By Robert Mullin

CAISO has asked FERC to approve a new Tariff provision that would enable rooftop solar and other small distributed energy resources (DER) to participate in California’s energy and ancillary services markets (ER16-1085).

The rule changes create an “initial framework” to extend market participation to DER smaller than 0.5 MW — the current minimum for selling into the ISO’s wholesale market — by allowing for aggregation at the distribution system level.

CAISO is anticipating participation by distributed generation, energy storage and electric vehicle charging stations, but the framework leaves open the possibility for market entry by other types of resources located on either side of the customer meter. This “broad definition” of eligibility is intended to avoid excluding emerging technologies from participating in aggregation.

“The framework will accommodate various resource types as well as different business models, provided the aggregation is capable of operating as an integrated resource and meets specific technical requirements,” CAISO wrote. Those models could include microgrids interconnected to distribution systems as well as third-party aggregators and utilities operating DER.

The rules would bar some resources from participating in aggregations, including generation rated at 1 MW or greater, demand-side resources bid into the market by curtailment service providers and demand response intended to react to grid emergencies. Generating units between 0.5 MW and 1 MW would need to terminate their participating generator agreements in order to join an aggregation. Also excluded would be resources already participating in a retail net energy metering program.

New Participant Type

The Tariff revisions would introduce three new terms into CAISO’s official market lexicon:

• Distributed energy resources: Any resource in the ISO balancing area with a first point of interconnection to a utility distribution company or a metered subsystem.
• Distributed energy resource aggregation: A “market resource” comprising one or more DER organized to participate in the wholesale market. Aggregations can contain multiple resource types, but resources will be restricted to participating in a single aggregation.
• Distributed energy resource provider: “A new type of market participant,” according to CAISO, DER providers would be owners or operators of an aggregation. They would engage the market through a registered scheduling coordinator, which would submit schedules and bids based on the aggregation’s generation distribution factors.

The rules would permit a DER aggregation to operate at a single pricing node or across multiple nodes. Regardless of the configuration, the resources are required to provide a net response at the nodal level consistent with dispatch instructions, with missteps subject to imbalance charges.

Compensation will be based on nodal LMPs, but CAISO will not directly poll meters in an aggregation, so DER scheduling coordinators must provide the ISO with settlement quality meter data in order to receive payments.

In its filing with FERC, CAISO urges approval of the changes by pointing out that distributed facilities already participate in ISO wholesale markets as both generating and demand-side resources.

“The Tariff revisions proposed in this filing do not change those arrangements,” CAISO wrote. “Instead, the CAISO is extending the same opportunity to support the reliable operation of the transmission system to aggregations of distribution-connected resources, recognizing the significant transformation in the industry and deployment of emerging technologies.”