Core Sector: Energy Resources and the Environment

NARUC-NASEO Distributed Energy Resource Integration and Compensation

Current and anticipated growth of distributed energy resources (DERs) and the introduction of aggregated DERs into wholesale markets resulting from FERC Order 2222 are fundamentally changing the way the grid is planned and operated. Policymakers at state energy offices and regulators at public utility commissions increasingly need to evaluate, consider, and establish the rules and requirements as well as enabling policies and programs to bring these resources online safely and fairly to provide retail and wholesale services.

The National Association of Regulatory Utility Commissioners (NARUC) and the National Association of State Energy Officials (NASEO) are providing a forum for the development of state-led pathways toward a more resilient, efficient, and affordable grid. The Initiative will provide information, tools, access to experts, and peer sharing opportunities that assist members with FERC Order 2222 implementation in RTO/ISO regions and state oversight of transmission-distribution-customer (TDC) coordination outside of RTO/ISO regions.

DERs provide grid services which deliver benefits to the grid that require valuation in order to structure appropriate compensation. Well-designed compensation mechanisms can align aggregated DERs with grid needs, rather than cause additional stress on the existing distribution system. As adoption rates ramp up due in part to federal funding and local and national trends towards electric vehicles and other electrification, it will become increasingly important to establish clear policies and programs that incentivize the location and operation of DERs.

The DER I&C Initiative 2023-24 is designed around three sequential modules:

  • Module 1: The modern landscape, best practices & lessons from what’s being done today. See Activities for webinar recordings and presentations.
  • Module 2: Hot topics, collectively explore cutting-edge applications
  • Module 3: Deep dive, advancing a pressing topic through intentional collaboration 
  • DER Integration & Compensation Initiative Project Overview, Fall 2023
    This project overview summarizes the DER-I&C Initiative description, objectives, and approach for 2023-2024 program year.
  • Overview of RTO/ISO Filing Status in Response to FERC Order 2222, November 2023
    RTOs/ISOs are primarily responsible for complying with Order 2222 directives, while resulting market changes may need to be addressed and implemented by other entities (e.g., distribution utilities, DERAs, and relevant electric retail regulatory authorities (RERRAs)). This document was prepared to provide Public Utility Commissions and State Energy Offices with a summary of each RTO/ISO filing status at FERC as each market area works to comply with Order 2222. The table and the information included in this document are updated regularly as new developments are announced.
  • Summary of Expert Recommendations for Supporting DER Aggregator Participation in Wholesale Markets and Operations in Line with FERC Order 2222, March 2023
    The Federal Energy Regulatory Commission (FERC) passed Order 2222 in September 2020, allowing Distributed Energy Resources (DER) to compete alongside traditional generation resources in wholesale electricity markets through participation via DER Aggregators (DERAs). Order 2222 adds complexity to a system already in the midst of unparalleled change with current and anticipated growth of DER deployment. State and federal policy makers and regulators are evaluating and determining whether and where to establish new rules and requirements as well as enabling policies to bring both DERs and their aggregations onto the electricity system safely, fairly, and reliably. This document was prepared to provide state energy decision makers such as Public Utility Commissions and State Energy Offices with a summary of state actions, considerations, and enabling policies related to Order 2222 implementation.
  • Order 2222, September 2020
    Order 2222 amends Federal Energy Regulatory Commission (FERC) regulations to remove barriers to the participation of distributed energy resource aggregations in the capacity, energy, and ancillary service markets operated by Regional Transmission Organizations and Independent System Operators (RTOs/ISOS).
  • U.S. DOE Distribution Grid Transformation Webpage
    The U.S. Department of Energy partners with the electricity industry to identify challenges and proactively address grid transformation issues. Policies, changing customer preferences, and innovative technologies are all transforming power system planning and operations, particularly at the distribution grid.
  • NARUC-NASEO Webinar Series: The Modern Landscape for DER-Integration & Compensation

