For the last decade, demand response has been a tool to manage peak loads on the grid. FERC Order 745 established this retail payment program to reduce demand on the grid, prevent brown and blackouts, and provide grid reliability. But the grid is changing: there is now increased renewable energy generation, battery storage, vehicle-to-grid opportunities, and distributed energy resources (DERs). The FERC (Federal Energy Regulatory Commission) has issued Order 2222 to enable additional revenue streams and further accelerate the integration of DERs through the wholesale energy market.
The Order defines a DER as “small-scale power generation or storage technologies (typically from 1 kW to 10,000 kW) that can provide an alternative to or an enhancement of the traditional electric power system. These can be located on an electric utility’s distribution system, a subsystem of the utility’s distribution system or behind a customer meter. They may include electric storage, intermittent generation, distributed generation, demand response, energy efficiency, thermal storage or electric vehicles and their charging equipment.” This technology-agnostic definition allows for the inclusion of both front and behind-the-meter resources in a transactive energy management process, versus just a peak shaving policy based on their capability. DERs currently have a requirement for interval metering, so integration into the energy market will be seamless, transactive, and transparent. It will help provide a variety of benefits: lower costs for consumers through enhanced competition, more grid flexibility and resilience, and more innovation within the electric power industry.