California Rooftop Solar To Participate In Wholesale Market

California’s ISO opens way to a distributed energy future with new wholesale market participation rules for small-scale DERs.
Published: Fri 24 Jul 2015

Customer participation in the markets is a cornerstone of a distributed, prosumer-based energy system. Traditionally wholesale markets have been closed to residential and small business participants but the growing capacity of solar PV and other distributed energy resources (DERs) is opening the way to change this paradigm.

Distributed resource aggregation

Once again taking a lead, California’s independent system operator (ISO) has introduced rules to enable aggregation of small-scale distributed resources such as rooftop solar by utilities and third parties to meet the 0.5MW minimum requirement for participation in the state’s wholesale market.

“With the rapidly evolving grid and quantum growth in distributed generation, this framework for integrating smaller renewable resources onto the high voltage grid demonstrates a significant step in re-designing our energy future with lower carbon emissions and helping California meet its clean energy goals,” said ISO president and CEO Steve Berberich. “This proposal encourages innovation and entrepreneurs to explore opportunities within the wholesale market by combining resources that individually would be too small to participate on their own.”

In addition to rooftop solar, energy storage, plug-in electric vehicles and potentially others, regardless of size or whether connected behind or in front of the end-use customer meter, also qualify as distributed resources.

Distributed energy resource provider

Under the proposals, aggregations of distributed resources may be at a single pricing node or across multiple pricing nodes (where a physical injection or withdrawal is modelled and for which a locational marginal price is calculated and used for financial settlements), but must be within a single sub-load aggregation point (an ISO defined subset of pricing nodes within a default load aggregation point). There is no limit on the number of pricing nodes within a sub-load aggregation point, and there is no minimum size limitation on the individual sub-resources in an aggregation.

For aggregations limited to one pricing node, there is no maximum size limitation. Sub-resources may be heterogeneous, i.e. a mixture of sub-resource types. For aggregations limited to one pricing node all of the sub-resources do not need to move in the same direction as the ISO dispatch instruction; rather, it is only necessary that the net movement of the aggregate of the sub-resources equate to the ISO dispatch instruction.

However, for aggregations across multiple pricing nodes, several limitations have been set. First, these aggregations may not exceed 20MW. Second, all sub-resources must be homogenous and must move in the same direction as the ISO dispatch instruction. Third, for aggregations of energy storage, all sub-resources must be operating in the same mode (i.e. charging or discharging, but not a mix of the two) in response to an ISO dispatch instruction. While these limitations may make aggregations at a single pricing node more attractive, they are considered appropriate until the ISO understands the congestion management impacts of DER aggregations.

The framework also introduces the “distributed energy resource provider" as the owner/operator of the aggregations of individual distributed resources as a new type of market participant, analogous to a participating generator or a participating load. A distributed energy resource provider will, among other things, provide the ISO with accurate information about the sub-resources in an aggregation. The provider will be responsible for operating and maintaining its sub-resources consistent with applicable provisions of the tariff and must comply with applicable outage requirements as well as any applicable reliability and other requirements.

Metering aggregations

Aggregations would participate in the ISO’s energy and/or ancillary services market through a scheduling coordinator, who may or may not be the distributed energy resource provider. With the aggregations as scheduling coordinator metered entities, the metering arrangement is between the scheduling coordinator and the resource – rather than between the ISO and the resource – and the scheduling coordinator submits settlement quality meter data to the ISO for settlement purposes. This effectively provides interaction with the ISO through a single point of contact. In turn, the ISO will have the ability to select a broader array of resources when balancing supply with demand, while integrating more renewables on to the power grid.

Supporting tariff language will be developed and submitted to the Federal Energy Regulatory Commission (FERC) for its approval later this year.

With this move, other jurisdictions are likely to follow with similar measures. It is also likely to enhance the attractiveness of these distributed resources to owners in addition to offering a new service opportunity for utilities and third-party aggregators.