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California May Allow Distributed Resources into Wholesale Market

June 24, 2015 By Josh Kessler

Traditionally, distributed energy resources (DER) have been too small to bid into energy markets. The California Independent System Operator (CAISO), which oversees the California power market, typically requires projects to be at least 500 kW in order to participate in the market. In order to promote small-scale solar, batteries, demand response technologies, and other DER, the agency has developed a draft Distributed Energy Resources Plan that will allow small-scale facilities to be bid into the California energy market.

The proposal relies on three key advances that will break down the traditional barriers and allow distributed energy resources into the mix:

  • Aggregation – A single entity can aggregate the capacity of many small-scale projects into a single bid that meets the 500 kW capacity threshold.
  • Metering – Any aggregation will be a “scheduling coordinator metered entity,” which avoids the need for each sub-resource in an aggregation to engage in a separate metering arrangement with the ISO.
  • Data Concentration – The proposal allows DERs to interact with the ISO through a single point of contact that transmits the data between the ISO and the aggregator.

According to Greentech Media (GTM), the measures could take effect in early 2016. GTM also notes that the new metering requirements would create a framework that is simpler and more affordable than current requirements.

The less-stringent requirement would only allow systems seeking to participate in energy markets, not in “ancillary service markets.” Ancillary services help increase or decrease the amount of electricity on the grid at any given time in order to maintain the integrity of the grid. Batteries are exceptional resources for this purpose, as they can respond instantaneously to signals that tell them to begin charging or discharging – to help increase or decrease the overall amount of energy on the grid – much more rapidly than power plants, which have to ramp up or down their output over a period of minutes or hours. However, to operate effectively, this type of service requires an advanced two-way interface that enables the resources to respond at a moment’s notice, which is why the normal metering and communications requirements are still necessary in this case.

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