On September 17, the Federal Energy Regulatory Commission released FERC Order No. 2222, which requires system operators to remove barriers to the participation of distributed energy resources (DERs) in all wholesale energy markets across the country.
The major takeaway: The Order paves the way for Enel X’s customers to participate in wholesale markets with all forms of Distributed Energy Resources, including but not limited to demand response, energy storage, and electric vehicles, in a manner that is not possible today in much of the country. If implemented properly by grid operators, the Order will enable the transition to a more clean, affordable, and resilient electric grid.
What Does This Order Mean?
Regional grid operators oversee wholesale markets to ensure resource adequacy and efficient market pricing. These objectives are often achieved through market-based mechanisms, including annual auctions. In these wholesale auctions, large-scale electric generators, including nuclear, gas, and coal power plants have traditionally supplied the overwhelming majority of MW. In recent years, demand resources and renewable resources have supplied an increasing share of total power, but newer forms of Distributed Energy Resources have faced considerable barriers to wholesale market participation.
Now, as a result of the Commission’s ruling, every Independent System Operator (ISO) and Regional Transmission Organization (RTO) across the country will have to create a new participation framework for Distributed Energy Resources, or update an existing framework.
What are DER Aggregators?
DER aggregators bundle together a variety of small-scale energy resources—including energy storage, distributed generation, demand response, energy efficiency, and electric vehicles—to create a bottom-up portfolio of energy assets. With this aggregated portfolio, DER service providers can bid that portfolio’s capacity into wholesale markets, similar to how a traditional supply resource, like a natural gas power plant, bids its capacity into the market.
New Opportunities for Enel X Customers
Enel X was a pioneer in demand response aggregation back in the early 2000’s and has been enrolling electricity consumers into wholesale markets for the past two decades. Over the past several years, Enel X has expanded its breadth of services to cover additional DERs, including energy storage, distributed generation, solar, electric vehicles, and others.
With the passing of this Order, Enel X can extend its DER aggregation experience to more markets and more resources for our customers. The specific market changes resulting from the Order will transpire over many months to come, but we’re excited about what this new future could mean for our customers.
Creating a More Stable, More Sustainable Grid
At Enel X, we believe encouraging DER participation in wholesale markets is a major step forward for both grid reliability and sustainability. Enel is advocating on behalf of customers across the country to ensure they can maximize their participation and revenue from DERs and to provide grid operators with the flexible resources that are crucially needed. We’ve often worked in tandem with our partners at Advanced Energy Economy and Advanced Energy Management Alliance, who both played a crucial role coordinating responses from DER providers and spent years making the policy and legal case for this decision.
Because the electricity provided by DERs is, on average, far less fossil-fuel based than the marginal power plant, this is a major win for sustainability. As the fight against climate change ramps up and DER technology costs continue to decrease, this Order marks a major milestone in the widespread adoption of innovative solutions like DER aggregation, which are furthering the evolution and energy transition of today's grid.