In EnerNoc v. Electric Power Supply Association, 577 U.S. ___ (2016), the U.S. Supreme Court held that the Federal Power Act (FPA) provides the Federal Energy Regulatory Commission (FERC) with the authority to regulate wholesale market operators’ compensation of demand response bids. The Supreme Court’s ruling paved the way for the participation of both traditional demand response providers and new energy storage resources in the organized electric markets throughout the country.
The California Independent System Operator (CAISO) has opened a new, first-of-its-kind program through which a portfolio of behind-the-meter resources—both load and generation—can aggregate and participate in the energy markets as part of a stacked value stream. One of the main impediments to the integration of demand response and energy storage resources into the organized markets has been the tariff requirements that have limited the participation of resources connected behind the meter. Allowing these behind-the-meter resources to work together as a group to create a portfolio of offerings is a significant step toward revamping the business of generating and distributing electricity in this country.
Under CAISO’s new tariff rules, behind-the-meter resources that are located within the same sub-load aggregation point (SLAP) and sized between .5 MW and 1 MW may enter into arrangements to aggregate and bid products into CAISO’s energy markets. This provides opportunities for storage resources, demand response providers, electrical vehicle charging stations, and small renewable generators to create a portfolio of options that has value at all times and in all seasons. To begin the program, CAISO will not allow resources participating in net-metering to join the aggregation programs, but this option will open up additional value streams for behind-the-meter resources with excess capacity, new resources not participating in net-metering, and potentially storage systems that are co-sited with rooftop solar, so long as the storage system is not part of the net-metering arrangement.
This program opens up the electric grid for new capabilities, but details remain to be finalized for how resources connected to the utility distribution systems can access CAISO markets. Over the upcoming months, CAISO will be developing a business practice manual and the state’s utilities, as well as the California Public Utilities Commission (CPUC), will be undertaking measures to implement the CAISO program.
To participate in the development of these standards, or to obtain more information about the CAISO aggregation program for behind-the-meter resources, please contact Todd Glass, in Wilson Sonsini’s energy and climate solutions practice.