PNNL

Abstract

Electricity markets in the bulk grid are beginning to implement market mechanisms that support the procurement of flexible capabilities from wide range of technologies, including distributed energy resources (DERs). The flexibility of these resources will help counterbalance supply uncertainties from large-scale integration of variable renewable generation. To encourage development of distributed and aggregated market participants, FERC Order 2222 was issued in September 2020 to require each Independent System Operator (ISO) in the US to implement rules that enable broader participation from aggregations of DERs in the bulk market. The following paper first describes the generic design of ISO markets before introducing the new market participation rules that ISOs have proposed for compliance with Order 2222. The paper then describes how software performance issues may continue to affect the eligibility requirements and offer structures for DER aggregations participating in ISOs, noting that continued research on computational methods may help reduce burdens for DER integration. The prospects for transmission and distribution system coordination is second major issue discussed, which will require minor changes to existing processes in the short term. In the longer term, there is more opportunity for more wide-ranging reforms, such as the development of a Distribution System Operator (DSO) framework. Newly proposed market rules may affect how Transactive Energy Systems (TES) will help facilitate efficient formation of DER aggregations and operation of the individual DERs within an aggregation. Within the TES context, the challenge is to fully understand how resource eligibility and operational and planning coordination methods will affect the design and implementation of TES.