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FERC Lets DER Aggregate into Cal-ISO Markets by Staff Power Markets Today, June 3, 2016

Rules keep individuals small, aggregations above 0.5 MW

FERC yesterday approved Cal-ISO's proposal to let distributed energy resources (DER) aggregate to take part in its wholesale markets. The resources have to form aggregations of at least 0.5 MW to take part.

Existing generators that are 1 MW or more still have to become participating generators on their own and will not be able to aggregate into a DER provider. Generators between 0.5-1 MW will also not be eligible, unless they decide to terminate their participating generator agreement.

DR that participates as proxy DR or reliability DR may not participate under DER aggregation and will continue to run as curtailable demand.

Resources taking part in retail programs such as net metering also cannot take part in a wholesale market aggregation. Under net metering, resources already get benefits from netting their excess energy against subsequent bills so they have no energy to offer at wholesale, the proposal said.

The DER aggregations will be treated as the market resource, not the individual resources themselves. Aggregations can be at one pricing node or could spawn different ones but if they are across multiple nodes, they cannot be larger than 20 MW.

The aggregations will have to be located in a single "sub-load aggregation point," an area that reflects major transmission constraints and is inside each utility territory. That will ensure the DER aggregations do not lead to more congestion on the grid.

FERC accepted the proposal to establish a DER provider as a new type of market participant which it found will increase participation and competition in the markets. The DER will be carefully measured and will have to follow dispatch instructions as do other participants.

The ISO will have to file an implementation report at FERC within six months of the DER rules enactment. That will include information on the number of DER aggregations that have requested participation, the status of those requests, issues identified about them by distribution utilities and a discussion of any issues on the coordination of the distribution and transmission systems.

Pacific Gas & Electric made argued the individual resources in aggregated DER should have to respond to dispatch signals but FERC disagreed, saying that activity would not harm reliability since distribution utilities will be studying DER for any impacts ahead of time and will have to follow any operational limits identified there.

The utility also asked FERC to require the ISO to penalize aggregated DER for failing to follow dispatch instructions in a way that is consistent with their generation distribution factor. But the commission agreed with the ISO that the proposal would be overly discriminatory since DR and physical scheduling plants are not penalized in that way.

The ISO's transmittal letter that came with the initial filing said DER providers that fail to follow dispatch instructions would be faced with penalties but that was not in the tariffs. The tariffs also do not include the ISO's pricing methodology for single- and multiple-node aggregations.

Since those rules significantly affect rates, the ISO will have to put them in its tariff in a compliance filing as opposed to leaving them to a less formal manual, FERC said.