FERC Makes WonDERful Change
In its Order 2222, issued last week, the Federal Energy Regulatory Commission (FERC) officially required RTOs and ISOs to allow distributed energy resources (DERs) to participate in wholesale electricity markets alongside tradi-tional resources through aggregations. Building upon the recent judicial upholding of Order 841, which removed bar-riers to the participation of electricity storage facilities in wholesale markets, this proclamation should grant DERs market power and flexibility that they did not previously en-joy. FERC Commissioner Neil Chatterjee even affirmed that this plan will “increase competition and efficiencies in our [wholesale energy] markets.”
DERs are small-scale energy assets—which usually com-prise wind generators and solar panels but can also include battery storage technologies—that, without aggregation, do not typically satisfy the minimum size and performance re-quirements to participate in regional markets. Nonetheless, they are nimbler than traditional resources and can re-spond quickly to local price signals to help reduce conges-tion costs. Thanks to FERC’s order, more DERs are now likely to be utilized to help lower congestion throughout re-gional grids.
In addition to its benefits for energy prices, Order 2222 is potentially one of the most important boosts to energy inno-vation. The level of flexibility provided by the addition of more strategically placed renewable-energy generation should be significant. Indeed, FERC projects that as much as 380 gigawatts of additional capacity could come online by 2025.
Of course, the energy, capacity, and ancillary markets will need some degree of restructuring for each grid operator as a result of this market reform. ISO-specific rule changes are still several months to a year away. Although the path is still being forged, this regulatory breakthrough, which should enhance reliability while making U.S. energy even more environmentally sound, is refreshing to see. As the destination comes into view, Calpine Energy Solutions will definitely be able to help its customers reap all of the re-wards that it will offer.