Distributed solar stakeholders must take comfort in FERC’s data requests sent to NYISO and CAISO. There are seven instances where solar is mentioned in the FERC letter to NYISO. Most of the questions focused on how distributed solar would operate within the ISO market construct through an aggregator and how the ISO would coordinate with the distribution utility to facilitate solar and storage dispatch.
This blog focuses on two compliance elements out of the possible ten topics, because FERC staff had many questions on NYISO’s market model, and how NYISO would coordinate with the distribution utilities and the retail authorities. Taking the cue from FERC’s letters to NYISO and CAISO, ISO staff at MISO, SPP, PJM, and ISO-NE would be well served.
New York Independent System Operator (NYISO) did not ask for an extension and filed their compliance plan at FERC on July 19, 2021, the original due date. However, on October 1, FERC staff sent twenty-one “please explain” questions to NYISO regarding their Order 2222 compliance filing.
For distributed solar and storage stakeholders, these FERC letters (one sent to California ISO (CAISO) and who also submitted their compliance filing) offer clues for FERC’s attention and focus on the aggregation of distributed energy resources and their role in the energy market construct.
Both NYISO and CAISO did not convene stakeholders to put together their compliance filings. But the rest of the ISOs did. Hence these questions offer guidance for ISO staff and stakeholders at PJM, ISO-NE, MISO, and SPP, since they still have time to file their compliance plans.
FERC had many questions on the eligibility to participate in NYISO markets for DER Aggregator (DERA) and the coordination between NYISO, the Aggregator, and the Distribution Utility (DU). Hence this blog focuses on these two compliance elements out of the possible ten topics.
DERs market participation model
The key difference with the current market model for demand response and distributed storage or solar with the 2222 market model is, ISOs are required to allow multiple distributed technologies to aggregate as long as they meet the minimum size 100 kW requirement. And participate in all of the markets – energy, capacity, and ancillary services. Both CAISO and NYISO have the most experience with DERs. Hence their DER experience is paving the way for more DERs to participate at other ISOs.
FERC has given ISOs leeway on implementing these 2222 requirements because each ISO can leverage their existing market models for aggregated DERs. For example, MISO recently announced that aggregated DERs would participate using the Electric Storage Resource (ESR) model. This ESR model is required of MISO to comply with another FERC Order 841 that requires ISOs to allow electric storage resources to participate in all of the wholesale markets.
Since aggregation of DERs would contain solar and storage or some combination with existing demand response programs, FERC is asking NYISO how homogenous (same technologies) versus heterogeneous (multiple technologies) would participate in NYISO markets. MISO and PJM have this question covered because they are engaging stakeholders in use case discussions. They are specifically discussing how solar plus storage would work versus multiple solar farms.
Coordination between the RTO/ISO, Aggregator, and Distribution Utility – Big piece of the puzzle
Coordination among multiple stakeholders is the key to implementing the vision of FERC Order 2222. There are three main aspects in this coordination to make it work.
First, let’s start with the DU role and address the double-counting issue
If the Transmission Owner (TO) plays a key role in the wholesale markets because they own the transmission, the distribution utility plays a similar role in the distribution system because they own the distribution wires, feeders, and substations where DERs interconnect.
And double counting is an issue when a distributed resource participates in both wholesale and retail markets for the same service at the same time. But ISOs already have experience with demand response programs, which participate in wholesale markets where states have allowed such participation.
Due to this double-counting potential, the DUs have raised market registration concerns at MISO and SPP O2222 stakeholder meetings. FERC asks NYISO to explain how the DU reliability criteria would allow DERs to participate in NYISO markets. All the ISOs should note and discuss how DU reliability requirements would allow DERs that are part of aggregation to participate in organized markets.
Second is the DU override issue
Since RTOs don’t have the authority over the distribution network, the DU’s do, the DERA could be in a potentially conflicting role in a situation where the RTO operator dispatches the aggregated DER, and the DU overrides that dispatch due to a safety and reliability issue on the distribution grid. This situation is the “override” issue when the DU overrides the ISO dispatch of the DERA.
FERC’s question to NYISO focuses on the specific NYISO tariff provision that discusses this override and how NYISO maintains transparency for the Aggregator in such a situation. Similarly, both MISO and SPP should discuss this question in their DU coordination workshops.
Third, is the State authorities Coordination
Within the O2222 context, Relevant Electric Retail Regulatory Authorities (RERRA) are the primary authorities responsible for authorizing DER’s participation in the wholesale market. Small utilities with sales ≤ 4 million MWh in the prior fiscal year are by default “opt-out,” but they can “opt-in” with their RERRA approval.
FERC’s RERRA coordination questions to NYISO are asking for more details on how NYISO plans to coordinate with RERRAs, “Please specify whether the RERRA will have a role in coordinating the participation of Aggregations in NYISO’s markets by: developing interconnection agreements and rules; developing local rules to ensure distribution system safety and reliability, data sharing, and/or metering and telemetry requirements; overseeing Distribution Utility review of Distributed Energy Resource participation in Aggregations; establishing rules for multi-use applications; or resolving disputes between Aggregators and Distribution Utilities over issues such as access to individual Distributed Energy Resource data”.
Since storage provides multiple services, this RERRA question offers ideas on what MISO should discuss at the October 22 MISO RERRA workshops.
NYISO has 30 days to respond to FERC. Hence, their response to FERC is due by the end of this month. CAISO is in a similar boat. While this blog focused on FERC’s data request to NYISO, the industry knows this is not a “request” per se. And the remaining RTOs like PJM, ISO-NE who are up next, must pay attention to what FERC had asked in these NYISO and CAISO letters.