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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.


ISO New England will be reviewing and developing tariff rules to meet FERC Order 2222. Their approach will be to focus on the DER capabilities rather than technologies. A DER may have one or more of the following capabilities:

Demand reduction capability
The ability to reduce demand as measured against a baseline

Energy injection capability
The ability to inject energy to the grid

Energy withdrawal capability
The ability to withdraw energy from the grid

Regulation capability
The ability to balance the grid every 4 seconds

Different capabilities may be aggregated to expand opportunities in the market to achieve greater savings and payback on behind the meter investments. Measurement of the DER can be either at the retail delivery point or point of interconnection. Payments for DER are made at the local marginal price (LMP) within the wholesale energy market. These key improvements will allow customers greater flexibility and savings across the grid.

As we move toward decarbonization of our daily energy use, the ability to use renewable resources in the grid is paramount. Recent investments in renewable energy and future installations of new technologies and reliable renewable resources need a level playing field in the market. These interconnected and behind-the-meter systems can be available at all hours and, through FERC Order 2222, will be included in load-leveling opportunities and paid at the same rates as other conventional generation. This will make the grid cleaner down the road. The ISO New England filing deadline is February 2, 2022, the date by which all wholesale services that are technically capable, through an aggregation of resources, must be implemented.

John Driscoll, Actual Energy’s Director of Energy Engineering, has an extensive background in energy and the environment. He is a veteran of the US Navy and received a B.S. in Facilities Engineering and an M.S. in Facilities Management from Massachusetts Maritime Academy. John has experience across many industries: healthcare, utilities, energy engineering, and algorithmic software technology. He brings to the Actual Energy team a depth of knowledge in procurement, facility load analysis, and energy markets.

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Actual Energy Inc.
74 Route 6A
Sandwich, MA 02563

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