Redefining the Role of Distributed Energy Resources in Wholesale Markets

The growth of distributed energy resources such as demand management, solar, energy storage, and fuel-based distributed generation is beginning to shift the behavior of the wholesale market.

In its latest report, Regulating DER Participation in U.S. Electricity Markets: CAISO, ERCOT and NYISO, GTM Research examines regulatory and market changes pertaining to integrating distributed energy resources (DERs) into the wholesale market and fueling new approaches across California, Texas and New York.

All three system operators have recently proposed changes to market rules and regulations that ambitiously seek to reduce market barriers, more accurately compensate resource participation, and allow for increased third-party aggregation for DER participation in wholesale markets. As net-metering policies continue to evolve, these market rules will help to shape the future of DER economics by creating new potential value streams for DERs acting individually or operating under an aggregation scheme.

FIGURE: Comparing ISO Market Potential for DER Participation

Source: Regulating DER Participation in U.S. Electricity Markets

With more solar capacity installed than any other state in the nation, it’s little surprise that California’s system operator is working to implement the most progressive changes to its market rules and programs. A number of reforms are shaping the future of DER participation in CAISO, including demand-response bifurcation, load-modifying demand response valuation, and a DER provider proposal.

ERCOT’s Distributed Resource Energy and Ancillaries Market (DREAM) Task Force recently proposed three regulatory market-structure options: DER Minimal, DER Light, and DER Heavy. The report breaks down how these will more effectively enable DER wholesale market participation and compares these efforts with proposed reforms in CAISO and NYISO.

New York’s electricity market has taken center stage this year with its Reforming the Energy Vision (REV) framework. The report details the current requirements for DERs to participate in NYISO’s wholesale market programs, as well as the changes that will be introduced as distributed system platforms develop new programs to capture the value presented by DERs at the distribution level. 

“As DERs become more prevalent, system operators will be under increased pressure to allow greater resource participation to enhance situational awareness and ensure system reliability,” notes Omar Saadeh, senior analyst at GTM Research and author of the report. “Beyond benefiting regional ISOs, these regulatory changes will extend opportunities to commercial and industrial end users, resource aggregators, and even utilities.”


For more information, download the report’s brochure here.

via Greentech Media: Headlines

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