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Grid operators must follow CAISO’s approach to multi-nodal aggregation

FERC Order 2222 allows broad aggregations both geographically and technically. But not all ISOs have complied with the broad aggregation requirement.

With MISO and SPP compliance plans for FERC Order 2222 due in April, the attention shifts to collecting patterns on key requirements for aggregated distributed resources. Order 2222 allows broad aggregations both geographically and technically. But as FERC and other DER providers observe, not all ISOs have complied with the broad aggregation requirement. Only CAISO had complied with this requirement even before FERC Order 2222 was issued.

Multi-nodal aggregation is not addressed at multi-state ISOs like MISO and SPP. MISO at least commissioned a research study from a university. SPP didn’t even try to address that requirement. Other multi-state ISOs, PJM and ISO-NE, have their versions of multi-nodal aggregation with size limitations. The DER providers and Aggregators are better served if FERC issues a policy statement after hearing from all ISOs at a technical conference.

What is multi-nodal aggregation?

A single node on the transmission system represents where either a supply-side or a demand-side resource connect and provide energy — for example, a solar farm connected to a transmission node.

A single node aggregation means aggregating multiple DER technologies at that transmission node. For example, consider aggregating a group of residential rooftop solar customers on the distribution grid where that distribution substation intersects with a transmission node under a grid operator’s functional control.

A multi-nodal aggregation represents an aggregation of multiple DER technologies across multiple transmission nodes. Some grid operators like MISO say aggregating at a single node is allowed, but aggregation across multiple nodes on the transmission system is not allowed.

Why is multi-nodal aggregation necessary for DER providers and aggregators?

DER providers and aggregators don’t know which retail customers would enter into a contract, when, and for how long. So, these aggregators need the flexibility of bundling different DER technologies. Aggregating at a single transmission node reduces that flexibility to aggregate and participate in these wholesale markets.

Moreover, any changes to the aggregation reset the clock on distribution utility 60-day review leading to potential delays in market registration.

Some ISOs have proposed multi-nodal aggregation due to their experience in demand response programs

Independent System Operators with enough operating experience with DERs realize multi-nodal aggregation benefits. As we see below, CASIO allows aggregations at the multi-nodal level. Even multi-state ISOs like ISO-NE and PJM allow multi-nodal aggregations with restrictions. The issue is, why don’t MISO and SPP allow multi-nodal aggregations?

California ISO (CAISO) allows multi-nodal at sub-load aggregation point (Sub-LAP)

As the CAISO transmittal letter to FERC in March 2016 notes, “the CAISO is proposing that distributed energy resource aggregations operate within single Sub-LAPs to avoid the possibility that they create additional congestion. Currently, the CAISO has twenty-three (23) Sub-LAPs.”

It is not clear why other ISOs have not taken the CAISO approach of sub-LAPs.

FERC should ask SPP why DERs cannot alleviate transmission congestion in SPP but can at CAISO as seen in this paragraph, “Limiting aggregations to Sub-LAP boundaries will ensure that a resource is not operating on both sides of a constraint and potentially exacerbating congestion by virtue of its own operation. For example, a distributed energy resource aggregation with sub-resources in two adjoining Sub-LAPs could find its sub-resources on both sides of a constraint identified by the CAISO’s market processes. As a result, there is potential that a CAISO dispatch instruction to the distributed energy resource aggregation to alleviate a constraint between these two Sub-LAPs may actually exacerbate the problem.”

New England ISO (ISO-NE) allows limited (<5MW) multi-nodal aggregation

As noted earlier, ISO-NE’s proposal has some issues for DERs, but it does allow multi-nodal aggregations for less than 5 MW size. FERC should ask MISO why it didn’t follow this ISO-NE approach.

PJM allows multi-nodal for capacity and ancillary services market

Also noted earlier is PJM’s use case approach to comply with FERC Order 2222. PJM allows for multi-nodal aggregation in its capacity and ancillary services markets but does not allow for energy market participation. PJM says dispatch and pricing across nodes cause less accurate energy prices. FERC should ask MISO why it didn’t follow PJM’s approach.

Some ISOs have not accommodated multi-nodal in their FERC Order 2222 compliance plans

DER providers were hopeful when some ISOs asked for an extension to comply with FERC Order 2222. But their hopes were dashed by ISOs like MISO and SPP, who did not address a key requirement – multi-nodal aggregation. Neither of these ISOs even conducted a survey directly with their Aggregators of Retail Customers to ask whether multi-nodal was an issue in the market design.

New York ISO (NYISO) does not allow multi-nodal aggregation

NYISO allows aggregations at a single transmission node only. NYISO has identified a list of 115 transmission nodes. Even while imposing a broad restriction, MISO could have followed NYISO’s example and worked with its distribution utilities to identify MISO’s list of transmission nodes where it expects to see aggregated DERs.

Midcontinent ISO (MISO) says multi-nodal is not possible

MISO said that multi-nodal aggregation is not allowed right off the bat with its stakeholders due to wholesale price oscillations in March 2021, almost a year before its compliance plan due date, and never broached the topic again. MISO cited a research study done with Stevens and Clarkson University, which stakeholders did not vet.

MISO says it observed price oscillations from multiple nodes when DERs were dispatched in aggregate to respond to transmission needs, leading to inaccurate distribution factors. MISO proposes restricting aggregations to a single node without addressing its challenges with multi-nodal aggregations. MISO says a single node makes sense because it is consistent with generator modeling and provides “more certainty and control” of the transmission grid.

Some Southwest Power Pool (SPP) utility members don’t believe DERs can address congestion

SPP didn’t even try to engage with stakeholders on this multi-nodal aggregation topic. In January 2021, lacking broad stakeholder support, SPP said it might work with stakeholders on this topic after filing the compliance proposal at FERC, due at the end of April.

Utilities in SPP are under the impression that DERs cannot reduce transmission congestion. This impression is the fundamental disconnect in SPP’s task force on Order 2222 because most stakeholders don’t agree on the benefits of DERs.

SPP’s entire compliance proposal for Order 2222 centered around stakeholder voting and ensuring its Electric Distribution Companies are on-board with the SPP proposal. FERC should ask SPP to commit to a schedule to address multi-nodal aggregation.

Next steps – FERC needs to weigh in with a policy statement

Since FERC regulates all these ISOs, the ball is in FERC’s court. FERC can decide once MISO and SPP file their compliance plans in April.

FERC still has to decide on Voltus’s petition for a technical conference where one of the suggested topics for a panel discussion is multi-nodal aggregation. FERC should promptly schedule this technical conference to benefit and learn from the ISO experts. Soon after that, FERC could issue a policy statement advising ISOs like MISO and SPP to re-start stakeholder discussions on multi-nodal aggregations.

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