take into account the physical and operational characteristics of these resources.
The new rule builds on the DC Circuit Court’s recent ruling on Order 841, in which the court confirmed FERC’s exclusive jurisdiction over wholesale markets and the criteria for their participation. Regulation 2222 prohibits retail regulators from largely excluding DERs from participating in regional markets. However, the new regulation prohibits regional network operators from accepting offers from the collection of customers of a small utility company, unless the retail regulator responsible for that utility company allows such participation. The last rule also takes into account the current ability of retail regulators to prevent retail customer demand from being offered by aggregators to regional markets.
The final regulation will be issued 90 days after publication in the federal register. Within 270 days of the effective date, network operators must provide FERC with a declaration of conformity and a timely implementation plan for the final rule.