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SEPA and EEI publish report on DERs in wholesale markets with support from EnergyHub’s markets team

Kat O'Leary

October 7, 2017

The Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) in November of 2016 that recommends requiring Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) to facilitate the participation of electric storage resources and aggregated DERs in wholesale markets.

While some RTOs and ISOs are beginning to plan for DER participation in wholesale markets, this rule change would fundamentally alter the way the grid operates. If the NOPR is approved in its current form, instead of electricity flowing one way from the bulk electric system to the distribution system, power and other grid services would move in both directions.

SEPA DER aggregation report cover image.png

The Smart Electric Power Alliance (SEPA) and the Edison Electric Institute (EEI) collaborated to gather experts from across the energy industry — including EnergyHub’s VP and GM of Energy Markets Erika Diamond — to review and categorize stakeholder comments in response to the NOPR on the technical and operational challenges this rule change could create.

In late September, a report was released detailing the results of this collaboration. The report, titled “DER Aggregations in Wholesale Markets,” distills hundreds of pages of comments and identifies three primary sets of operational and technical challenges associated with aggregated DERs participating in RTO/ISO markets:

Eligibility requirements: Many comments focused on how DERs would become eligible for market participation. Questions were raised around locational requirements for DER aggregations and the ability of DER aggregations to respond to real-time dispatch. Commenters also had technical concerns about FERC’s proposal instituting a rule that would separate retail program participation from wholesale markets participation in order to prevent DERs from being double compensated for providing the same service.

Metering and telemetry requirements: Other comments focused on data requirements to allow DERs to participate in wholesale markets.Commenters questioned the amount of directly metered data RTOs and ISOs would need from aggregated DERs and whether statistical tools or models could be used to provide adequate telemetry. There were also questions raised about the potential need for an “aggregation schedule coordinator” to mediate between wholesale markets and DER aggregators and owners.

Coordination between markets, aggregators and wires companies: Commenters generally agreed that coordination will be necessary to ensure that DER aggregations can participate in wholesale markets, but some stakeholders raised concerns about technical issues that could arise from operational coordination between markets, aggregators, and wires companies. Specific concerns were based around the issue of communication between these entities. The need to incorporate smaller utilities into market operations was also an area of focus, with some commenters believing that smaller utilities will need to develop new communications capabilities, while others felt that existing protocols could be used.

“All of SEPA and EEI’s membership will be impacted by the FERC NOPR, so it was important for us to distill the main challenges presented by stakeholders as part of the commenting process,” said Diamond. “SEPA and EEI provided a great service to the industry by investing the necessary time to analyze this NOPR and organize the comments and feedback into one report. EnergyHub is excited to see the growing momentum around DER participation in wholesale markets, and we will continue to support those efforts in the future.”

Click the button below to download the free report from SEPA’s website.

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