Rooftop solar generators, electric vehicle batteries and other small energy resources will be allowed to supply wholesale power markets in the US, in a challenge to top-down delivery systems controlled by electric utilities.
New rules approved by the Federal Energy Regulatory Commission on Thursday put these dispersed energy resources in competition with big power plants — potentially hastening investment in solar and storage projects installed at homes and in businesses.
The order on “distributed energy resources” is the latest supported by Neil Chatterjee, the Republican chairman of Ferc, to reflect the changing patterns of generating, transmitting and distributing electricity.
“DERs can hide in plain sight in our homes, businesses and communities across the nation. But their power is mighty,” Mr Chatterjee said.
As examples, Mr Chatterjee cited rooftop solar arrays, home storage batteries and “demand response,” where customers are paid to reduce their consumption, thereby subtracting demand from the power grid.
Electric vehicles could be tied together by an aggregator while they are parked and plugged in, he said, effectively becoming a large battery that could feed the grid at certain times.
“By unleashing the power of EVs in this way, we have the ability to further drive down costs in our markets and bolster grid resilience. That’s to say nothing of the added benefit of emissions reductions we could see from increased EV deployment,” Mr Chatterjee said.
Thursday’s order builds on a policy that already allows energy storage facilities to sell into power markets. Groups of state regulators and utilities lost legal challenges to the 2018 storage rule, arguing that Ferc had overstepped its jurisdiction.
The order will allow companies to bundle electricity and other services from thousands of individual sites and sell it into Ferc-regulated wholesale markets such as PJM Interconnection, which extends from Chicago to the east coast, or into California’s market.
Twice weekly newsletter
Energy is the world’s indispensable business and Energy Source is its newsletter. Every Tuesday and Thursday, direct to your inbox, Energy Source brings you essential news, forward-thinking analysis and insider intelligence. Sign up here.
Mr Chatterjee cited studies forecasting up to 380 gigawatts of distributed energy resources could come online by 2025. US power plants now have about 1,100GW of generating capacity in total.
Ferc officials defined distributed resources as small-scale power generation or storage technologies typically 1 kilowatt to 10,000kW in size.
Mr Chatterjee’s approach at Ferc has sometimes pleased and sometimes frustrated clean-energy advocates. A former adviser to Senate majority leader Mitch McConnell, he voted for a rule that some states claimed undercut subsidies for renewable projects such as offshore wind farms.
However, he voted for the 2018 storage rule, which could displace some fossil-fuel generation as batteries absorb excess solar and wind power that can then be used at times of peak demand.
The latest order won praise from the Solar Energy Industries Association.
“Competition in our electricity markets is a critical part of our clean energy transformation,” said Katherine Gensler, vice-president of regulatory affairs for the association. “This rule will create jobs, drive local economies and enable the solar industry to supply 20 per cent of US electricity generation by 2030.”
ClearView Energy Partners, a research group in Washington, said Ferc’s new rule was unlikely to be politically controversial, but it said that a more significant factor in fostering distributed resources could be retail electricity rates — the domain of state regulators.
Joining Mr Chatterjee in voting for the order was Richard Glick, the lone Democrat on the three-person commission. A dissenting vote came from commissioner James Danly, a Republican like the chairman.