New York’s new Distributed Energy Resource (DER) & Aggregation Participation Model, a first-of-its-kind initiative, integrates aggregated DERs, like virtual power plants (VPPs), into wholesale energy markets, benefiting commercial and industrial customers through increased revenue and cost savings.
It differs from the previous Demand-Side Ancillary Services Program (DSASP) by allowing participation in multiple market programs simultaneously. The model’s success is instrumental in achieving New York’s clean energy goals, particularly leveraging VPPs to enhance grid reliability and resilience, and it aligns with the state’s “Grid of the Future” initiative to improve grid flexibility.
Transition from DSASP to the DER Program
The New York Independent System Operator (NYISO) is phasing out the DSASP to streamline and modernize its demand response programs. The decision is part of a broader effort to integrate DERs more effectively into the grid and to simplify the market structure.
Key Benefits of New York’s DER Program
The NYISO Distributed Energy Resources (DER) program offers several benefits:
- Enhanced Grid Reliability: By integrating a diverse array of small-scale energy resources, the DER program helps improve the overall reliability and resilience of the grid.
- Revenue Opportunities: Commercial and industrial customers can earn additional revenue by participating in the DER program. They can provide grid services such as energy, capacity, and ancillary services, similar to traditional power plants.
- Flexibility and Efficiency: The program allows for the aggregation of multiple small resources, enabling them to participate in the market more effectively. This flexibility helps optimize grid utilization and supports the integration of renewable energy sources.
- Support for Climate Goals: By promoting the use of distributed energy resources, the DER program aligns with New York’s ambitious climate goals and the Reforming the Energy Vision (REV) initiative, which aims to create a more sustainable and diversified energy system.
- Market Access: The DER program provides market opportunities for participants to access NYISO’s real-time energy markets, which were previously unavailable to many smaller resources.
Understanding the Pricing Structure for NYISO DER Participation
Pricing for the NYISO Distributed Energy Resources (DER) program is based on market participation and varies depending on the services provided. Some key points to consider include:
- Energy Market: DERs participating in the energy market are compensated based on the locational-based marginal price (LBMP) for the energy they provide.
- Ancillary Services: DERs providing ancillary services, such as reserves and regulation, are compensated based on the market prices for these services.
- Capacity Market: DERs participating in the capacity market receive payments based on the capacity they provide, which is determined through NYISO’s capacity auctions
- Aggregation Benefits: Aggregated DERs can participate in these markets collectively, allowing smaller resources to meet minimum participation requirements and potentially earn more revenue
Challenges in Implementing the NYISO DER Program
Despite the benefits, there are also some challenges associated with implementing and ensuring effective use of the DER Program:
- Integration Complexity: Integrating a diverse array of small-scale resources into the grid can be complex. Ensuring that these resources can reliably provide services and respond to dispatch instructions requires sophisticated coordination and technology.
- Regulatory Compliance: The DER program must navigate various regulatory requirements, which can be challenging. For example, the program is not yet fully compliant with FERC Order 2222, which aims to facilitate DER participation in wholesale markets.
- Market Participation: Smaller resources may face barriers to entry, such as the costs associated with metering, telemetry, and other participation requirements. Aggregating these resources can help, but it still requires significant effort and investment.
- Valuation and Compensation: Accurately valuing and compensating DERs for the services they provide can be difficult. The market must ensure that DERs are fairly compensated while maintaining overall market efficiency.
- Grid Management: Managing the variability and unpredictability of distributed resources, especially renewable energy sources like solar and wind, poses challenges for grid operators. Ensuring grid stability and reliability while integrating these resources is a key concern.
Enhancing Efficiency and Sustainability with the DER Program
The DER program is designed to create a more efficient, reliable, and sustainable energy system while providing economic benefits to participants. By focusing on the DER program, NYISO aims to encourage the participation of smaller, aggregated resources, which can provide similar services as those in the DSASP but with greater flexibility and efficiency. This program plays a crucial role in meeting New York’s clean energy and grid modernization goals.
Contact Rodan Energy Solutions
As a registered DER Provider in the NYISO’s Distributed Energy Resource Participation Model, Rodan Energy empowers businesses in New York to maximize operational efficiency, grid reliability, and sustainability goals. Through advanced energy management and technology, we provide Asset Control Logic and Telemetry Setup to ensure seamless real-time monitoring and optimization of energy assets. Our expertise in Optimized Market Participation helps businesses navigate energy markets effectively driving economic advantages through smarter energy use and compensation.
Ready to take control of your energy future? Contact Rodan Energy to explore how your business can thrive in the evolving energy landscape!
