- How are RTOs/ISOs planning to implement FERC Order 2222?
- How do regional disparities in implementation effect the pace of power market innovation?
- What is Order 719’s opt-out authority and how important is it to the success of Order 2222?
- What are the major challenges facing stakeholders in implementing FERC 2222?
- What opportunities for market innovation arise from implementation of FERC 2222?
- Who is likely to benefit the most from FERC Order 2222’s implementation?
- How long will it take to realize the market reforms outlined in FERC 2222?
- How can stakeholders capitalize on FERC 2222’s implementation in the meantime?
3Q 2022
FERC Order 2222: RTO Compliance Plans Reveal Regional Disparities in Distributed Energy Integration
In 2020, the Federal Energy Regulatory Commission (FERC) issued Order 2222 with the intent of opening regional transmission organization (RTO)/independent system operator (ISO) wholesale markets to aggregations of distributed energy and demand response resources, which would vastly expand the tools system operators can employ to balance an increasingly dynamic transmission grid. Many details have yet to be resolved.
While FERC considers whether to rescind the opt-out authority it granted states in Order 719 to bar DR aggregations from wholesale markets—an authority that could undermine efforts to create a more innovative bulk power market—every RTO/ISO has filed a compliance plan. Analysis of these filings reveals wide disparities in the scope and speed these RTOs/ISOs intend to adopt the market reforms Order 2222 directed. These implementation gaps present serious challenges for the stakeholders most likely to benefit from the order’s blurring of the distinction between retail and wholesale markets. But they also reveal some interesting business models and surprising growth opportunities for market players prepared to outwit the regulatory complexity.
This Guidehouse Insights strategy insight summarizes every RTO/ISO Order 2222 compliance filing and FERC’s responses, to date. It analyzes outstanding issues that could impact how Order 2222 is implemented and whether the order effectively integrates distributed energy resources into wholesale power markets; it also assesses the risk and consequences of particular outcomes. Evaluating differences in implementation schemes across the RTOs/ISOs forecasts how Order 2222 implementation could impact various market players in the near and long term.
Pages
23
Tables | Charts | Figures
1
Key Questions Addressed
Who Needs This Report
- Distributed energy resource aggregators
- Distributed energy resource OEMs and software vendors
- Renewable energy project developers
- Equity investors in renewable energy projects
- Demand response advocates
- System operators
- State and local utility regulators
- Utility executives and their regulatory affairs staff
- Federal energy regulators
Table Of Contents
Compliance Plans Show Wide Regional Disparity on Order 2222 Implementation
Context
Recommendations
Fully Implemented, Order 2222 Has the Potential to Revolutionize US Power Markets and Benefit Nearly Every Stakeholder
Compliance Filings Reveal Widening Regional Gaps in Scope and Speed of Distributed Energy Resource Integration
California Independent System Operator
CAISO Uses Sub-LAPs to Permit Multi-nodal Aggregations
CAISO Limits DUs Ability to Block DER and DR Participation
FERC Responds to CAISO
New York Independent System Operator
NYISO Limits Aggregation to Single, Authorized Nodes
NYISO Tweaks Existing Participation Models, But Imposes Restrictions on DERA
NYISO Proposes Bizarre Small Utility Opt-in Provision
FERC Ordered NYISO to Resubmit, Omitting DERA Restrictions and Amending Small Utility Opt-In
Pennsylvania-Jersey-Maryland Interconnection
FERC Functionally Accepted PJM’s Plan, Including Restrictions on Multi-nodal Aggregations
New England Independent System Operator
Employing DRR Aggregation Zones to Facilitate (Some) Multi-Nodal Aggregations
ISO-NE Proposed Restricting Broader Participation Until New England Deploys Advanced Metering Infrastructure
ISO-NE Deviates from FERC’s Language for Small Utility Opt-in Provision
FERC Requests Additional Information from ISO-NE
The Midcontinent Independent System Operator
Restricting Aggregations to Single Pricing Nodes
Coordinating with State Regulators and DUs
Proposing October 1, 2029, as the Effective Implementation Date
Southwest Power Pool
SPP Adopts Resource Types in Lieu of Participation Models
SPP Imposes (by Implication) a 10 MW Maximum Capacity Cap
SPP Proposed December 31, 9998 as its Effective Implementation Date
Electric Reliability Council of Texas
Compliance Filings Raise Unresolved Questions About Order 2222 Implementation
Do State Regulators Have Authority Under Order 719 to Bar DR Aggregations from Participating in Wholesale Markets?
Order 2222-a Clarified Order 719
Order 2222-b Rescinded Order 2222-a
Can Distributed Energy Resource Aggregations Operate Effectively if Confined to a Single Transmission Node?
Can State Regulators, DUs, and RTOs/ISOs Cooperate Sufficiently to Harmonize Retail and Wholesale Markets for Distributed Energy Resources?
Will RTOs/ISOs Adopt a Standard DER Aggregation Participation Model?
Does the Small Utility Opt-in Provision Effectively Block Participation by Rural Electric Cooperatives and Public Power Providers?
Net Metering Programs—and FERC’s Own Language—May Inadvertently Stunt Order 2222’s Effectiveness
List of Tables
- Order 2222—RTO/ISO Compliance Plans At-a-Glance
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