Table of Contents. Distributed Energy Resource Roadmap 2

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2 Table of Contents I. Introduction... 4 II. Purpose and Scope of this Roadap... 5 III. Overview... 6 IV. Current State of DER Integration... 9 A. Econoic Progras Econoic Deand Response Behind-the-Meter Net Generation Resources Load Modifiers B. Reliability-Based Progras V. Key Objectives behind this Effort A. Integrate DER into Energy, Ancillary Services, and Capacity Markets B. Align with the goals of New York State s REV C. Enhance Measureent and Verification Methodologies D. Align Copensation with Wholesale Service Perforance E. Focus on Wholesale Market Transactions VI. Integrating DER VII. Aggregation and Modeling A. DER Aggregation and Aggregators B. Granularity C. Sizes and Types Energy, Operating Reserves and/or Regulation Energy Only D. Coordination between the NYISO, Utilities, and DCEs VIII. Measureent and Verification A. Metering and Teleetry Requireents Real-tie Teleetry for DCEA After-the-fact Meter Data for DER DCEA Sapling Meter Data Service Providers B. Baselines Recoendations fro the 2014 Baseline Study Baselines for Different Technology and Load Types C. Settleents IX. Perforance Obligations A. DER that are ICAP Suppliers Distributed Energy Resource Roadap 2

3 B. DER that are not ICAP Suppliers X. DER Integration into Syste Planning XI. Siultaneous Participation in Retail/Distribution-Level Progras XII. Other Considerations XIII. Transition plan XIV. Other Supporting Initiatives A. NYISO Pilot Fraework B. REV Deonstration Support C. Granular Pricing D. Market Price Delivery E. Meter Data Policy XV. Next Steps XVI. Appendix A Use Cases for DER in Wholesale Markets A. Fixed Load Consuers B. DER Prosuers Use Case 1 - Load Use Case 2 - Load Use Case 3 - Load and Generation Use Case 4 - Load and Generation Use Case 5 - Load and Storage Use Case 6 - Load and Storage Use Case 7 - Load, Storage and Generation Use Case 8 - Load, Storage and Generation Table of Figures Figure 1 - Today's Electrical Grid... 4 Figure 2 - Toorrow's Electrical Grid... 4 Figure 3 Integrating DER in Wholesale Markets... 6 Figure 4 - Future Wholesale DER Participation... 8 Figure 5 - Final DER Roadap Tieline... 9 Figure 6 Current State of DER Integration Figure 7 - Future Wholesale DER Participation Figure 8 - Transission Substation with two transission nodes Figure 9 - Exaple of DER Dispatch Figure 10 - Concept for DCEAs in Energy, Operating Reserves and Regulation Figure 11 Exaple of Winter Load Figure 12 Exaple of Suer Load Figure 13 Capacity Resource Obligations Distributed Energy Resource Roadap 3

4 I. Introduction Distributed Energy Resources (DER) are poised to transfor New York s wholesale electric syste. DER can help grid operators by iproving syste resiliency, energy security, and fuel diversity. DER can lower consuer prices, iprove arket efficiency, and allow consuers to take greater control of their electricity use and costs through a variety of new technologies. DER will also iprove our environent through the developent of new renewable generation and energy storage technologies, helping the State of New York achieve its goals under the Reforing the Energy Vision (REV) initiative and Clean Energy Standard. The NYISO stands ready to harness these benefits and build the grid of the future. This DER Roadap is only the first step in building that grid of the future. We are coitted to sealessly transitioning fro a priarily central station-based grid (Figure 1) to a diverse bi-directional grid (Figure 2). The transition will require careful and extensive planning by the NYISO and its stakeholders. NYISO will continue to provide its stakeholders and the public with independent and ipartial inforation it can trust. This transition will fundaentally alter the coposition of New York s infrastructure and energy arkets and, throughout this transforation, the NYISO will continue to ensure econoic electricity that New York s consuers can rely on. Figure 1 - Today's Electrical Grid Figure 2 - Toorrow's Electrical Grid Distributed Energy Resource Roadap 4

