Dive Brief:

• State regulators, regional transmission organizations (RTOs) and other stakeholders listed a too-short timeline as one of many challenges wholesale markets face in implementing a federal rule intended to bring more distributed energy resources (DERs) online.

• Though parties are generally supportive of the Federal Energy Regulatory Commission's Order 2222, several expressed concerns during a National Association of Regulatory Utility Commissioners (NARUC) virtual session on Tuesday that the most difficult challenges of implementation were still ahead of them, and said they hoped the commission would give them more time to ensure they get the policy right.

• "FERC, when issuing Order 2222, left many of the most difficult challenges to be dealt with by the RTOs in their stakeholder process," said Ted Thomas, chair of the Arkansas Public Service Commission. "The issues are very challenging. The time is also short."

Dive Insight:

FERC left open the question of implementation in issuing Order 2222, leaving grid operators a lot of flexibility in how they would apply the rule to their territories

The order found that current market rules do not appropriately account for DER integration, limiting the ability of such resources to participate in wholesale markets. It directs independent system operators (ISOs) and RTOs to revise their rules to allow aggregates of DERs to participate in the market, leaving it up to them to determine a minimum aggregation size, and address any technical and operational issues that might hinder DER market participation.

Stakeholders at NARUC said that although the order faces many implementation hurdles, it has the potential to create a boon for greater deployment of DERs, such as energy storage, rooftop solar, electric vehicles and more.

"It's very challenging, but if we can meet those challenges I think there's a great upside," said Thomas.

Another challenge he cited was ensuring that grid operators, utilities and DER aggregates can communicate effectively to ensure safety and reliability, in the same way that utilities and transmission operators communicate now.

"Easy to say, [but] it's very challenging to do," said Thomas.

These challenges will require a "dovetail" between state and federal policy, even more challenging for RTOs that operate multi-state territories, said Marcus Hawkins, executive director of the organization of MISO states. The Midcontinent ISO represents 16 states/provinces stretching from Louisiana to Manitoba, Canada, meaning there is a wide range of policies the grid operator will need to consider in its implementation.

"In the MISO footprint there's definitely a wide variety of activity at the state level related to DER or retail programs," Hawkins said. "And so, while the RTO is going full speed ahead to meet the compliance deadline, some states might be getting up to speed or focused on one particular area or another."

Coordination among stakeholders will be key, said Hawkins, in particular the RTO needs to lay out in its compliance filing how it will work with state regulators, the aggregators and the distribution utilities.

There is also the unresolved issue of a planning framework, said Kelli Joseph, senior advisor at mobile energy storage provider Power Edison, noting that although FERC encourages such a framework in its order, it does not require it.

"It's really unfortunate, I think, that [system planning guidance] was completely left out of this order," she said.

Other stakeholders have previously said they are keeping an eye on ensuring that RTO implementation keeps in line with "the spirit of the order," by maximizing the potential of DER participation in the markets, and on making sure the interconnection process is as efficient as possible. There are also still questions about what DER aggregations will look like, and how new parties might interact with existing grid management.

Compliance filings are due to FERC on July 19, but Chair Thomas said some RTOs and their stakeholder groups will be requesting an extension. "I hope the FERC gives us more time to work through these issues," he said.