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CleanTech Investing Utilities

FERC 2222 Drives Energy Transformation for Customers

On September 17, 2020, the Federal Energy Regulatory Commission (“FERC”), approved a historic final rule, Order 2222, enabling distributed energy resource (“DER”) aggregators to compete in all regional organized wholesale electric markets across the US.

This is the enabling of energy transformation into a customer-centric model. Really, this decision ensures that new technologies can all participate with customer-driven supply and loads on a level playing field.

I would like to explain how I see this transformation playing out.

In my opinion, you need to view this from the customer perspective. Any other perspective, and you could get caught down a rabbit hole of intentions and ramifications. It certainly involves regional system operators and their regulated utilities, but it is being driven by the appreciation that DERs will be a big part of the overall delivery of energy.

A customer can now install various electricity supply and demand loads for greater values than they have had to-date.

Essentially, energy is now turned into a commoditized asset for them to deploy when it makes sense for their business conditions. This is huge, because traditionally, customers have been at the whim of whatever local or system operator program with minimal options to monetize energy. It was being done to help system operators and utilities with peak issues, but wasn’t very customer-centric.

So what does this mean to a customer?

In theory, a customer would have more competitive options for their energy supply. More competition means best value and options to deploy their energy.

Beyond energy supply and storage technologies, what else will now experience significant growth from this?

Demand/Supply Aggregators

Energy Management Platforms (Supply and load monitoring and control)

Transactive Energy Platform (registry and protocols)

Data Systems Integrations

Unregulated Energy Utilities

Demand/Supply Aggregators

Companies will acquire exclusive rights to secure and control certain loads/supplies on a pre-determined commercial model, and there will be variations of commercial wins for the customer from gain shares from energy transactions to lower energy costs. Arguably, traditional DR companies have not been very customer-centric, as they were more focused on gaming market signals. They would need to better understand and command Trust behind the meter, now.

What should not be lost is the ability to convert and utilize thermal energy into electricity as a DER. Remember that. Solutions that allow you to bank your thermal, will mean you could earn rewards for curtailing at key times, as well.

Energy Management Platforms (Supply and load monitoring and control)

None of this works without ensuring supply and demand can be monitored and controlled effectively with proper algorithms that benefit customer and external buyer. It’s complicated, is an under-statement, but it is critical to ensure that a customer gets the benefit of the system for internal and external options, rather than just simply external. I have been working with SensorSuite on max control and monetization for customers.

Transactive Energy Platform

Many global pilots to build out the proper asset registry and protocols for blockchain energy transactions, but what this new order demonstrates is that regulated utilities should not and will not be the masters of those registration systems. Just as the utilities vow to be ubiquitous for distribution of energy, these platforms need to be the same in order to secure as many competitive offers to maximize the use of the system. In my experience, you won’t find too many better packages than ones from I-EMS.

Data Systems Integrations

Thinking through the new capabilities that utilities will require to integrate thousands and thousands of DERs within their service territories means that utilities will have to double up on their ability to manage two directions of electricity, and have the ability to manage and prevent operational challenges beyond the simple registration and billing of transactions. Utilities not known for their ability to manage meter to cash very well, will now be inundated with multiples of data from multiple points. The ability to have visibility into operating systems and pending transactions in real time will mean access to data will become critical to their success.

CIS will look like children building blocks compared to the daunting task.

I’m sure the large SI houses will chomp at these opportunities, but it will be the ones doing the grunt work who will bring order to the chaos, like Blue Heron Consulting Global.

In fact, I have been touting to municipalities and utilities the need to aggregate data as a pre-requisite to securing utility and municipal rights of ways through amended Municipal Access Agreements and/or Master Data Licensing Agreements.

Unregulated Energy Utilities

As someone who has started platforms in this space- EnerStream Ventures– I can inform you that FERC Order 2222 has emboldened the pursuit of building and operating these systems. The only difference is that I once believed that staying connected to regulated utilities provided limited overall value, and now, they may serve a purpose to assist in the maximization of energy value with the customer, but that assumes the utilities can survive this monstrous shift.

Finally, we wait for the regulated industry response to this Order 2222. But my biggest excitement is that it has the potential to finally put energy back in the hands of customers, and particularly allow Small Medium Enterprise to level the playing field with energy now transforming into their assets rather than liabilities.