  • NARUC-NASEO Webinar: Grid Modernization Strategies to Accelerate Deployment of DERs, April 14, 2023
    States have been conducting grid modernization studies to identify pathways for updating interconnection processes, enhancing hosting capacity, and understanding the role of distributed energy resources (DERs). A comprehensive understanding of the connection, operation, and compensation of DERs is crucial to the activities of State Energy Offices and Public Utility Commissions. As part of the NARUC-NASEO Distributed Energy Resources Integration and Compensation Initiative, this webinar featured Lisa Schwartz of Lawrence Berkeley National Laboratory (LBNL) sharing a national perspective on trends and challenges states are facing when examining and seeking to accelerate DER deployment in the context of grid modernization. Paul Heitmann with the New Jersey Board of Public Utilities discussed New Jersey’s process for developing the recently released New Jersey Grid Modernization Study, recommendations from the study, and plans for implementation.

    View Recording
    View Presentation

  • NARUC-NASEO Webinar: Grid Investments for FERC Order 2222, January 27, 2023
    To implement FERC Order 2222, state and federal policy makers and regulators are evaluating and determining whether and where to establish new rules and requirements as well as enabling policies to bring both distributed energy resources (DERs) and their aggregations onto the electricity system safely, fairly, and reliably. Underpinning these decisions are the technological requirements for enabling DER aggregation. As part of the NASEO-NARUC Distributed Energy Resources Integration and Compensation Initiative, this webinar highlighted a new report on this topic being developed by the GridWise Alliance. Modeled after their recently released Technology Portfolio Report, the report will be a resource for stakeholders interested in understanding what specific types of grid technologies and investments are needed for the implementation of FERC Order 2222.

    View Recording
    View Presentation

  • Regulators’ Roundtable on DER Interconnection, September - October 2022
    NARUC initiated a Regulators’ Roundtable series to support members in sharing information on regulatory and technical challenges with Distributed Energy Resource (DER) interconnection. State utility commissions are increasingly being faced with novel technical issues and policy decisions related to the integration of distribution-connected energy resources. Almost every aspect of the electric utility can be impacted by DER growth, while retail and wholesale rules will also become more intertwined. Policy makers will need to consider many technical and economic issues to prepare for a variety of future paths that are changing rapidly. Ultimately, state energy decision makers individually and collectively want to ensure that these resources are connected and operated in a way that is safe, fair, and supports state goals.

    View Summary

  • NARUC-NASEO Distributed Energy Resource Integration and Compensation Workshop, September 20-21, 2022
    State Utility Commissions and State Energy Offices are increasingly faced with novel technical issues and policy decisions related to the integration of distribution-connected energy resources. Almost every aspect of the electric utility can be affected by distributed energy resource (DER) growth, while retail and wholesale rules will also become more intertwined. Policy makers will need to consider many technical and economic issues to prepare for a variety of future paths that are changing rapidly. Ultimately, state energy decision makers individually and collectively want to ensure that these resources are connected and operated in a way that is safe, fair, and supports state goals.

    This workshop convenes NARUC and NASEO state members to further prepare for decision making related to the connection, operation, and compensation of distributed energy resources (DERs)---within the distribution grid, bulk power system, and wholesale energy markets. Workshop attendees will be NARUC and NASEO members. Sessions include panel discussions, templates and time for action planning by states, and opportunities to provide input to the U.S Department of Energy and National Laboratories on efforts to support DER integration.

    View presentations for September 20: DER-Bulk Power System Coordination.
    View presentations for September 21: DER Integration through Advancing Interconnection.

  • Interconnection Standards Technical Assistance Workshop, July 17, 2022
    In the context of FERC order 2222, distributed energy resource (DER) growth, electric vehicle charging investments, and digitization trends in the evolving electricity sector, many state commissions have identified the need for near-term actions to update their state’s interconnection standards. NARUC members and DOE, NREL, and NIST technical experts joined together for an interactive workshop to learn about resources, lessons learned, and support opportunities for updating DER interconnection standards. Experts will demystify IEEE 1547-2018, assist in prioritizing action steps and processes, and provide an engaging forum for members to make connections to colleagues in other states who share similar challenges and timelines.

