It’s been nearly two years since the landmark Order 2222 was approved. In short, the order insists that each of the six RTO/ISOs (CAISO, ISO-NE, MISO, NYISO, PJM and SPP) develop new or update existing market rules to allow DER aggregations to participate in energy, capacity and ancillary markets just as centralized power plants do today. Not only will this stimulate new competition in energy markets, but it will also help de-risk investments in DER by providing them with an entirely new revenue stream (in addition to retail-level programs, which are becoming increasingly sophisticated and widespread thanks to regulatory changes and utilities’ technological maturity).

For reference, the US has roughly 11,000 centralized power plants which add up to a collective 1,200 GW in capacity (as estimated by the EIA). In comparison, the US has tens of millions of DER (smart thermostats, connected appliances, EVs, rooftop solar, distributed storage, etc.) which represents up to 300 GW in capacity (as estimated by Wood Mackenzie).

Needless to say, the cumulative impact of DER interconnected along the grid edge is certainly enough to move the needle in many parts of the country. As far as timeline, CAISO and NYISO will be the first markets to implement new rules (as they both had existing DER participation models in place), then likely to be followed by PJM and ISO-NE, and then MISO and SPP. The main drivers of these timelines will likely be software upgrades and procedural updates, each of which may include extensive stakeholder engagement to develop.

Since September 2020, much work has been done:

• Each RTO/ISO has assembled one or more working groups to engage key stakeholders, including transmission owners, distribution utilities, and aggregators (see Presentation link below)
• Each RTO/ISO has submitted its Order 2222 compliance filing (see Presentation link below)
• Industry groups like EPRI and NAESB have also been engaged to assemble key stakeholders and grid operations experts to compile diverse perspectives and drive toward consensus (see links under Additional Resources below)

Presentation – FERC Order 2222 snapshot summary

For utilities, many have come to realize that allowing DER to operate according to wholesale market outcomes (that is, to serve bulk power system needs) requires evolving several enterprise-level capabilities and in many cases introducing entirely new ones. This includes building out new business units (e.g. distribution system operator – DSO for short), instituting new business processes (e.g., short-term operational forecasting), and implementing new tools (e.g., DER management systems – DERMS for short).

Here at Darcy Partners, we are continuously monitoring the landscape of DERMS providers, which as expected, has been characterized by significant M&A activity over the last two years. Below is a summary of the key players in the space and how recent corporate transactions have panned out:

And here are some additional Darcy research outputs, which aim to help our members narrow down their search for good-fit solution providers:

• Darcy Partners - DER Management Innovator Landscape
• Darcy Partners - DER Management Innovator Comparison

If this year’s DistrbuTech was any indication, the DER management journey is a critical yet challenging one for power utilities, and our team here at Darcy is grateful for the opportunity to help!
Please reach out to me directly so we can discuss which ways our platform can be utilized to support your DERMS planning and implementation.

And as always, grateful for any questions, comments, or feedback folks may have.

Thanks for reading!

Additional resources:

• AEE - FERC Order 2222 Implementation: Preparing the Distribution System for DER Participation in Wholesale Markets
• EPRI - DER Aggregation Participation in Organized Markets: FERC Order 2222 Summary, Current State-of-the-Art, and Further Research Needs
• EPRI - DER Aggregation Participation in Electricity Markets: EPRI Collaborative Forum Final Report and FERC Order 2222 Roadmap
• NAESB - Press release on collaboration with DOE and national labs on developing standards for DER market integration