The North American Energy Standards Board on Monday said it will begin work on a standardized services contract that aims to ease the aggregation of distributed energy resources, or DERs, and facilitate development of virtual power plants.
“There is a growing need for standards to support integration and interoperability of DERs and DER aggregations, and the framework established by a NAESB model distribution services contract may lead to future standards development that can improve data sharing practices and enhance cybersecurity,” Chairman Michael Desselle said in a statement.
NAESB is launching the effort at the request of the U.S. Department of Energy, and plans to hold a kick-off meeting on Wednesday. The board has developed model contracts for both the gas and the electric sectors, which Desselle said have improved “transactional efficiencies within wholesale markets and for competitive retail energy services.”
NAESB said that at the Wednesday kick-off meeting Joseph Paladino, DOE’s acting director for grid technical assistance, will provide background on related program activities underway at the federal agency and how they resulted in the request for assistance in the development of a model contract.
NAESB said DOE’s request indicated that “a significant market barrier inhibiting the provision of distribution services from DER aggregations is the lack of a standard contract that specifies discrete services and related performance expectations from aggregators.”
Currently, contracting practices can widely vary between jurisdictions and even utilities within the same state, NAESB said.
Standardizing the process “will encourage market and operational coordination across distribution and wholesale interactions, enabling more seamless participation for DER aggregators seeking to participate in wholesale markets, consistent with FERC Order No. 2222 requirements,” NAESB said.
The Federal Energy Regulatory Commission issued Order 2222 in 2020, directing grid operators to enable DER aggregations to participate in wholesale markets. But its impact so far has been “mixed,” according to Guidehouse Insights.
Approaches to integrating aggregated DERs into wholesale markets could include distribution-level programs or local flexibility markets, Guidehouse said. The firm noted a half dozen implementation challenges for Order 2222, varying between markets, including minimum sizes for individual DERs to be able to participate in a DER aggregation that may keep some asset types on the sidelines, and single-node aggregation rules that require all DERs in an aggregation to be located within the same pricing node.
