Grid Operators Describe Challenges of Distributed Energy Aggregation to FERC

Stock SectorApril 11, 20187min5
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More than a dozen state energy regulators and grid operators told the Federal Energy Regulatory Commission their concerns about integrating distributed energy resources (DERs) into wholesale electricity markets on Tuesday. FERC requested the two-day conference in Washington, D.C., to address issues that must be solved before DERs can become a significant player in the largest U.S. electricity markets.

Most of the panelists expressed confidence that the technical challenges — such as coordination between grid operators and utilities, and properly compensating DERs — could be overcome.

“My principal concern is that, as we bring these DER resources into the grid, we avoid messing anything up,” said FERC Chairman Kevin McIntyre, addressing a panel of state and local regulators before a packed hearing room. 

“From an operations standpoint, what are the potential negative impacts that DER participation in the wholesale market could have on the distribution systems in your states?” he asked. 

“As DERs proliferate, there will have to be impact analyse…capacity analyses,” replied Asim Haque, chairman of Ohio’s Public Utilities Commission. “Are there operational concerns? Yes. Can they be overcome? We think, also, yes.” 

Panelists were quick to point out the need for regional transmission organizations (RTOs) and independent system operators (ISOs) to gain visibility into the distribution grid, where the vast majority of DERs are connected. If a grid operator and a utility want to dispatch the same DERs at the same time, it could be problematic. 

“There has to be coordination,” said Christopher Norton, the director of market and regulatory affairs for the wholesale power supplier American Municipal Power. “The utilities have to know what DER is being registered, and they have to have the time to be able to look at it and make sure that [they’re] not jeopardizing facilities.”

The commission passed a rule in February that requires each RTO and ISO to create rules for energy storage to participate in wholesale markets. FERC governs interstate power transmission and wholesale markets, which means its rules apply to about three-quarters of the country’s electricity supply.   

The original proposed rule on energy storage included a section on how to address aggregated DERs, but the commission opted to postpone the decision until it gathered more information from stakeholders.

Commissioner Cheryl LaFleur, a Democrat and the only remaining Obama appointee, wanted to know why the process for integrating DERs needed to be different for each region. 

“Shouldn’t we try to solve the coordination process once…as opposed to developing six different ways to do it?” she asked a panel of RTO and ISO representatives.

“We’re all facing different challenges,” said Jeff Bladen, executive director of market services for the Midcontinent Independent System Operator (MISO) grid, noting his region’s infamous wind power ramps.

“Our concern would be that we don’t try to achieve uniformity at the expense of slowing down our efforts going forward to integrate DER,” said Tammy Mitchell, deputy director of electricity for the New York State Department of Public Service, during an afternoon panel with all five FERC commissioners 

Michael Picker, president of the California Public Utilities Commission, echoed that sentiment, saying it would be hard to find a “one-size-fits-all” solution.

California has been an early adopter of DER integration. State grid operator CAISO already allows DERs to play in wholesale markets, although the uptake has reportedly been light. Pacific Gas & Electric and CAISO also unveiled a project in December that allows DERs to stand in for transmission grid investments.  

Most participants in Tuesday’s conference said they supported the idea of DERs participating both in wholesale and in retail markets, but noted that they shouldn’t receive “inappropriate double payment” for the same service.

Others suggested that states should be able to opt out from giving DERs both wholesale and retail compensation. Ted Thomas, chairman of the Arkansas Public Service Commission, said interested states could take the lead on developing a model, which other states could adopt down the road.

“If the Commission were to include an opt-out provision in the final rule, how would you make the decision on whether or not to opt out?” asked Commissioner Neil Chatterjee, a Republican appointed by Trump.

“Let states decide whether you can participate at the same time in retail and wholesale,” said Thomas. “To me that is a logical way to do it that protects the states from unintended consequences.”

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