FERC Order No. 2222 Explainer: Facilitating Participation in Electricity Markets by Distributed Energy Resources

Introduction

• FERC Order No. 2222: Issued in 2020, with updates in 2021 by the Federal Energy Regulatory Commission (FERC).
• Purpose: To enable distributed energy resources (DERs) to participate in electricity markets run by regional grid operators.
• DERs Include:
  • Electric battery storage systems
  • Rooftop solar panels
  • Smart thermostats
  • Energy efficiency measures
  • Thermal energy storage systems
  • Electric vehicles and charging equipment

Concept of Aggregation

• Aggregation: Bundling of multiple small DERs to form a sufficiently large group to participate in the energy market.
• Aggregator: An entity that combines DERs and participates in the market, sharing compensation back to individual DERs.

Importance of Order No. 2222

• Opportunities: DER owners can participate in electricity markets and earn money.
• Location Requirements: Participation is possible in regions with Regional Transmission Organizations (RTOs) or Independent System Operators (ISOs), excluding Texas ERCOT.

FERC Overview

• FERC's Role: Regulates the wholesale sale and transmission of electricity, natural gas, and oil in interstate commerce.

Wholesale Sales of Electricity

• Wholesale vs. Retail: Wholesale involves sales to utilities that resell it to end users.
• FERC's Goal: Enable DER aggregators to make wholesale sales in organized markets.

Role of RTOs

• RTOs' Function: Non-profit entities managing reliable and safe transmission of electricity.
• Market Types:
  • Energy Markets
  • Capacity Markets
  • Ancillary Service Markets

Enabling DER Participation

• Reducing Barriers: FERC is simplifying rules for DER aggregations to participate in markets by lowering minimum size requirements and establishing new market rules.

Current Barriers and Solutions

• Barriers: Market rules designed for traditional resources, not DERs.
• Solutions: FERC mandates RTOs to create rules for DER aggregations, addressing size, location, metering, and coordination requirements.

Implementation Timeline

• Implementation by RTOs: Varies by region, with timelines for CAISO, NYISO, ISO-NE, SPP, PJM, and MISO ranging from 2024 to 2030.

Participation Opportunities

• Aggregation Services: Expected rise of entities offering aggregation services for DERs.
• Considerations: Participants should compare offers and consider existing state and local programs.

Further Information

• Contact: FERC's Office of Public Participation for more details on opportunities and participation.