Dive Brief:

• The New York ISO last week released an outline of how it expects distributed energy resources (DERs) to integrate into wholesale markets, a goal central to the state's Reforming the Energy Vision initiative.
• But the grid operator expects to spend three to five years developing market design elements, functional requirements, and tariff language.
• The Distributed Energy Resource Roadmap also announced that a series of pilot projects will test various integrated components needed to bring DERs onto the system, with the ISO partnering with Distribution System Platform providers (DSP), aggregators and individual resources.

Dive Insight:

The New York ISO's "roadmap" envisions a system where various dispatchable DER all participate in the wholesale markets. The timeline to get there, however, more closely resembles the old game Twister.

The long-term horizon is five years to implement dispatchable DER rules by 2021. But the report lays out an implementation timeline (subject to revision) that also envisions pilot concepts in the first quarter of this year, and a meter data study kicking off in the second.

Integrating distributed resources is expected to require enhancements to wholesale market design, system planning, and grid operations.

NYISO President and CEO Brad Jones called the roadmap a "step toward building the grid of the future," and said it would help to "highlight opportunities for more emerging resources to participate in our markets. It will guide developers, communities and others as they seek to invest in a more flexible and dynamic grid.”

The document lays out five objectives:

• Integrating DERs into the New York ISO's energy, ancillary services and capacity markets, and finding ways for them to leverage  economic scheduling and real-time locational prices;
• Aligning the ISO's goals with those of the REV initiative;
• Enhancing measurement and verification methodologies, including accurate load forecasts necessary balancing supply;
• Aligning compensation with wholesale service performance. The ISO said it will develop "incentives and compensation aligning the flexibility and measured performance of DER with system needs, treating DER comparably with other resources;"
• Focusing on wholesale market transactions, which will often connect with the grid through distribution networks rather than the transmission grid.

The ISO's report makes clear that it wants to treat dispatchable DERs similar to traditional generators, though it also recognizes "that the capabilities of DER may be different. ...  We anticipate that dispatchable DER participating in the Capacity market will have similar obligations requiring a dispatchable DER to offer into the Energy and Ancillary Services market each day."

The report also notes the ISO "will be evaluating the appropriate penalty structure for DER, including penalties for non-performance."

And because the ISO believes energy efficiency is "compensated by energy savings and reducing the
load’s cost to procure capacity," it said the roadmap would not be addressing energy efficiency "at this time."

While some distributed resources are capable of delivering capacity at any hour, many by their nature will not be able to. That doesn't mean they aren't valuable, the report stressed—"but perhaps less than a full 24 hour DER."

"At this time the NYISO believes DER desiring full capacity payments will be expected to be capable of delivering its full capacity for a full 24 hour period, comparable to what is expected of traditional generators," the roadmap explains.

To get around this issue, the grid operator said it would develop three service tiers that dispatchable DER can provide to help the ISO meet its daily load: full day service, on-peak service and daytime peak service.

The grid operator said that because it believes capacity payments aligned with a DER’s capabilities and performance is appropriate, the ISO "expects to develop market rules through the stakeholder process to prorate capacity and associated capacity payments."

Matt Ketschke, vice president of distributed resource integration for Con Edison, said the utility was actively involved as a transmission-owning stakeholder and described the document as a "first cut" of what the ISO believes the roadmap will look like.

"We're going to have to work closely with them over time to resolve how we do coordination between the NYISO and the NYISO compensation and dispatch, and the distribution value compensation dispatch," Ketschke said.