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FERC’s surprising response to PJM’s Order 2222 proposal is good for solar, DER

On March 1, the Federal Energy Regulatory Commission approved PJM’s Order 2222 compliance proposal related to the aggregation of Distributed Energy Resources. This approval surprised FERC watchers who thought FERC orders would be stalled with commissioners tied 2-2 along party lines. But that was not the case, and distributed energy resources, specifically net energy metered solar, were a big winner in FERC’s ruling on PJM’s compliance filing. One of the key takeaways in FERC’s approval of PJM’s filing is the mention of device-level meter data, which will help NEM solar and other distributed energy resources.

There is a lot to chew on in the FERC order but here are some of the key takeaways of interest to the distributed solar and storage providers.

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Interconnection – Because Component DERs (individual DERs that make up an aggregation) are on the distribution system, which is state jurisdiction, in Order 2222, FERC did not mandate DER interconnections go through the FERC jurisdictional generator interconnection queue. FERC found PJM fully complied with this requirement because PJM’s proposal stated the DER Capacity Aggregation Model, which is new, does not have to secure Capacity Interconnection Rights, unlike the Generation Capacity Resources. This approval is good news for NEM solar.

Participation Model – FERC wanted the aggregation of DERs to provide all services they were technically capable of, including capacity, energy, and ancillary services. On the capacity market, FERC found PJM partially complied with this requirement because PJM’s proposed rules for Component DERs in an aggregation co-located with a retail end-use load are exempt from capacity market rules such as Minimum Offer Price Rule (MOPR) and Market Seller Offer Cap (MSOC).

FERC didn’t agree with PJM on this capacity market mitigation for Component DERs. As a result, FERC directed PJM to file a compliance plan within 30 days “that removes its proposed tariff language that exempts DER Capacity Aggregation Resources containing Component DER directly connected to distribution facilities co-located with retail end-use load from capacity market power mitigation rules.”

Double counting of services – FERC mandated that dual registration – registering a retail program in the wholesale market – should be allowed, and any restriction on retail programs must be narrowed according to the services they wish to provide. This double-counting is a big issue for NEM solar, and the Advanced Energy Management Alliance (AEMA) had written to PJM Board expressing their concern with PJM’s compliance proposal not allowing NEM solar to participate in PJM’s capacity market because of the must-offer requirement.

The double-counting topic is where PJM went back and forth with FERC. Not surprisingly, FERC found that PJM partially complied with this requirement because PJM’s proposal “does not broadly limit or restrict the participation of a Component DER that participates in a retail program from participation in PJM’s markets.” FERC directed PJM to file a compliance plan within 60 days that adheres to what FERC asked in Order 2222 – the same service is not double-counted. Double-counting is complex but important to meet the intent behind Order 2222. Stakeholders can expect multiple meetings at PJM before PJM files its revised proposal.

Locational requirements – FERC ordered PJM to propose locational requirements for distributed energy resources to participate in an aggregation that is as geographically broad as technically feasible. PJM proposed a single-node model for energy participation and a multi-node model for capacity and ancillary services-only DER Aggregation Resources. DER providers won big here because FERC found that PJM partially complied with this requirement. FERC directed PJM to file a compliance plan within 60 days that either provides a technical explanation of why Component DERs cannot aggregate more broadly than a single node or propose an alternate locational requirement with an explanation. FERC’s finding is a win for DER providers because, without multi-nodal aggregation, aggregators lack the flexibility to sign up customers.

Information and data requirements – FERC mandated information and data requirements for aggregators that they retain Component DERs performance data for auditing purposes, but PJM should receive aggregation performance data. PJM needs the data in aggregate for settlement purposes. FERC found that PJM partially complied with this requirement. FERC directed PJM to file a compliance plan within 60 days specifying details, such as 1) Whether an interconnection agreement is needed between an EDC and a Component DER or an EDC and an aggregator, 2) What specific information the DER aggregator is required to provide to map the location of the Component DER to PJM transmission model, and 3) Specific information that the DER aggregator is required to coordinate with the EDC to comply with any applicable metering and telemetry requirements.

Metering and telemetry system requirements – FERC required metering and telemetry requirements to not burden Component DERs in order to participate in an aggregation. Thankfully, PJM proposed requiring telemetry for aggregation, not Component DERs. But PJM required aggregators to provide metering for all Component DERs. FERC found that PJM partially complied with this requirement. FERC directed PJM to file a compliance plan within 60 days that includes the metering submission deadline and encouraged PJM to work with stakeholders on device-level meter data. On telemetry, FERC asked PJM to clarify that aggregations less than 10 MW are exempt from telemetry if participating only in an energy market.

Coordination between the RTO/ISO, aggregator, and distribution utility – FERC directed PJM to file a compliance plan within 60 days for pre-registration and registration processes stating that the DU review for incremental changes to aggregation occurs once PJM sends the information to the DU. The DU has the opportunity to review the Component DER before it gets added to the aggregation. And the DU review should not take more than 60 days. FERC asked PJM to state a specific, transparent capability criterion by which an EDC will determine during its review whether each proposed Component DER is capable of participating in a DER Aggregation Resource and to explain why these criteria are appropriate for the PJM region.

Most relevant for DER providers, FERC asked PJM to file a reliability criteria plan that ensures that the scope of the DU review of distribution system reliability impacts is limited to any incremental impacts from a resource’s participation in an aggregation that was not previously studied by the DU.

Distribution utility override issue – FERC required PJM to specify the operating protocols for the DU to override PJM’s dispatch in the event safety and reliability of the distribution system are in question. PJM proposed day-ahead, real-time, and emergency scenarios in its filing. FERC found that PJM partially complied with this requirement. FERC directed PJM to file a compliance plan within 60 days specifying details such as how the DU coordinates with an aggregator on the overriding issue during an operating day, and how PJM coordinates with the DU in both day-ahead and real-time scenarios.

Role of relevant electric retail regulatory authorities – FERC required PJM to specify how it will coordinate with state authorities to allow aggregations of DERs to participate in PJM markets. PJM proposed that RERRA oversee the Component DERs interconnection and settle disputes between the aggregator and DU. FERC found that PJM partially complied with this requirement and required PJM to file a compliance plan that specifies how registration disputes are resolved and how the dispatch authority works in the registration process. For guidance on the dispatch authority, FERC referred PJM to California Energy Commission’s comments referenced in Order 2222.

Effective date – FERC didn’t require an effective date and allowed PJM to propose a reasonable implementation date. PJM proposed Feb. 2026 for the energy and ancillary services market and July 2023 for the capacity market, because PJM runs a 3-year forward capacity auction. FERC found PJM fully compliant with this requirement because PJM proposed a reasonable implementation date. But FERC did ask PJM to file within 30 days a detailed implementation plan to meet the July 2023 and Feb. 2026 dates.

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