Five Case Studies Show How Distributed Energy Resources Can Participate in Wholesale Markets and Provide a Range of Benefits
New report from Advanced Energy Economy demonstrates the benefits of allowing DER participation in wholesale markets, and identifies remaining barriers
WASHINGTON, D.C., September 12, 2019 - Today, national business group Advanced Energy Economy released a white paper outlining case studies of participation in both retail and wholesale markets by a range of distributed energy resources (DERs), including battery storage (both standalone and paired with distributed solar), electric vehicles (EVs), and microgrids. The five case studies explore business models and use cases across the country today, and explain how market rules have limited opportunities for participation.
“These case studies demonstrate that DERs are not only technically capable of providing a range of wholesale market services, but that there’s a clear business and consumer case for this participation when markets give these technologies a fair chance to compete,” said Jeff Dennis, Managing Director and General Counsel at AEE. “If DERs continue to be held back from fully participating in wholesale markets, we will fail to utilize and deploy them optimally, and consumers will ultimately pay the price.”
The report, "Putting Distributed Energy Resources to Work in Wholesale Electricity Markets," explains the role of federal, regional, and state regulators in facilitating greater DER integration into wholesale markets, then outlines the benefits of DER participation in wholesale markets, which include:
- Cost savings and new revenue streams for owners of DER;
- Cost savings for utilities and all customers from deferred investments otherwise needed to meet grid needs;
- Increased visibility and operational transparency for grid operators; and
- Improved real-time load management and congestion relief.
The paper also acknowledges challenges that come with increased DER penetration, arguing that greater visibility and coordination between wholesale and retail activity will relieve, rather than exacerbate, these challenges by improving both real-time operations and long-term planning for the power grid.
The five case studies demonstrate that the benefits of participation by DERs in wholesale markets are not predictions, but observable facts. Yet they also demonstrate that even where dual participation is possible, DERs are often held back from selling into the market all the services they are technically capable of providing.
The case studies represent a range of different technologies and are drawn from different RTOs/ISOs, including aggregated energy storage facilities in California, a 13-facility solar-plus-storage portfolio operating in New York City, aggregated solar and storage facilities across New England, aggregated electric vehicle charging infrastructure in California, and a microgrid in New York.
“Through battery storage projects, JuiceNet-enabled EV chargers, and other forms of DERs, Enel X is uniquely positioned to reduce costs for ratepayers and drive a more flexible and resilient system,” said Greg Geller, Senior Director, Regulatory Affairs, Enel X North America. “It’s critical that distribution and wholesale markets capture the full value of these distributed energy resources. Specific to EVs, wholesale market rules evolve, Enel X will dynamically manage its EV charging to provide greater energy, capacity, and ancillary services in California and other markets.”
“Stem has dispatched DERs in the California wholesale market thousands of times in the last several years,” said Ted Ko, Director of Policy at Stem Inc. “While the technology is here and now, we’ve only scratched the surface of potential benefits we could bring to wholesale markets across the country once the market rules are modernized”
“Fair and clear rules for participation by DERs in both wholesale and retail markets will enable the uses we see today to improve and spread, while allowing new business models to emerge,” said Dennis. “DER providers have shown they’re up to the task. What they need is regulatory certainty.”
The report comes as the Federal Energy Regulatory Commission (FERC) continues to delay action on a final order directing Regional Transmission Operators and Independent System Operators (RTOs/ISOs) to develop rules for DER participation in wholesale markets. FERC issued a Notice of Proposed Rulemaking (NOPR) regarding DER participation in wholesale markets in November 2016, held a technical conference in April 2018, and issued requests for information from RTOs/ISOs in September 2019, but has yet to issue a final order. Meanwhile, FERC has taken action to enable greater participation by energy storage, an issue raised at the same time as the DER NOPR; final RTO/ISO rules for energy storage participation will go into effect in December 2019.
About Advanced Energy Economy:
Advanced Energy Economy (AEE) is a national association of businesses that are making the energy we use secure, clean, and affordable. Advanced energy encompasses a broad range of products and services that constitute the best available technologies for meeting energy needs today and tomorrow. AEE’s mission is to transform public policy to enable rapid growth of advanced energy businesses. Engaged at the federal level and in more than a dozen states around the country, including Colorado, AEE represents more than 100 companies in the $238 billion U.S. advanced energy industry, which employs 3.5 million U.S. workers. Learn more at www.aee.net, track the latest news @AEEnet.