SEPA and EEI Find Stakeholders Agree DER Aggregation Has Place Within Wholesale Markets but Concerns Remain

Joint Report Helps Industry Define DER Aggregation Problems to Allow for Collaborative Solutions

Media contact: Mike Kruger, [email protected], 202-280-1556

WASHINGTON, D.C. — The Smart Electric Power Alliance (SEPA) in partnership with the Edison Electric Institute (EEI) announce the release of a new publication, DER Aggregations in Wholesale Markets: A Review of Technical and Operational Comments Made in Response to FERC’s Notice of Proposed Rulemaking.

Hundreds of pages of comments filed by more than 100 stakeholders reveal a consensus that there could be a place for distribution energy resource (DER) aggregation in wholesale markets. The wide range of operational and technical concerns, solutions, and issues filed, however, make clear that further discussion among stakeholders is needed.

This report catalogs stakeholder comments and provides a foundation for further collaboration and communication in response to the Federal Energy Regulatory Commission’s (FERC) Notice of Proposed Rulemaking (NOPR) that would require regional transmission organizations (RTOs) and independent system operators (ISOs) to facilitate electric storage and aggregated DERs in competitive wholesale markets.

“FERC sees participation in the wholesale market as critical for the economic development and deployment of DERs, however, it is widely understood that the traditional electric system was not built with the intention for distributed resources to provide power back to the transmission system,” said SEPA Research Director, Erika Myers. “While the FERC NOPR is an important step toward removing barriers for DERs, myriad operational challenges will need to be overcome – through stakeholders working together – before high levels of DERs can truly play a significant role in the bulk power system.”

“The next step is working through the technical and operational issues to ensure that aggregated DERs can participate in wholesale markets in ways that provide for the continued reliable and safe operation of the electric system at both the distribution and wholesale levels,” said EEI Vice President, Law, Emily Fisher.

In an effort to clearly define the challenges the electric grid faces along the road to integrating DERs so solutions can be proposed, SEPA and EEI identified three main issue areas raised by stakeholders:

1. Eligibility requirements;
2. Metering and telemetry requirements; and
3. Operational coordination among the RTO/ISO, DER aggregation and the distribution utility

A more granular review identifies these high-level takeaways:

• Operations, reliability, and safety of the grid: Stakeholders agreed that the operations, reliability, and safety of the distribution and transmission system are important factors when considering DER aggregation.
• Support for Third-Party DER Aggregation: Stakeholders generally supported third-party DER aggregation in the competitive wholesale markets, recognizing that aggregation helps DERs overcome minimum size rules and other eligibility requirements.
• Ranging perspectives on technical and operational challenges: While commenters generally came to a consensus in identifying technical and operational challenges to DER aggregation, there were a wide range of perspectives on the potential severity and difficulty of overcoming them.
• Some solutions do not yet exist: Solutions to some of these technical and operational challenges may not exist yet, and require greater stakeholder collaboration to help find solutions.

Regardless of how FERC proceeds with the proposal, it is SEPA’s and EEI’s hope to convene key stakeholders to discuss these technical and operational challenges with the goal of developing a strategy and/or solution set. Additional information from EEI and SEPA will be forthcoming.

DER Aggregations in the Wholesale Markets is available here.

About EEI

EEI is the association that represents all U.S. investor-owned electric companies. Our members provide electricity for 220 million Americans, and operate in all 50 states and the District of Columbia. As a whole, the electric power industry supports more than 7 million jobs in communities across the United States. In addition to our U.S. members, EEI has more than 60 international electric companies, with operations in more than 90 countries, as International Members, and hundreds of industry suppliers and related organizations as Associate Members. Organized in 1933, EEI provides public policy leadership, strategic business intelligence, and essential conferences and forums.