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California to Allow Aggregated Distributed Energy Resources to be Bid into the Grid

On June 10, 2015, the California Independent System Operator (CAISO) issued a proposal to allow small-scale distributed energy resources (DERs), such as rooftop solar, storage, and electric vehicles, to be aggregated and bid into the grid. If approved, California would become the first state to integrate and manage small-scale DERs in a fashion similar to larger utility-scale renewable resources.

Key Details

  • Currently California requires DERs to be 500kW or larger to be participate in grid markets, typically utility-scale resources. By aggregating small-scale resources, larger numbers of smaller resources will be added together to meet the 500kW threshold.
  • Additionally, in order to be incorporated as assets in California’s grid markets, resources must have high-accuracy metering and the ability to provide real-time telemetry data to CAISO’s control center, making them dispatchable resources.
  • Under the proposed rule, a new class of grid participants called Distributed Energy Resource Providers (DERPs) would be created that would be responsible for aggregating, metering, and providing the telemetry data that small-scale resources might not otherwise be able to provide individually.
  • Some constraints will continue to exist, such as limiting the type of resources aggregated to the same resource type (solar, storage, etc.) and requiring that DERs be aggregated to the same node. In some cases, multiple resource types would be allowed to be aggregated together provided they are aggregated into the same node providing a controllable “net effect.”
  • Demand reduction will continue to be managed under existing CAISO demand reduction aggregation programs.


If the CAISO rule is approved, it would make California the first in the country to operationally address some of the issues that behind-the-meter resources present to grid operators, primarily the visibility of behind-the-meter resources and their control. By creating DERPs to manage these challenges, California’s approach promises to be instructive to other grid operators’ efforts to bring DERs into the grid and may usher in a new era of grid-connected services, such as home automation and electric vehicle charging systems.

More Information

CAISO: Expanded Metering and Telemetry Options Phase 2

Greentech Media: California’s Plan to Turn Distributed Energy Resources Into Grid Market Players

Greentech Media: Wants Versus Needs: The Struggle to Realize New York’s Energy Vision

SNL: NYISO report details strategies for ‘rightsizing the grid’

This report is part of the Grid Edge Minute series. To view all featured Minutes, please click here.

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