Analyst Insight: FERC 2222 and Global DER Deployment Insights

As distributed energy resources (DER) penetrate the electricity grid,  how they will be integrated into the broader electricity marketplace and pricing structure remains an open question. If not properly managed, DER resources co-located in similar areas can strain the grid and generate significant peak loads. To address some of these issues, the Federal Energy Regulatory Commission (FERC), issued Order 2222, which enables aggregated DER to be compensated for the flexibility they provide the grid by allowing them to compete in regional organized wholesale markets alongside traditional resources—essentially linking the retail and wholesale markets. The order also shows that the commission intends to work hastily toward a greener grid, while realizing full value of DER.

Focusing on FERC Order 2222, this Analyst Insight addresses how current regional transmission operators (RTOs) and independent system operators (ISOs) are responding to the order and its short- and long-term implications. It also offers recommendations for regulatory, RTO/RTO, DER vendors and integrators, and renewable energy developer stakeholders.

The report reviews the Guidehouse Insights Global DER Deployment Database 3Q22, which shows that the global DER market is expected to grow at a 13.9% CAGR from 2022 to 2031. Exponential growth comes largely from EV charging adoption projections. China and the US lead in expected cumulative DER capacity, with Japan and Germany as other significant country-level contributors.