FERC approves NYISO Aggregation Participation Model

U.S. utility regulators have approved a proposal by the operator of the New York electric grid to establish a new participation model for aggregations of distributed energy resources in the grid operator's markets. The Federal Energy Regulatory Commission's approval of the Aggregation Participation Model for the New York ISO could expand opportunities for small-scale solar projects and other distributed energy resources to participate in New York's wholesale markets, and represents a model for other regional transmission organizations to consider.

New York Independent System Operator, Inc. (NYISO) operates wholesale markets for electricity in New York and manages the state's electric grid. According to NYISO, prior to its adoption of the Aggregation Participation Model, distributed energy resources had "limited opportunities to participate in the NYISO-administered markets, in large part because many of these facilities are not individually able to meet the eligibility or performance requirements under an existing participation model to participate or to fully participate in its markets."

To better integrate distributed energy resources into the grid, following a stakeholder process, in 2017 NYISO adopted its Distributed Energy Resources Roadmap for New York’s Wholesale Electricity Markets (DER Roadmap) and subsequently a Distributed Energy Resource Market Design Concept Proposal (DER Market Design Proposal). That DER Market Design Proposal formed the basis for a June 27, 2019 tariff filing by NYISO, including language establishing the new Aggregation Participation Model.

Under the Aggregation Participation Model, a market participant or "aggregator" may combine individual facilities, including distributed energy resources, located on the transmission or distribution system as a single "Aggregation" for purposes of participating in the NYISO-administered Energy and Ancillary Services markets and NYISO’s ICAP Market for electric capacity. The model allows an aggregation to include facilities of differing technology types and capacities, so long as they are electrically interconnected at the same transmission node. It also allows "dual participation" in wholesale and retail markets, simultaneously participating in the NYISO-administered markets as well as offering energy and other services to a local distribution utility or to a host load.

On January 23, 2020, the Federal Energy Regulatory Commission issued its Order Accepting Tariff Revisions and Directing Compliance Filing and Informational Report. In that order, the Commission found that the Aggregation Participation Model "provides a just and reasonable and not unduly discriminatory framework for Aggregations, including DERs, to participate in the NYISO administered markets." The Commission noted that NYISO’s filing "facilitates the participation of  DERs and other Aggregations of resources in its wholesale markets by enabling heterogenous groups  of technologies to aggregate and be compensated for services that they are collectively capable of providing."