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FERC should approve PJM’s Order 2222 compliance filing

Among the regional transmission organizations that asked FERC for an extension from last July to this February, PJM is the only one who has used that time judiciously. The seven use cases that stress-tested the DERA model in PJM’s 2222 compliance proposal are worth FERC’s approval. Keeping in mind Order 2222 addresses the gaps in the current market participation models […]

Among the regional transmission organizations that asked FERC for an extension from last July to this February, PJM is the only one who has used that time judiciously. The seven use cases that stress-tested the DERA model in PJM’s 2222 compliance proposal are worth FERC’s approval. Keeping in mind Order 2222 addresses the gaps in the current market participation models for distributed resources, PJM’s proposal comes close to leveling the playing field for DERs with generation resources.

With some restrictions, DER Aggregations can participate in all 3 PJM markets – energy, capacity, and ancillary services. For example, net energy metered resources need distribution utility attestations before participating in energy and capacity markets. Another restriction is the size – 5 MW is the limit for aggregations to participate in the ancillary services market.

Compared to other multi-state ISOs like New England ISO, MISO, and SPP, FERC should approve PJM’s compliance proposal because PJM did a good job of listening to diverse stakeholder interests. Is it ideal? No, it is not specifically around market registrations. But PJM’s proposal is a step in the right direction of integrating more distributed resources in organized markets.

PJM Market Participation Model discussions with 7 use cases are best

The stakeholder process at PJM heard multiple proposals from diverse perspectives, not just the distribution utility perspective. In addition to focused Order 2222 discussions at DER & Inverter-based Resources Subcommittee (DIRS), PJM had Electric Distribution Company (EDC) Coordination meetings. The PJM DIRS meetings dug into seven use case discussions with its stakeholders.

PJM use cases hit all the main objectives of FERC Order 2222 because they show the benefits of homogeneous and heterogeneous aggregations. They also show the complexity of retail side resources participating in wholesale markets and opportunities for both behind-the-meter and in-front-of-the-meter resources. To show that PJM staff put some thought into these use cases, they have included one site versus multiple sites to illustrate an aggregation of many customer sites, each with mixed technology types, wanting to participate in one or multiple markets.



Hot button issue – Net Energy Metering (NEM)

There is also the issue raised in the letter sent by Advanced Energy Economy (AEE), Advanced Energy Management Alliance (AEMA), and their members to PJM’s Board of Managers. Before this letter, PJM’s compliance proposal only allowed NEM resources to participate in ancillary services, not energy or capacity. As the AEE letter indicates, there could be 12,000 MW of NEM resources in the next 15 years in PJM.

While PJM Board’s response was not ideal for the NEM resource advocates, it proposed a “release valve” that allows NEM resources to participate in energy and capacity markets provided PJM distribution utilities attest there is no double-counting of services and all retail tariff requirements are met. Contrast this dialogue between the PJM Board and its stakeholders with a lack of a robust discussion on NEM at MISO and SPP stakeholder committees.

PJM’s 2222 proposal is not ideal for aggregated DER registration

PJM gave into its EDCs on registering DERs. PJM has an open season-like registration process on the EDC side before starting the 60-day mandatory clock to review DER Aggregation (DERA) market registration applications. There are 2 distinct phases – 1) Data Review Period with no time limitations, and 2) EDC Reliability Review Period with a 60-day time limit.

In the Data Review Period, PJM reviews the applications for completeness and verifies markets for DERA participation. Additionally, PJM reviews the aggregation in the planning model, including any meter configurations and applicable state requirements for small utility opt-ins. Meanwhile, the EDCs review the information for accuracy and provide locational information. EDCs also identify any need for additional reliability review.

The final step in the Data Review Period seems to be unnecessary since EDCs have to perform any necessary reliability studies for aggregations market participation within 60 days. Perhaps the data review period sets up the data needed for the reliability review before the reliability review period starts. The point is that open-ended EDC and PJM review is not good for DER providers.

The maximum size limit of 5 MW is not helpful either

Another limitation is that PJM has proposed a maximum size limit of 5 MW for DER Aggregations in PJM’s ancillary services market. This maximum size limit does not apply to energy and capacity markets. FERC Order 2222 states the minimum size for DER Aggregations is 100 kW. Aggregations can consist of a single DER of 100 kW size. In contrast with MISO and SPP, those ISOs do not have a maximum size limit for DER Aggregations after stakeholders provided feedback that some DERs are already operating in the market greater than 10 MW.

And the effective date of February 2026 is not bad!

Both California ISO (CAISO) and New York ISO (NYISO) implementation dates are in the 4th quarter of 2022, and the reason for that is that both those single-state ISOs have been working on integrating distributed resources for a while now. The challenge for multi-state ISOs like PJM is bringing all the states together with their distribution utilities. And PJM did a nice job of penciling in the effective date of February 2, 2026. Even though PJM’s implementation date is 4 years out, PJM plans to continue stakeholder discussions on integrating aggregated DERs.

PJM’s 2026 effective date doesn’t look bad compared to MISO’s proposed 2030. MISO also tried to sunset its DER task force by July 2022. The MISO taskforce stakeholders voted to extend the sunset date by an additional year to July 2023.



Comments in the FERC Docket are due April 1, 2022

The FERC docket # ER22-962 will receive comments either in support or protest aspects of PJM’s compliance filing by April 1, 2022. PJM has done enough work with its DER stakeholder to warrant FERC’s approval.


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