FERC’s new DER rule to pry open big opportunities for solar, storage

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The Federal Energy Regulatory Commission (FERC) yesterday approved an order that lets distributed energy resources (DERs), like rooftop solar and storage, participate alongside traditional resources in the regional organized wholesale energy markets.

“This is a game changer,” Ravi Manghani, Wood Mackenzie’s head of solar said of the new rule, which many say will help make the grid more resilient, sustainable and affordable.

New technologies and business models that did not have a lot of space in the room will now have an opportunity to flourish, Dan Finn-Foley, head of storage at Wood Mackenzie said. “This order allows us to design for the future,” Ellta Kolo, Wood Mackenzie’s lead grid-edge researcher added.

DERs range from electric storage and intermittent generation to distributed generation, demand response, energy efficiency, thermal storage and electric vehicles and their charging equipment.

“Enabling these flexible resources to participate together as ‘virtual power plants’ in wholesale markets is a victory for enhancing grid reliability, enabling a more resilient grid and lowering costs for customers,” Kelly Speakes-Backman, CEO of the Energy Storage Association said, noting that this new rule builds on FERC order 841, which lets energy storage to compete in wholesale power.

Additionally, for grid operators, the new rule provides much-needed clarity on how to harness the energy and ancillary services that DERs provide, Katherine Gensler, the Solar Energy Industries Association’s vice president of regulatory affairs added.

Order 2222 appears to recognize the principle that any resource able to provide a defined service should be able to compete in the market, Gregory Wetstone, president of the American Council on Renewable Energy (ACORE) pointed out. “Unfortunately, FERC is working against this principle in the nation’s capacity markets by continuing to erect barriers to the entry of new technologies in PJM and NYISO through the use of minimum offer price rules,” he noted. “While today’s order on distributed energy resources follows in the forward-thinking footsteps of [Order 841] on energy storage, no market can be free until arbitrary resource-specific price floors are eliminated,” he added.

After Order 2222 is published in the Federal Register, individual regional transmission organizations and independent system operators will have 270 days to propose an implementation plan that outlines how the final rule will be implemented in a timely manner.

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