Summary of "Sep 09, 2025 - Demand and Distributed Energy Market Integration Working Group"

Summary of Financial Strategies, Market Analyses, and Business Trends

The video is a detailed working group session hosted by California ISO focused on demand and distributed energy market integration, particularly addressing distributed energy resource (DER) participation and expanding demand side bidding options. The discussion centers on improving market access and participation models for DERs, especially behind-the-meter storage resources, and enhancing demand flexibility in wholesale electricity markets.

Key Financial Strategies and Business Trends

Distributed Energy Resource Aggregation (DRA) Model Overview:
- DRA aggregates distributed energy resources (DERs) behind the meter or on the distribution system to participate in wholesale markets as supply resources.
- Unlike traditional demand response (DR), DRA resources act more like virtual power plants, aggregating generation rather than load curtailment.
- The model complies with FERC Order 2222, allowing DER aggregations to participate in energy and ancillary service markets.
- Participation constraints include a minimum aggregation size of 100 kW, maximum individual resource size of 1 MW, and maximum aggregation size of 20 MW.
- Dual compensation is avoided by prohibiting resources from receiving payments in both retail programs and wholesale markets for the same service.
- Despite the model's existence for nearly a decade, participation remains low due to barriers such as lack of resource adequacy (RA) crediting, interconnection challenges, and tariff restrictions.
Barriers to DER Aggregation Market Participation:
- Lack of Resource Adequacy (RA) Credit: The California Public Utilities Commission (CPUC) has not credited RA capacity to DRA resources, limiting their financial viability.
- Interconnection Requirements: Wholesale market participation requires costly and complex interconnection under the Wholesale Distribution Access Tariff (WDAT), which is impractical for behind-the-meter resources.
- Ineligibility of Net Energy Metering (NEM) and Net Billing Tariff (NBT) Sites: Many DERs interconnected under retail tariffs are excluded from DRA participation.
- Telemetry and Metering Standards: Stringent default metering requirements and 24/7 data submission obligations increase operational burdens.
- System Size Limits: Individual DERs must be under 1 MW, excluding larger behind-the-meter batteries.
- Device-Level Asset Registration: Current rules restrict multiple resources behind one meter from participating in separate aggregations, limiting flexibility.
Behind-the-Meter Storage Participation Challenges:
- Existing participation models like Proxy Demand Response (PDR) are more viable but require modifications to better accommodate behind-the-meter storage.
- DRA/DERP models have multiple obstacles making them impractical for behind-the-meter storage.
- Stakeholders advocate for near-term improvements to PDR (e.g., crediting exports, revising metering) while continuing to explore long-term tailored participation models for behind-the-meter batteries.
- Dual compensation concerns could be addressed through accounting methods that subtract retail value when wholesale compensation is received, a practice seen in other markets.
Expanding Demand Side Bidding Options:
- Demand side bidding refers to electricity consumers (often large industrial or load-serving entities) submitting price-sensitive bids reflecting their willingness to consume electricity at various price points.
- This concept moves toward a two-sided market where demand can dynamically increase or decrease based on price signals, beyond traditional supply-side demand response.
- Current ISO markets have limited utilization of demand side bidding, mostly performed by load-serving entities rather than aggregators.
- Challenges include complexity of rules, limited retail customer exposure to wholesale prices, and need for automation to respond to real-time price signals.
- Potential applications include aggregations of electric vehicles or other flexible loads.
- Stakeholders expressed interest in exploring demand side bidding further but emphasized it should not detract from addressing immediate DER participation challenges.
Participating Load Model and Curtailable Demand:
- Participating load models focus on curtailable demand resources, such as pump storage and large industrial loads, that can offer negative generation (load reduction) in markets.
- These resources are directly metered and do not require baselines or performance evaluation methodologies.
- Problem statements include the need to allow participating loads to submit both upward and downward bids to reflect discrete, on/off operation states and reduce uninstructed deviation costs.

Methodology / Step-by-Step Guide Presented

For Enhancing DER Market Participation:

Identify and Confirm Problem Statements:
- Collect stakeholder input on barriers and challenges related to DER aggregation and demand side bidding.
- Formulate problem statements addressing specific issues such as interconnection, metering, RA qualification, export crediting, and device-level registration.
Prioritize Problem Statements:
- Focus initially on near-term, lower complexity improvements (e.g., PDR model modifications).
- Continue parallel efforts on more complex, long-term challenges (e.g., DRA model redesign, RA qualification).
Assess Regulatory and Implementation Risks: