Market barriers for rooftop solar and other distributed energy resources (DERs) were removed Sept. 17 after a 2-1 vote by the Federal Energy Regulatory Commission (FERC).
“Order 2222 is a landmark, foundational rule that paves the way for the grid of tomorrow,” said Craig Cano, FERC spokesman. “It will promote competition and efficiencies in our markets, enhance grid flexibility and reliability, and stimulate the kind of innovation that’s needed to keep pace with our ever-evolving energy demands.”
DERs are small-scale resources, typically 10,000 kilowatts or less that provide an alternative to or an enhancement of the traditional electric power system, according to the FERC.
“They are located on an electric utility’s distribution system, a subsystem of the utility’s distribution system or behind a customer meter,” Cano told the Lone Star Standard. “DERs can hide in plain sight in our homes, businesses and communities. They include everything from rooftop solar panels and storage resources to demand response and energy efficiency resources such as grid-enabled water heaters, and even electric vehicles and their supply equipment.”
It's been widely reported that the vote clears the way for other technologies, such as electricity-fueled cars and appliances that employ artificial intelligence, known as smart appliances.
“Their participation will increase competition and reduce market inefficiencies that can lead RTOs and ISOs to rely on more expensive resources,” said Cano in an interview. “When DERs come together to form an aggregation, they can – and should – be able to participate in our wholesale markets.”
Commissioner James Danly, a Republican who voted against the measure, said in his dissent that “regardless of the benefits promised by DERs, the commission goes too far in declaring the extent of its own jurisdiction and because the commission should not encourage resource development by fiat."
According to media reports, a benefit of the new rule is that it will reduce electricity costs for consumers.
“It will provide a variety of benefits, including enhanced grid resilience and increased competition that can drive down prices for customers,” Cano said. “That means smaller energy bills for hardworking families and businesses of all shapes and sizes. Further, because many DERs have fast response times and can serve multiple functions, they’re able to show up quickly and meet various grid needs as they arise. Bottom line: DERs can help keep the lights on.”
Regarding how the rule will affect the energy market and pricing, pertaining to renewable energy pricing and subsidies, Cano said, “Order 2222 ensures that DERs can compete in the regional markets like any other resource. By relying on simple market principles and unleashing the power of innovation, this order will allow us to build a smarter, more dynamic grid. We’ve seen it time and again that when our markets are truly open, the best and brightest minds pool their talents and bring new ideas to the table.”
Cano added that the rule change will not result in subsidies for consumers of DERs.
"By removing barriers to the participation of DERs in the RTO/ISO markets, the rule allows them to compete on a level playing field with all other resources,” he said. “The commission is fuel-neutral when it comes to our actions, but, just as important, this new rule is technology-neutral.”
