The PJM Interconnection’s revised plan for integrating distributed energy resources into its markets contains measures that effectively block virtual power plants, known as VPPs, Tesla said Friday in a filing with the Federal Energy Regulatory Commission.
Tesla offered pathways it said would eliminate the barriers so residential aggregations in VPPs in PJM’s wholesale market “can be achieved at scale and provide transformative reliability value and reduce consumer energy costs.”
Through its Order 2222 issued three years ago, FERC directed regional transmission organizations and independent system operators to ensure DER aggregations can participate in wholesale markets. The aggregations could include resources such as rooftop solar, energy storage and electric vehicle chargers.
Virtual power plants are groups of distributed resources such as rooftop solar and batteries that can act as a single resource.
Tesla has set up virtual power plants that provide services to wholesale markets in South Australia and in a pilot project in Texas. The VPPs combine Tesla customers’ solar and co-located Tesla 5-kW, 2.5-hour Powerwall batteries, which are deployed mainly for residential customers, according to the company.
FERC in March ordered PJM to revise many elements of its initial Order 2222 compliance plan. On Friday, Tesla, clean energy trade groups, utilities and some state utility regulators called for changes to the grid operator’s latest plan filed on Sept. 1.
The development of VPPs is especially important given lengthy interconnection timelines for new generation, aging grid infrastructure, peaking power plant retirements, supply chain roadblocks for high-voltage system replacements and expansions along with load growth because of electrification, Tesla said.
Tesla said it aims to develop VPP models that can provide wholesale services such as regulation, frequency and balancing, capacity, and system strength services.
“These are the services that the U.S. electric grid will need within the next 10 years and will not be readily available to ensure grid reliability unless distributed assets can quickly step in to provide equivalent or better value than retiring peak generation,” Tesla said.
Tesla urged FERC to require PJM to allow residential batteries on net energy metering premises to aggregate and provide ancillary services with device-level submetering. “Device-level metering is the pathway to scaling dispatchable resources that can be easily separated from NEM resources located on the same premise,” the company said.
Also, FERC should reject PJM’s proposal to require separate utility meter accounts for net energy metering co-located batteries or other submetered devices to participate in grid services, Tesla said.
Finally, PJM’s plan for nodal pricing settlements, instead of zonal pricing, is premature, according to Tesla. “Erecting unnecessary roadblocks up front, such as a nodal settlement requirement will hinder, if not completely handicap, the development of DER aggregations of residential and small commercial customers,” Tesla said.
Two clean energy trade groups — Advanced Energy United and the Solar Energy Industries Association — also raised concerns about PJM’s nodal settlement framework.
“PJM has failed to ensure that its nodal energy market participation framework is the only ‘technically feasible’ option for DER aggregation participation at scale,” the groups told FERC.
PJM’s proposal to allow limited multi-nodal aggregation is an improvement over its initial plan, but it contains limitations that will constrain its usefulness, the groups said.
Utilities generally supported PJM’s proposal, but warned there may not be enough time to put it in place under the grid operator’s current schedule for implementing it by Feb. 2, 2026.
PJM expects it will take 24 months to incorporate software changes into its platform and test them to make sure they don’t harm other programs, including its day-ahead and real-time energy market clearing engines, according to the utilities, which included Exelon, FirstEnergy AES Ohio and PPL Electric.
PJM expects that by May 1 it will either ask FERC to approve specific capacity market provisions related to DER aggregations or provide an updated status report on its implementation efforts and a projected effective date, the utilities said.
Other parties raising concerns with PJM’s latest compliance plan include the Pennsylvania Public Utilities Commission, the Public Utilities Commission of Ohio and the Advanced Energy Management Alliance.