    View Presentations

  • DER Aggregation Participation in Electricity Markets: NASEO and NARUC Webinar on EPRI Collaborative Forum Final Report and FERC Order 2222 Roadmap Confirmation, June 2, 2022
    Over 2021 and the early part of 2022, the Electric Power Research Institute (EPRI) facilitated a collaborative forum with U.S. and Canadian ISOs/RTOs, distribution and transmission utilities, DER aggregators, and relevant retail regulatory authorities to discuss the challenges and opportunities associated with FERC’s Order 2222 to enable participation of DER aggregations in wholesale electricity markets. Over 45 webcasts were held across the project with relevant topics, educational sessions, and panels involving important stakeholders. In March, EPRI released the final report of the project, in the form of a roadmap that summarized key findings and potential actions across six important areas. In this NASEO-NARUC webinar, EPRI will provide a summary of the report, its key findings, and further activities planned for the future.
    Speakers: Erik Ela, EPRI; Nick Heine, EPRI; Jens Boemer, EPRI; Ben Ealey, EPRI; Angela Chuang, EPRI; Ajit Renjit, EPRI

    View Recording
    Read Report

  • DERs in Wholesale Markets and on the Distribution Network: What Needs to Happen, Advanced Energy Economy (AEE), March 8, 2022
    FERC Order 2222 directed regional grid operators to open their wholesale markets to distributed energy resources (DERs) but that will take more than action by RTOs/ISOs. Distribution utilities and their state regulators also have big roles to play in realizing all the benefits of distributed resources for customers and the power grid. In this webinar, which drew on FERC Order No 2222 Implementation: Preparing the Distribution System for DER Participation in Wholesale Markets, a report from AEE and GridLab, utility executives and DER companies explored what needs to happen locally to unlock the value of DERs at the grid edge.
    Speakers: Ric O’Connell, GridLab; Susan Mora, Exelon; Tamara Dzubay, Ecobee; Adam Stern, Enel X; Yujia Zhou, DTE Energy; Nate Bennett, DTE Energy; Terri Eaton, Xcel Energy; Peter Dotson-Westphalen, CPower Energy Management; Lisa Frantzis, AEE; Jeff Dennis, AEE

    View Recording
    Read Report

  • Distributed Energy Resource (DER) Integration into Wholesale Markets and Operations: Overview and Current News, March 2022
    The Energy Systems Integration Group has released a new report, DER Integration into Wholesale Markets and Operations, examining the changes in regulation, market rules, planning, and operating practices needed to better integrate distributed energy resources into U.S. wholesale markets and operations. The report covers the nearer-term implementation of FERC Order 2222, the order’s implications for electricity distribution systems, and broader gaps related to DER integration in wholesale markets and distribution systems.
    Speakers: Matt McDonnell, Strategen, Lorenzo Kristov, Electric System Policy, Structure, Market Design

    View Recording
    View Presentation
    Read Report

Funder

NARUC and NASEO are grateful to the U.S. Department of Energy, Office of Electricity and Grid Deployment Office and the Office of Energy Efficiency and Renewable Energy for funding the DER Integration and Compensation Project which enables the resources and activities described on this webpage. For more information about related DOE activities, visit: https://www.energy.gov/distribution-grid.

Advisory Group Members:

  • Aurora Edington, Massachusetts Department of Energy Resources
  • Shannon Frede, Maryland Energy Administration
  • Chair Marissa Gillett, Connecticut Public Utilities Regulatory Authority
  • Vice Chair Angie Hatton, Kentucky Public Service Commission
  • Jeremy Lewis, New Mexico State Energy Office
  • Kristy Manning, Missouri Public Service Commission
  • Nick Patane, New York State Energy Research and Development Authority
  • Commissioner Tom Plant, Colorado Public Utilities Commission
  • Rebecca Puck Stair, New Mexico Energy Office
  • Julie Staveland, Michigan Department of Environment, Great Lakes, and Energy

NARUC and NASEO staff experts who support these activities include: