NYISO prepares to implement its distributed energy resource model

The New York Independent System Operator is preparing to implement its FERC-approved 2019 market participation model by the end of the second quarter in 2023. Simultaneously, NYISO is working to comply with the FERC Order 2222 issued after the approval of the 2019 model. Imposing a 10 kW minimum size requirement on individual DERs is a major surprise for aggregators. FERC’s explanation regarding the rejection of an NYISO rehearing request closes the gap between the implementation of the 2019 model and the Order 2222 implementation.

2019 Market Participation Model

NYISO’s multiple Distributed Energy Resource (DER) FERC filings can be onerous even for regular attendees of Installed Capacity Working Group (ICAPWG) stakeholder meetings. It is important to realize that FERC first accepted the 2019 Market Participation Model (Docket # ER19-2276) from NYISO in January 2020, before the pandemic, and that model is separate from FERC Order 2222 (which was issued on September 17, 2020) compliance-based market model (Docket # ER21-2460). FERC accepted some aspects of the 2222 NYISO model in June 2022.

The 2019 market model will be implemented by the end of the second quarter of 2023. We will know the implementation date for the Order 2222 model on Nov. 14.

NYISO imposes 10 kW minimum for DERs

During the stakeholder discussions on NYISO’s 2019 DER Market Design, NYISO proposed a minimum size requirement of 10 kW for DERs in aggregation. NYISO reasons that staff time is limited; hence, their time is better spent on market registration for 10 DERs each at 10 KW to address the 100 kW size limit for DER aggregation rather than 100 DERs each at 1 kW. While most stakeholders empathize with NYISO on the staffing issue, residential battery providers are worried that this 10 kW limit will be a barrier for aggregating 5-7 kW residential batteries.

Previously NYISO had imposed a 20 MW maximum injection limit for aggregations, defined as “[t]he maximum injection of BTM:NG Resources and Distributed Energy Resources, in MW, into the NYS Transmission System or distribution system at the BTM:NG Resource’s Point of Injection or Distributed Energy Resource’s point of interconnection.” (Source: Page 25, NYISO Order 2222 Compliance Proposal submitted to FERC, July 19, 2021.)

It remains to be seen if FERC rejects the minimum DER size requirement when NYISO files a Section 205 filing in early 2023.

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Order 2222 tacks additional requirements for the 2019 model

When NYISO filed its compliance proposal for implementing FERC Order 2222 on July 19, 2021 – it felt that NYISO was largely compliant with Order 2222 requirements but needed to include some additional requirements to be 100% compliant.

There were six aspects that NYISO needed to comply with 2222 on top of its 2019 model:
1) The requirement that all grid operators include provisions for small utilities (4 million MWh or less in electrical output in the previous fiscal year) to opt-in to participate in the wholesale markets,
2) Document interconnection requirements for DERs,
3) Provide a path forward for retail programs to participate in the wholesale programs where applicable
4) Address single resource aggregations,
5) The ISO must spell out coordination with the distribution utilities and the state regulatory authorities, and
6) Market participation agreements.

FERC explained its rehearing rejection

On June 17, 2022, FERC accepted parts of NYISO’s Order 2222 proposal and asked NYISO to further work on aspects such as allowing heterogeneous technologies to participate in the ancillary services market if technically capable. That June 2022 order triggered a July 18 rehearing request from NYISO on the specific interpretation of paragraphs 92 and 93, asking FERC whether it meant each DER within an aggregation must be allowed to participate in the ancillary services market. If so, NYISO said it needed more time to implement the software systems because it had not planned for individual DERs to provide operating reserves and energy, only aggregated DERs.

By operation of law, FERC rejected the rehearing request without explaining. That action allowed NYISO to file a complaint at the United States Court of Appeals for the District of Columbia Circuit on October 4. FERC responded on October 24 and explained that it didn’t require individual DERs to simultaneously provide operating reserves if they are technically capable in that paragraph 93 – “paragraph 93 of the June 17 Order does not require NYISO to allow a heterogeneous Aggregation to simultaneously make available multiple operating reserve products”. Hence the ball is in NYISO’s court. Its compliance response to the June order is due November 14 since FERC accepted NYISO’s 90-day extension request in July.

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NYISO is getting ready to finally implement its 2019 market participation model for aggregated DERs in mid-2023. That’s good news. And thanks to FERC’s explanation of what it meant in the June order, now, NYISO can implement its tariff modifications to comply with FERC Order 2222 without extensive software changes.

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Author: Rao Konidena