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Facilitating Participation for Distributed Energy (and Avoiding the Pitfalls)

Last week FERC held a two-day technical conference on the participation of aggregated distributed energy resources (DER) in the wholesale energy markets. A priority policy issue for the year, Commissioners expressed various objectives for the conference, ranging from eliminating barriers to DER participation in wholesale markets (Commissioner Rich Glick) to ensuring that DER aggregations do not undermine existing markets (Commissioner Kevin McIntyre).

In wholesale energy markets, DERs can help defer new centralized generation and avoid utilization of higher cost (and often higher emitting) resources. Making efficient use of the full capabilities of system resources, both centralized and distributed, promises to meet energy, capacity and ancillary service requirements at the lowest cost, benefitting electricity consumers alongside the DER hosts. DERs can similarly defer expenditures and promote reliability in retail markets. As noted by Commissioner Cheryl LaFleur, FERC should figure out how to integrate DER resources to avoid leaving value on the table. And as made clear by representatives from California and New York, a key part of wholesale market access is ensuring that DERs can grow to be large enough to be of sufficient scale to be utilized by the ISO’s and included in optimizations. This can only happen through aggregation.