FERC Order 2222: a once-in-a-lifetime opportunity for decentralized technologies to accelerate the U.S. energy transition
A “game-changer.” A “foundational rule.” A “landmark.” No matter what you call it, the message remains the same: FERC Order 2222 will transform wholesale electricity markets in the U.S. and pave the way for distributed energy resources (DERs) to shape the grid of tomorrow. Much has been written on the detail of the order since it’s announcement last week (checkout the summaries by Greentech Media and Utilitydive to learn more) but at the highest level the order unlocks the ability for DERs to participate in wholesale electric markets on a level playing field with traditional energy assets.
For more than three years we have been building a tool purpose-built for this moment: the Energy Web Decentralized Operating System (EW-DOS). Major architectural and technical challenges need to be overcome to meet the objectives of the FERC order. Most of those challenges come back to a single overarching issue: DER attributes and behavior must be trusted and coordinated across multiple market participants including wholesale market and grid operators, distribution utilities, DER aggregators, original equipment manufacturers (OEMs), retailers, customers, and DERs themselves. This is exactly what we and the global Energy Web community designed EW-DOS to support.
Each regional transmission organization (RTO) and independent system operator (ISO) may take their own path. But given the systemic nature of this order, we see an unprecedented opportunity for partnership and collaboration across U.S. markets. EW-DOS is a public, open-source stack of software and standards that was tailor-made to deliver on the vision of this order. Our goal at Energy Web is to bring every ISO and RTO in the U.S. onto the EW-DOS stack in order to fully unlock the potential of DERs and accelerate the energy transition.
EW-DOS: a calling card for DER participation.
“DERs can hide in plain sight in our homes, businesses and communities, but their power is mighty,” Neil Chatterjee, FERC Chairman, highlighted at Thursday’s meeting. Such DERs can include residential batteries, electric vehicles (EVs) and charging stations, rooftop solar PV systems, thermostats, as well as grid-enabled water heaters and energy efficiency resources. But what is the most important aspect of DERs participating in energy markets according to Chatterjee? “[To] register their resources under one or more participation models that accommodate(s) the physical and operational characteristics of those resources.”
This is exactly what EW-DOS is designed to do. We like to describe EW-DOS as enabling “any customer, and any asset, to participate in any energy market.” Among the many features of EW-DOS, decentralized identifiers (DIDs) play a key role by assigning DERs a “digital passport” to allow them to participate in multiple energy markets by addressing, among other things, two important issues:
- DER coordination: EW-DOS is itself a framework for coordination amongst energy market participants — a requirement explicitly called out in the order. By leveraging DIDs, EW-DOS guarantees that participation of DERs in both RTO / ISO and distribution-level or retail markets are harmonized across all market participants including ISOs / RTOs, distribution utilities, aggregators, retailers, OEMs, and customers.
- Multi-market participation while avoiding duplicate compensation: Avoiding double counting while enabling dual (or more) market participation is an intrinsic part of the EW-DOS stack that “ensure[s] that there is no duplication of compensation” for DERs participating in RTO / ISO markets and distribution / retail markets.
Apart from the features mentioned above, EW-DOS also provides the functionalities required for the implementation of Order 2222. These functionalities include:
- Establish trust with individual customer-owned DERs, thus allowing the participation and coordination of DERs of sizes less that 100 kW stipulated within the Order, as well as increasing the situational awareness of the grid for both RTOs and ISOs. This enables both ”to establish a comprehensive process ensuring distribution utilities can review the individual DERs that comprise an aggregation”;
- Provide end-to-end secure and trusted messaging that guarantees the secure and reliable operation of the grid, as well as ensuring fast message exchange between the market participants and the DERs; and
- Provides the required settlement functionality that guarantees that DER owners are compensated based on “metering data for settlement purposes” for the participation in the various energy markets, thus avoiding any duplicated compensation.
The EW-DOS stack is a collection of open-source toolkits that align perfectly with the “technology neutral” nature of the rule, as highlighted by Chatterjee, while at the same time the keep transactions costs extremely low.
EW-DOS was built to support Order 2222’s exact use case
EW-DOS is not a concept. It is a decentralized stack of tools for grid operators that has already been deployed, tested and validated.
In Austria, transmission system operator APG is using EW-DOS to control DERs (especially residential batteries) for frequency regulation. The EW-DOS solution via the DIDs and self-sovereign identities (SSIs) enable DERs to participate in multiple energy markets. In contrast to conventional centralized IoT cloud platforms, where a single central entity is responsible for maintaining an accurate catalog of all DERs, the EW-DOS approach allows customers to register their DERs directly, while accredited third parties such as installers can independently verify the details of any given unit (e.g., residential batteries). In the scenario realized for APG, millions of assets with direct access and visibility to the DERs and end-to-end latency of less than 500ms participated in an aFRR market, while constraints imposed by distribution network congestion were taken into account.
In the same domain, recently Elia Group and Energy Web announced a multi-year collaboration to understand the potential of DIDs for a more-decentralized electricity system.
Call to action
FERC Order 2222 sets the framework for tomorrow’s grid. Far and above all technical challenges, providing customers a stable supply of electricity, as well as access to markets and services calls for the cooperation and coordination of RTOs and ISOs is what lies in the heart of the Order. In Europe, this need has been already identified by the vast majority of transmission and distribution system operators and prioritized by the European Commission as well as the Council of European Energy Regulators.
So, what should be the next steps? The Order makes clear that “grid operators must make compliance filings to FERC within 270 days of the effective date.” It also offers an unprecedented opportunity for ISOs, RTOs, and aggregators across the country to collaborate and partner. We at Energy Web have brought to market an open source, low cost platform that can help all market participants meet the goals and address the challenges emerging from Order 2222. We look forward to engaging with U.S. grid operators in this key planning phase and invite the broader DER ecosystem to join us on our mission to accelerate the energy transition. Let’s go!
