Based on the two-day FERC Technical Conference on DERs, where varying opinions were presented on a variety of technical and operational issues relating to DERs and DER aggregation, the following are overarching takeaways that the Commission and its Staff should consider before taking the next step on DERs’ and/or DER aggregations’ participation in wholesale markets.
- Identify where/whether need exists. The need for ISO/RTO rules for DER aggregations or DER participation in wholesale markets may vary widely, especially as a preference for participation in “the retail market” (e.g., net metering; distribution system support; distribution facility deferral) may result in very little DER participation in wholesale markets, even where market penetration of DERs is significant.
- The UDC rules this domain. The role of the Utility Distribution Company (UDC) in wholesale market participation will be significant. The notion that a DER aggregator would interface only with the ISO/RTO, although supported by DER aggregators at the conference, appeared to be a non-starter for UDCs and ISOs/RTOs. The message that the UDC or a Distribution System Operator ultimately had to have operational control over the distribution system was clear.
- Plug and play is not here today. The readiness for significant DER penetration varies widely from UDC to UDC and any FERC rule must take this into account, particularly as state commissions are the entities ultimately authorizing UDC “spend” on distribution system modernization.
- Jurisdictional, regulatory, and legal issues must be resolved first, not as an afterthought. Technical/operational issues cannot be fully divorced from jurisdictional, regulatory, and legal issues. Establishing rules and policies should precede any discussion of technical implementation, but have been largely ignored to date (and purposefully omitted from the Technical Conference). Examples: 1) is it practical for DERs that do not have or cannot obtain qualifying facility (QF) status to sell into wholesale markets (whether directly or through a DER aggregator) under the existing regulatory system (requiring quarterly EQR filings and maintaining market-based rate eTariffs)?; 2) Currently, QFs selling to the market must take FERC-jurisdictional interconnection service under existing FERC policy; if aggregators are considering aggregating entire neighborhoods of PV owners (which are QFs as a matter of law if under 1 MW), is this approach to interconnection practical? When and how are such issues going to be addressed?
- Multi-use applications will take time to address. Compensation and cost recovery relating to DERs offering both FERC- and state-jurisdictional services and/or taking FERC- and state-jurisdictional services raise implementation issues that are very complex. Although they are solvable issues, significant time and effort is required to solve them, particularly at the state commission level.