Dive Brief:
- The New York ISO this week launched the nation’s first program to integrate aggregations of distributed energy resources into wholesale markets. The new market rules require participating DER to be at least 10 kW in size.
- In 2020 the Federal Energy Regulatory Commission issued Order 2222, requiring grid operators to allow DER aggregations to participate in wholesale markets. The market rules FERC approved Monday are “a step in the right direction,” but do not get NYISO to full compliance, Christopher Casey, a senior attorney for the Natural Resources Defense Council, said in an email.
- The 10-kW minimum size was a controversial issue and will significantly limit the number of resources that can participate, at least initially. In a concurring statement, FERC Chairman Willie Phillips and Commissioner Allison Clements acknowledged “valid concerns about the potential limiting effect” of the threshold, but said the “lack of such a requirement would substantially delay rollout of the participation model.”
Dive Insight:
“FERC’s acceptance of our landmark model is a huge win for grid reliability and energy consumers in New York,” NYISO President and CEO Rich Dewey said in a Wednesday statement.
In its application to revise its market rules to allow DER aggregation, NYISO said the 10 kW threshold “balances the need for efficient administration” of wholesale markets alongside the “value that small facilities can reliably provide the bulk power system.”
“Accommodating resources below 10 kW is expected to require market rule enhancements, and potentially additional software changes, that the NYISO has not developed yet,” the grid operator said.
Order 2222 envisioned aggregations of smaller resources, including rooftop solar, energy storage, electric vehicle chargers and other technologies, all working together to maintain the grid. New York made its DER filing in 2019, prior to that decision. In another docket, FERC required that NYISO’s DER participation model be fully compliant with Order 2222 by no later than December 31, 2026, Casey said.
NYISO has acknowledged, according to FERC’s order, that the 10 kW minimum capability requirement will likely exclude most, if not all, residential and other small retail DERs from participating. In the near term, NYISO told FERC the impact will likely be small. But “there is also evidence that this could change in the near future,” Phillips and Clements wrote.
NYISO said its forecasts show distributed generation in the state roughly doubling over the next three decades, as it moves towards a power mix that includes 70% renewable generation by 2030 and 100% clean power by 2040.
“Because NYISO provided sufficient support that the 10 kW minimum capability requirement strikes a reasonable balance between minimizing barriers to DER participation and achieving a model that NYISO may efficiently administer in the near term, we find this limitation acceptable,” the two regulators wrote. “We do not, however, arrive at this finding lightly.”
Advanced Energy United, a participant in the FERC proceeding, said it is “highly supportive of efforts to open pathways to market participation for distributed energy resources” but opposed the 10 kW limit.
NYISO’s threshold “will exclude numerous clean energy resources, such as residential solar arrays, batteries, and electric vehicles, and will make it more difficult for New York to meet its clean energy goals,” the group said in a statement. “We encourage NYISO to make good use of time before submitting its required 2-year informational filing to evaluate opportunities for participation by DERs smaller than 10kW.”
Distributed resources “constitute a critical piece” of what is needed to reach 70% renewables, the Alliance for Clean Energy New York said in a statement. The new rules “will likely spur further growth and adoption” of DERs, ACENY said.
“We hope as the NYISO gains expertise in DER aggregation it will lower the minimum size to allow even greater participation,” the group added.
Even with the limit, the New York grid operator “is at the forefront of developing a participation model for DERs,” Phillips and Clements said.
“We are only now leaving the starting gates in unlocking the potential of DERs to provide reliability value to our grid, but that value will be essential to ensuring we meet new and emerging reliability challenges in the future in an efficient manner that protects customers,” they wrote.
Correction: This article has been updated to include comments from Natural Resources Defense Council Senior Attorney Christopher Casey, explaining that the market rules FERC approved Monday for New York ISO do not bring the grid operator into compliance with Order 2222.
