FERC approves final rule enabling DERs to compete in regional electric markets
The Federal Energy Regulatory Commission (FERC) approved a final rule allowing distributed energy resource (DER) aggregators to compete in all regional wholesale electric markets.
DERs range from electric storage and intermittent generation to distributed generation, demand response, energy efficiency, thermal storage, and electric vehicles and their charging equipment. This move is designed to enhance competition, encourage innovation, and drive down costs for consumers.
“Today, FERC broke new ground towards creating the grid of the future by knocking down barriers to entry for emerging technologies,” FERC Chairman Neil Chatterjee said. “With this final rule on DERs, we build on the significant progress already made through Order 841 and expand our ability to harness the full potential of these flexible resources. By relying on simple market principles and unleashing the power of innovation, this order will allow us to build a smarter, more dynamic grid that can help America keep pace with our ever-evolving energy demands. I am honored to be at the helm of the agency as we bring this critical rule across the finish line and continue to navigate our nation’s energy transition.”
Under this rule, regional grid operators must revise their tariffs to establish DER aggregators as a type of market participant. This would allow them to register their resources under one or more participation models that accommodate the physical and operational characteristics of those resources. However, the new rule prohibits regional grid operators from accepting bids from the aggregation of customers of a small utility unless regulators for that utility allows such participation.
The action was lauded by several industry groups, including the Solar Energy Industries Association (SEIA).
“We are pleased to see FERC recognize the important role that distributed energy resources and DER aggregators play in reliably delivering clean energy to American homes and businesses. Customers are choosing cost-competitive solar and energy storage from a variety of sources,” Katherine Gensler, vice president of regulatory affairs SEIA, said. “This rule embraces the trend of increasing use of distributed resources and provides much-needed clarity to grid operators on how to harness the energy and ancillary services they provide. Competition in our electricity markets is a critical part of our clean energy transformation. This rule will create jobs, drive local economies, and enable the solar industry to supply 20% of U.S. electricity generation by 2030.”
Kelly Speakes-Backman, CEO of the Energy Storage Association, called it a landmark ruling.
“FERC’s Order 2222 removes regulatory barriers to aggregation of distributed resources in wholesale electricity markets and is the next step forward for energy storage and other distributed energy resources. Energy storage is increasingly located on local electric grids, in households and businesses, and is often integrated with distributed generation and controllable loads. Enabling these flexible resources to participate together as ‘virtual power plants’ in wholesale markets is a victory for enhancing grid reliability, enabling a more resilient grid, and lowering costs for consumers,” Speakes-Backman said.
The final rule will be enacted 90 days after publication in the Federal Register.
