Dive Brief:

• The role of distribution utilities took center stage at the second and final of the Federal Energy Regulatory Commission's technical conference on distributed energy resources (DERs).
• Distribution utilities and state regulators argued they should have authority to control the interconnection and output of DER aggregations to ensure they do not threaten the reliability of the power system. DER providers stressed that those processes should be transparent and should not prevent market participation on non-reliability grounds. 
• Technical conference panelists also addressed information sharing and operational coordination between utilities, DER providers and grid operators, with grid operators warning reliability could be threatened if practices do not improve. FERC staff will produce a final report of the technical conference in the coming weeks. 

Dive Insight:

On the first day of FERC's DER technical conference, states in the Midcontinent ISO electricity market argued FERC should allow them to choose whether to let aggregated DERs participate in both retail and wholesale markets.

"Draw a line" between the markets and "let states decide," Arkansas PSC Chairman Ted Thomas, also president of the Organization of MISO States (OMS), told regulators. 

The vice president of OMS picked up that line on Wednesday, arguing state regulators and the distribution utilities they regulate should have the authority to prevent a DER or resource aggregation from participating in electricity markets if they believe reliability will be threatened. 

"What I do care about is before there is DER offered into the market that the utility does sign off," said Missouri Public Service Commission Chairman Daniel Hall, also OMS vice president. "I would take it farther and say the state regulatory authority should as well, and assure that new product is not going to cause any harm to reliability and safety of the system."

DER providers agreed that utilities should be able to safeguard their systems, but stressed that the criteria for intervening in DER market participation should be clear and public, so utilities do not use the authority to stifle competition from new resources. 

"We believe that the utility's role is at the point of interconnection and distribution utilities should only be able to prevent or delay DERs from enrolling in aggregations in the wholesale market if doing so would threaten the safe and reliable operation of the distribution system," said Audrey Lee, vice president of grid services at Sunrun, the largest U.S. rooftop solar installer. 

Lee said Sunrun believes in sharing operational information with utilities, but allowing them to serve as a "gateway" to DER participation "could put them at odds with DER interests in a way that would enable them to distort wholesale market clearing prices."

"I think we need specific examples before we can make any blanket rules about this," she said. "Look at specific cases where there is a safety and reliability issue at hand and resolve those on a case-by-case basis."

Distribution utilities should be "facilitators, as opposed to gatekeepers," said Maria Robinson, director of the wholesale markets program at Advanced Energy Economy, a clean energy trade group. "From a DER aggregator's perspective, they just want to ensure that the distribution utility is not serving as a gatekeeper and preventing the ability to enter the market."

Regulators should consider time limits on reliability reviews for DER aggregations, Robinson said, so they are not used as a barrier for market entry. And utilities could outline reliability directives for DERs in their interconnection agreements, she suggested.

"As to what Chairman Hall was saying, the PUC is involved in that process," Robinson said. "It's not as important to him the specific timeline — whether it's when interconnection happens or when they join the wholesale market — but I think allowing the opportunity to join the wholesale market should be a given for these resources as they join the grid."

Regardless of the utility's role, panelists across the two days of the conference agreed that utilities and grid operators would benefit from better visibility of DERs on their systems. 

"You have to have — I won’t use the word 'control' — but knowledge of what's going on your system understanding about how it will impact the flows on your system," said David Owens, executive vice president at the Edison Electric Institute, a trade group for investor-owned utilities. 

"The worst thing that can happen to us is to not have visibility into what is that DER [on our system]," said Portland General Electric Vice President Larry Bekkedahl.  "We need to know where it is, the size of it and how it’s being operated on a real-time basis."

Some utilities in states with high DER penetration, like California, are developing new software platforms to allow them to see and control distributed resources. But even there, those tools are still in development, as are the practices for information sharing with grid operators. 

"We don't have operating frameworks between transmission operators and distribution operators," said Doug Parker, director of integrated innovation and modernization at Southern California Edison.

In California, the lack of those frameworks for information sharing means "we have system operators trying to control a grid with unpredictable demand and variable supply," said Clyde Loutan, a principal at the California ISO said. That means the ISO is "always in a reactive mode."

As DER penetration increases, developing new practices for information sharing and resource control will be critical, Loutan said. In the future, he said the grid operator should be able to control not only the entry of DER aggregations into the market, but the rate at which they dispatch their electricity or other grid services. 

Failure to develop new coordination practices could create reliability risks for the grid, ISO officials warned. Without sufficient data about how DER output will affect electricity demand, grid operators could find themselves in a situation without sufficient committed resources in the market to meet load.

"We need an accurate load forecast to operate the system and operate it economically," said Donnie Bielak, a reliability engineer at PJM. "Without this kind of data we may be looking at drastic emergency procedures to maintain reliability on bulk power system ... That could mean up to and including load shedding."