PJM’s plan to open markets for aggregated distributed energy resources seen as a ‘good first step’

Diving brief:

  • PJM Interconnection’s plan to open its markets to Distributed Energy Resource (DER) aggregations is a “good first step”, but it includes provisions that could prevent them from fully participating in the market, Advanced Energy Economy (AEE) and Advanced Energy Management Alliance (AEMA) said Wednesday.

  • PJM, the largest US network operator, filed a plan Tuesday at the Federal Energy Regulatory Commission establishing a framework for aggregate DERs such as rooftop solar, energy storage and electric vehicle chargers to participate in energy, capacity and ancillary services from the network operator from 2026.

  • PJM said it would continue to work on various issues that emerged during discussions with stakeholders, such as cybersecurity and ensuring the DER aggregation model keeps pace with evolving state policy and network modernization efforts.

Overview of the dive:

In a historic decision, FERC in September 2020 ordered regional transmission organizations and independent system operators to remove barriers preventing DER aggregations from participating in wholesale markets.

Since then, system operators have developed plans to meet FERC’s requirements set out in its Order 2222.

FERC’s decision coincided with rapid growth in DERs in response to falling consumer costs, increased consumer interest and state policy, according to Jeff Dennis, CEO and General Counsel of the FERC. ‘EEA.

“We’re going to have this vast set of resources that, when brought together, can provide valuable services to the wholesale market, and by capturing that value it can help make markets more efficient and can provide a new, resilient and a reliable set of resources for RTOs,” Dennis said on Wednesday. “And that’s really one of the first steps toward unlocking flexibility on the demand side of the market.”

The compliance plan seeks to strike a balance between giving aggregated DERs access to wholesale markets while allowing distribution utilities and “relevant electricity retail regulators” to ensure that the electricity distribution system is safe and reliable, according to PJM, which operates the grid in 13 Mid-Atlantic and Midwestern states and the District of Columbia.

PJM said its model for participation in DER aggregators takes into account the physical and operational characteristics of an aggregation without imposing restrictions on types of resources or technologies for market participation, and allows for single-type and mixed-type DER aggregations. to participate in all markets where they can provide services. A mixed aggregation could combine different resources such as residential rooftop solar, energy storage and larger offsite solar, for example.

The proposal defines a DER aggregator as having at least one DER component. The aggregation must be able to provide at least a 100 kW power and/or ancillary services market offering, and individual DER components cannot exceed 5 MW, depending on the filing.

PJM’s “balanced treatment” of different resource types and innovation in metering, sub-metering and settlement data will help facilitate DER’s participation in network operator markets, the company said. ‘AEMA in A declaration.

Even so, the alliance and others see areas in the proposal that they believe could limit DER aggregations.

PJM’s proposal limits DER aggregation participation in the power market to a single pricing node on the grid. PJM said allowing aggregations to use multiple nodes would make it difficult to meet reliability standards. The network operator has proposed to authorize multinodal aggregations up to 5 MW for its capacity and ancillary services markets.

The single-node limit makes it difficult to create DER aggregations and could lock up potential resources, according to Greg Geller, Head of Regulatory Affairs for Enel North America. Ideally, an aggregation is as large as possible, which may require covering a wide area, he said Wednesday.

Enel runs aggregations of electric vehicle chargers in markets run by the California Independent System Operator (CAISO) and wants to bring them to other markets, Geller said.

PJM has thousands of nodes, so reaching a minimum size of 100kW for an aggregation can be difficult, according to AEMA. “In comparison, California, New England, and New York have all found ways to allow these smaller resources to participate by enabling aggregation across large subsets of pricing nodes,” said the trade group said in a statement.

The EEA is also concerned about the registration process proposed by PJM for groupings. As part of the plan, DER aggregations must coordinate with their distribution service before registering with PJM. The registration process includes a 60-day period for distribution utilities to review the proposed aggregation. After getting the utility’s recommendation, PJM has 15 days to approve or reject the registration.

According to Prush Hasan, Director of AEE Policy.

The professional group is also concerned about the limits imposed on the participation of measured net energy resources in the energy and capacity markets, which would leave a “swath” of resources unable to be part of PJM’s markets, Hasan said.

While the EEA would like to see some changes to PJM’s proposal, it appears to better meet the needs of potential DER aggregators than other network operator plans, including New England ISO Proposal filed Wednesday, according to Dennis.

“Our members were happier with PJM’s proposal than some of the others we’ve seen,” Dennis said. “Like in New England, we don’t think The New England Proposal really will unlock anything.”

FERC Reviews Filings for Compliance with Order 2222 CAISO and the New York Independent Network Operator. The Midcontinent Independent System Operator and the Southwest Power Pool are preparing to file their proposals this spring.