In 2020, the Federal Energy Regulatory Commission (FERC) issued Order 2222 with the intent of opening regional transmission organization (RTO)/independent system operator (ISO) wholesale markets to aggregations of distributed energy and demand response resources, which would vastly expand the tools system operators can employ to balance an increasingly dynamic transmission grid. A new report from Guidehouse Insights provides a comprehensive analysis of FERC Order 2222 implementation plans.

While FERC considers whether to rescind the opt-out authority it granted states in Order 719 to bar DR aggregations from wholesale markets—an authority that could undermine efforts to create a more innovative bulk power market—every RTO/ISO has filed a compliance plan. According to a new report from Guidehouse Insights, stakeholders should explore ways to harmonize RTO/ISO compliance plans and reduce regional disparities in distributed energy resources (DER) deployment and integration, including adopting standardized wholesale market participation models developed by the North American Energy Standards Board (NAESB).

“These implementation gaps present serious challenges for the stakeholders most likely to benefit from the order’s blurring of the distinction between retail and wholesale markets,” says Christopher Cooper, senior research analyst with Guidehouse Insights. “But they also reveal some interesting business models and surprising growth opportunities for market players prepared to outwit the regulatory complexity.”

Analysis of these filings reveals wide disparities in the scope and speed these RTOs/ISOs intend to adopt the market reforms Order 2222 directed. Coupled with market incentives keeping distributed generation (DG) in retail power markets, these disparities could stunt the effectiveness of Order 2222 at integrating distributed energy resources into wholesale markets, according to the report.

The report, FERC Order 2222: RTO Compliance Plans Reveal Regional Disparities in Distributed Energy Integration, summarizes every RTO/ISO Order 2222 compliance filing and FERC’s responses, to date. It analyzes outstanding issues that could impact how Order 2222 is implemented and whether the order effectively integrates distributed energy resources into wholesale power markets; it also assesses the risk and consequences of particular outcomes. Evaluating differences in implementation schemes across the RTOs/ISOs analyses how Order 2222 implementation could impact various market players in the near and long term. An executive summary of the report is available for free download on the Guidehouse Insights website.