Dive Brief:

• Southern California Edison (SCE) has announced it has completed the first phase of integrating 1,118 MW of demand response resources into the California Independent System Operator's (CAISO) wholesale energy markets, according to a release. 
• The aggregated demand response represents 320,000 SCE customers that would normally be too small to participate in the wholesale market on their own. CAISO earlier this summer unveiled new wholesale market rules aimed at allowing aggregations of smaller customers to participate.
• CAISO will hold an auction for demand response resources for 2016 later this year.

Dive Insight:

Back in June, California's grid operator released a slate of highly-anticipated wholesale market rules allowing utilities or third party suppliers to aggregate groups of residential and small commercial customers and allow their load to be bid into wholesale markets, much like a power plant would. 

The goal in integrating more resources from the customer side of the grid — such as demand response, rooftop solar, electric vehicles and energy storage — is to increase the reliability and sustainability of the entire electric system, Utility Dive reported at the time. If aggregations of demand response or customer-sited resources are able to bid into wholesale markets, it could avoid the need to utilize fossil-fired power plants or import power from other states.

Now, SCE is demonstrating how utilities can take advantage of the new market framework, announcing that it is integrating 1118 MW of demand response into wholesale energy markets, representing more capacity than many conventional power plants.

The announcement is a "significant milestone" for the utility, as it marks the first time it has bought into wholesale markets using an aggregation of demand side resources. "Yet," the company wrote in a statement, "participation in the wholesale market, done this way, does not require any additional effort by customers beyond signing up for the program of their choice."

The SCE demand response aggregation consists of a group of about 320,000 customers who have agreed to reduce their energy consumption when called upon to decrease stress on the grid, especially in times of peak power demand.

"The full integration of SCE’s demand response portfolio into CAISO markets will result in a more efficient energy market for California and increased reliability for all customers," the utility said in its statement. "Revenue generated by this participation in the markets will help offset the prices that customers pay for power bought on their behalf by the utility."