Policy & Regulation

MISO’s transition DER model does not help aggregators

MISO’s transition DER model does not help aggregators
(MISO control room. Credit: MISO Energy)

MISO submitted its second compliance filing for FERC Order 2222. MISO has proposed an existing model that allows multi-nodal capability as a transition model available in 2027, sticking with its 2030 implementation date.

There are many issues with this existing demand response model. Additional issues with MISO’s proposal include the $60,000 deposit per substation to study DERs and aggregate DERs in an affected systems study. Stakeholders have until June 10 to file their protests at FERC. However, the transmission owners have requested an extension until July 10.

Background

On May 10 this year, MISO submitted its second compliance filing to comply with FERC Order 2222. MISO filed its first compliance filing in April 2022, and FERC issued a decision in October last year. MISO’s second compliance filing is in response to FERC’s October decision.

As expected, MISO, after running monthly stakeholder meetings, put together a proposal that MISO believes complies with the FERC’s Order 2222. Specifically, on multi-nodal aggregation, which is aggregating multiple distribution energy resources across multiple market nodes, MISO proposed a transitionary model. This transitionary model is an existing demand response model called Demand Response Resource Type I.  

Five issues with demand response resource Type I model

While MISO’s intent is right in proposing a DRR Type I model, there are a lot of issues with that model that make it a bit clumsy for aggregators to work with. First, the minimum size of this model is 1 MW, not the Order 2222 minimum size of 0.1 MW. Hence, right off the bat, this DRR Type I model makes it tough for aggregators to find customers to meet that 1 MW threshold limitation. Solar rooftop aggregators are hard-pressed in the first place to meet the 0.1 MW, now, MISO has increased their hardship further by proposing an existing model with a greater size limitation.

Second, even though DRR Type I allows multi-nodal aggregation capability, MISO is limiting its use to a single baseline methodology. The baseline methodology is how MISO measures and verifies the market resource participation. Essentially, four different generic consumption baselines exist for DRRs delivering the energy product: metered generation, calculated baseline, direct load control, and custom baseline. If the aggregated DER is homogenous – such as rooftop solar, then the behind-the-meter generation could use a metered generation consumption baseline to provide energy. But if the aggregated DER is heterogeneous – rooftop solar and demand response, 2 different baselines are needed – metered generation (for rooftop) and calculated baseline (for DR). But MISO allows only a single baseline in this DRR Type I for Order 2222. That’s the second issue.

If the second issue is nuanced, the third issue is even more nuanced. As most are aware, a lot of MISO states have opted out of allowing their retail demand response programs to participate in MISO markets. Recently, states like Michigan and Missouri have lifted the ban on 3rd party aggregators, but in a limited fashion. With MISO’s DRR Type I model, there is a possibility that those states that opted out will continue to see demand response sitting on the sidelines when other distributed resources are allowed to participate. This is a legitimate issue for aggregators because there is no opt-out for energy storage and DERs in FERC Orders 841 and 2222, but an opt-out is available for demand response. Hence it is not clear how MISO is proposing a DRR Type I model would work for aggregators in states that don’t allow 3rd party aggregators. 

The fourth issue has to deal with the market itself. By nature, the DRR Type I model is like an on/off switch. Hence, it does not participate in providing frequency regulation. So, some of the ancillary services market opportunities are out of the reach of aggregators with the DRR Type I model. And then there is the limitation of either providing energy or contingency reserves but not both. A DRR Type II can provide energy and contingency reserves simultaneously. So, that’s another limitation of the DRR Type I model for aggregators.

The final issue is related to energy injections. Only demand curtailments are allowed using the DRR Type I model. Yes, behind-the-meter generation is allowed to participate as DRR Type I, but that generation must be netted against the load at that market node. So, DRR Type I is not a model that works for energy storage resources. MISO has another model, called the electric storage resource model, that has been available to market participants since June 2022. MISO has released a report after one year of implementing that model stating that the model is working well for market participants. Unfortunately, the ESR model does not allow aggregation. So, MISO has proposed a DRR Type I model that allows aggregation per Order 2222 but has many issues with it.

Other issues with MISO’s second compliance filing

There are other issues with MISO’s second compliance filing, including allowing electric distribution companies to communicate in real-time with the DER owners, not the aggregators. FERC agreed that the distribution companies are responsible for the safety and reliability of the distribution system. But aggregators are registering the DERs in the market, and hence, aggregators are the market participants for the DERs not the DER owners, and pay non-performance penalties if DERs don’t operate. So, it is not clear why MISO is proposing distribution companies communicate with DER owners when they are overriding the ISO dispatch in real-time.

Another major issue is the interconnection of DERs. MISO had proposed a DER Affected Systems Study during the first compliance filing, but didn’t communicate to FERC all the relevant details. FERC had asked MISO whether this DER Affected Systems Study is part of the 60-day reliability study that distribution companies perform, or the generator interconnection study or an entirely new process. MISO states that this Affected Systems Study is a new process. MISO states that the local DER interconnection initiates this study, and MISO applies a threshold criterion for net injections. Net injections must be greater than 5 MW, and there is a 1% increase in transmission line loading during the summer peak. This threshold criteria is well-meaning but MISO collects $60,000 per substation in this process. The transmission owner collects this deposit from the DER owner and sends it to MISO for MISO to conduct this assessment. Even though FERC asked MISO for relevant details on this Affected Systems study, MISO does not mention this $60,000 fee in the second compliance filing.

It remains to be seen how FERC will react to this MISO filing. For someone new to the process, they will likely see that MISO proposed the DRR Type I model to comply with the multi-nodal objectives of Order 2222. But only if we dig deeper, market participants realize this transition model available in 2027 will not work as MISO proposes. MISO could add changes to the market systems enhancement project and make energy injections part of the DRR Type I model. This model improvement will help aggregators.

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