Dive Brief:

• The California ISO has finalized a draft proposal for its Energy Storage and Distributed Energy Resources (ESDER) initiative that would ease the way for several new types of resources to compete in the grid's market, including a more straightforward manner for setting residential baselines.
• Under the final proposal, demand response potential of aggregated residential customers would be determined by looking at a four-day block of time, as opposed to the 45-day block used for commercial and industrial demand response.
• The ESDER Phase 2 proposal will go to the Energy Imbalance Market Governing Body on July 13, and then to the ISO Board for approval July 26-27.

Dive Insight:

The range of resources on the California grid is growing, and finding a way to integrate them into the market will "help lower carbon emissions and add operational flexibility," according to the ISO's final daft proposal.

The proposal is one of three the grid operator is drafting in efforts to integrate distributed energy resources more seamlessly in the market and grid. 

The challenge, however, lies in distinguishing between wholesale charging energy to be resold and so-called "station power," which is energy consumed by a generator. The distinction between the two definitions is important because the grid operator wants to prevent storage resources from being charged twice at the wholesale and retail level. 

"Without careful consideration between the CPUC and the CAISO, incompatible retail and wholesale station power rules could result in the same energy incurring both wholesale and retail charges, resuscitating the years of litigation that preceded the current station power framework," the ISO warned.

There is broad support for the proposal, according to the ISO. Stakeholders say the use of additional baselines for residential and non-residential customers "would improve the accuracy and reduce bias in the performance calculation in comparison to the 10 in 10 customer load baseline methodology."

The proposal includes a less restrictive methodology for assessing the demand response potential of aggregated retail customers, essentially a four day look-back for residential accounts, rather than 45 days used for larger consumers, followed by comparing 10 days where no demand response was called.

"While research has shown this day matching baseline to be accurate for many medium and large commercial and industrial customers, research has also shown that this baseline is not accurate for all customer types," the ISO said.

The ISO is also proposing changes to the net benefits test, potentially expanding the list of gas price indices available for use in the calculation of the demand response net benefits test to represent prices "relevant to EIM entities outside of California."