Hope everyone is staying busy out there. I wanted to get a discussion going about FERC Order 2222 implementation since we're now about 18 months past the compliance deadline. For those not familiar, this order requires RTOs and ISOs to allow distributed energy resources to participate in wholesale markets through aggregation. Here in the MISO footprint, we're finally seeing some real progress with the DER aggregation pilot programs. MLGW just signed up their first battery storage aggregator last month. Anyone else seeing movement in their regions?
FERC Order 2222 implementation status - DER aggregation updates
Out here in CAISO territory we've had DER aggregation for a while but Order 2222 has definitely expanded the opportunities. Southern California Edison just launched a new virtual power plant program that aggregates residential solar and battery systems. The participation payments are still pretty modest - around $2-4/kWh for dispatch - but it's a start. The bigger challenge is the complex telemetry and control requirements. Most smaller DER owners don't want to invest in the metering infrastructure.
PJM has been slower to implement but they finally have their DER aggregation tariff approved. The minimum aggregation size is 100kW which rules out most residential participation unless you go through a third-party aggregator. I've got a client in Philadelphia with a 500kW solar array and battery system who's interested but the registration process is incredibly complex. Has anyone successfully navigated the PJM DER participation requirements?
Idaho Power isn't in an RTO market so Order 2222 doesn't directly apply to us, but we're watching the developments closely. The utility has been piloting their own demand response programs with solar customers. What I'm seeing is that the technical requirements for real-time dispatch and settlement are the biggest barriers. Even large commercial customers struggle with the telemetry and control system costs. The wholesale market participation sounds great in theory but the implementation is challenging.
That's exactly the issue we're running into here too. The technology requirements are substantial and the revenue opportunities are still uncertain. I think we'll see more success with larger commercial and industrial aggregations initially, then maybe residential participation will follow as the technology costs come down. The key is finding aggregators who can manage the technical complexity and offer simplified participation for DER owners. It's still early days but the potential is significant.
I agree Randy, the commercial sector seems more promising near-term. Xcel Energy here in Colorado has been working with some large retail customers on battery storage aggregation. The economics work better when you can stack revenue streams - demand charge management, wholesale market participation, and utility programs. For residential customers the value proposition is still pretty thin after accounting for all the program costs and equipment requirements. But give it a few more years and I think we'll see broader participation.