FERC to weigh how distributed energy plays in power markets

Source: Rod Kuckro, E&E News reporter • Posted: Tuesday, April 10, 2018

Federal regulators this week will hear from more than 50 experts about how to manage the increasing amounts of distributed energy resources (DER) that are being deployed in the nation’s power markets.

The two-day technical conference tomorrow and Wednesday at the Federal Energy Regulatory Commission headquarters is the outgrowth of a 2016 proposed rule that could have permanent consequences in shaping how the regional electricity markets operate.

That rule proposed encouraging the participation of energy storage technologies in power markets, putting batteries and pumped hydroelectric power on par with nuclear, coal, natural gas and renewable generation. That portion of the rule, Order No. 841, was approved by FERC on Feb. 15 (Energywire, Feb. 16).

But the commission also said it needs more facts on aggregating and integrating DER into power markets before crafting a rule.

“While we continue to believe that removing barriers to distributed energy resource aggregations in the [regional transmission organizations/independent system operator] markets is important, we have determined that more information is needed with respect to those proposals,” to puzzle through what actions to take on the DER aggregation reforms in the original proposed rule, FERC said.

The meetings are sure to be a must-see event for people who follow FERC closely, given the increasing role of distributed resources. Consulting firm Navigant expects the amount of distributed energy resources to grow to more than 60,000 megawatts by 2024 from a little more than 30,000 MW today.

The addition of distributed energy resources, which can include rooftop solar, batteries, microgrids, energy efficiency and demand response, is a reflection of changing customer choices about how they want to manage their electricity usage.

Those additional megawatts will be competing with existing energy generation at a time of flat to minimal growth in customer demand for electricity in most parts of the United States.

And that competition will be in addition to that set in motion by FERC with its February Order No. 841 to encourage energy storage technologies.

All five FERC commissioners are expected to attend the technical conference, which will feature testimonyfrom 54 individuals spanning seven panel over two days.

Aggregating DER will “help to address the commercial and transactional barriers to distributed energy resource participation in the organized wholesale electric markets,” FERC said in its 2016 proposal.

Owners and operators of individual distributed energy resources “may be reluctant to incur the significant costs of participating in the organized wholesale electric markets, such as the costs of the necessary metering, telemetry and communication equipment,” the commission said.

Thus, the cost to sell into a market would likely “outweigh the benefits that the prospective market participant may realize from selling wholesale services,” FERC said.

But that cost could be reduced through a distributed energy resource aggregation provider that would know the market rules and how to “actively submit bids and/or offers into the electric markets,” FERC said.

The first panel tomorrow will consist of officials from the nation’s power markets, which would have to change their rules to accommodate any proposed FERC reforms. Who can participate and how to compensate DER will be central questions.

The second panel will offer an opportunity for FERC commissioners to talk with eight state and local regulators about the effects of how DER participation in wholesale markets could play in the retail markets that states typically regulate.

The third panel tomorrow will try to provide answers to complex questions about how DER aggregations can avoid duplication of compensation for the same service and what procedures should be in place to prevent DER from affecting the efficiency of power markets.

The second day of the conference will feature four panels looking at operational issues associated with DER data, modeling and coordination of aggregations in the markets.

Both days of the conference will be streamed on the FERC website.