February 2, 2022
When the Federal Energy Regulatory Commission (“FERC”) issued Order 2222 in September of 2020, it was the culmination of years of effort on the part of Advanced Energy Management Alliance (“AEMA”) and our members to have distributed energy resources (“DERs”) recognized as wholesale electricity market resources and be thus given access to those markets. Order 2222 required that each system operator (“ISO”) in FERC’s jurisdiction develop and file participation models that allow full engagement in energy, capacity, and ancillary services markets by consumer-sited resources, ensuring a more competitive system for all participants.
This week, PJM, the largest organized market, proposed how it would incorporate DERs into wholesale markets. Overall, their proposal is a major step in the right direction. PJM dialogues with stakeholders have resulted in a proposal that meets many of the requirements of the FERC rulemaking. PJM’s balanced treatment of various resource types and innovation regarding metering, submetering and settlement data will all be helpful in facilitating DER participation.
The PJM proposal, however, does have significant gaps that require FERC’s attention. Two of the more critical items disproportionately impact and limit mass-market participation —such as consumers with rooftop solar, electric vehicles, and batteries.
First, AEMA is disappointed that PJM only superficially examined how multi-nodal aggregation might be accomplished in a fair and equitable way and instead allows only for a single node model. Given that there are thousands of transmission nodes across PJM, this approach means that the number of resources that can be aggregated could be very small, limiting their collective flexibility just because the 100kW minimum size threshold can’t be acheived. By comparison, California, New England, and New York all found ways to allow for these smaller resources to participate by allowing aggregation over large subsets of pricing nodes.
Also concerning, the PJM proposal, by prescribing an energy must offer requirement for capacity market participation, creates massive hurdles for Net Energy Metered DERs from being credited with the provision of reliability services. Tens of thousands of PJM ratepayers have already invested in solar power systems for their homes and businesses. PJM’s requirement forces customers to potentially pay twice for capacity.
Finally, PJM also proposes an open-ended “pre-registration” process, before its 60-day registration process, which could add to other AEMA concerns regarding managing utility conflicts of interest. AEMA has recommended a solution, which PJM did not include in its proposal.
In summary, AEMA is glad that PJM has taken a first positive step in developing market access tools for DERs. AEMA will continue to engage with FERC and the ISO to improve upon this filing.
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AEMA advocates for policies that empower and compensate customers appropriately–to contribute energy or energy-related services or to manage their energy usage–in a manner which contributes to a more efficient, cost-effective, resilient, reliable, and environmentally sustainable grid. Our members are providers and consumers of distributed energy resources, including demand response and advanced energy management, united to overcome barriers to nationwide use of demand-side resources. AEMA was engaged in this rulemaking process since FERC opened the process for distributed energy as separate from energy storage, filing Post-Technical Conference comments in June 2018 on DER participation and Supplemental Comments in March 2019 noting recently successful distributed energy resource projects and programs. AEMA has worked through ISO stakeholder processes to encourage development of distributed energy resource participation but has also worked with state regulators and utilities to develop solutions through retail and state markets. Our members believe that customer-sited resources should be valued for the benefits they bring to the grid and that more competition and choice for customers enhances those benefits for all resources on the grid. This statement reflects the opinion of AEMA as an organization, not that of any individual member company.