5 In the pages that follow we describe how DER is already providing valuable services in New York s Wholesale Markets. We outline the key objectives we intend to achieve in the initial phase of DER integration, and the progress we expect to ake in the next three to five years. We also highlight certain technical challenges including easureent and verification of resource perforance, and siultaneous participation in wholesale arkets and in retail progras. Finally, we explain how the NYISO expects to transition certain existing wholesale arket progras (such as deand response) to a fully integrated DER odel. We believe that opening the NYISO s arkets to all resource types and configurations will iprove the strength and efficiency of the electric grid. The ideas and proposals explained in this Roadap will transfor as we learn ore about eerging technologies and receive input fro stakeholders. But one thing is certain: in the coing decades we will look back at this evolution of the electric syste and know that New York state has been on the leading edge of refors that have iproved reliability, increased resiliency, reduced prices for consuers, and iproved our environent. II. Purpose and Scope of this Roadap Technological advanceents and public policies, particularly REV, are encouraging greater adoption of DER to eet consuer energy needs as well as electric syste needs. DER offer the potential to ake load ore dynaic and responsive to wholesale arket price signals, potentially iproving overall syste efficiencies. The NYISO s arket enhanceents will perit dispatchable DER (i.e., controllable resources) with various capabilities to participate in the wholesale arkets. Integrating DER in this anner will require enhanceents to wholesale arket design, syste planning, and grid operations to better align resource investents and perforance with syste needs and conditions. The NYISO generally considers DER to be behind-the-eter resources, although sall aggregations of Counity Distributed Generation (CDG), ay also be considered DER. Soe DER ay be net-generators and others net-loads. The NYISO defines DER as a resource, or a set of resources, typically located on an end-use custoer s preises that can provide wholesale arket services but are usually operated for the purpose of supplying the custoer s electric load. DER can consist of curtailable load (deand response), generation, storage, or various cobinations aggregated into a single entity. For resources that are net-generators, the scope of participation in the dispatchable DER progra will be liited to resources and aggregations that do not eet the requireents to be Behind-the-Meter Net Generation ( BTM:NG ) Resources. 1 The purpose of this docuent is to present the NYISO s vision for integrating DER into the NYISO s Energy, Ancillary Services, and Capacity arkets. It outlines high-level concepts to facilitate the eergence of dispatchable DER through a series of econoic-based products. Doing so will proote greater grid and arket efficiencies by coordinating load in conjunction with supply on the basis of price signals. These high level concepts are presented in an order that uses the previous concept s arket design to infor the next concept s arket design such that each concept builds upon all previous concepts. Existing reliability-based deand response (DR) progras, the Special Case Resource ( SCR ) Progra and Eergency Deand Response Progra ( EDRP ), will continue to be an iportant tool for syste operators to curtail load in response to periods of high deand or eergency syste conditions that could threaten reliability in the near ter. However, by facilitating the growth of econoicbased DER products, the NYISO is looking to ore effectively anage deand through autoated, 1 Capitalized ters not otherwise defined in the body of this Report shall have the eaning specified in Section 1 of the NYISO s Open Access Transission Tariff and Section 2 of the NYISO s Market Adinistration and Control Area Services Tariff. Distributed Energy Resource Roadap 5

6 arket-based econoic transactions, that reduce the need for anual operator actions and thereby increase arket efficiency. This docuent is not intended to be a detailed arket design with specific ipleentation details. Where the NYISO has developed detail on certain concepts, however, it has included that detail in this docuent as a basis for further discussion with stakeholders. III. Overview DER currently have liited opportunities to participate in the NYISO s Energy, Ancillary Services, and Capacity arkets. The NYISO s goal in this Roadap is to develop a series of arket enhanceents to ore fully integrate DER. Achieving the key objectives of this Roadap, below, will ore fully open New York s wholesale arkets to DER, and will support NYISO goals to iprove arket aniation, increase syste-wide efficiency, and iprove syste reliability and resiliency. Key Objectives 1. Integrate DER into Energy, Ancillary Services, and Capacity arkets; 2. Align with the goals of New York State s REV; 3. Enhance easureent and verification ethodologies; 4. Align copensation with wholesale service perforance; and 5. Focus on wholesale arket transactions. Figure 3 Integrating DER in Wholesale Markets Distributed Energy Resource Roadap 6

7 Figure 3 depicts how DER ay provide services in the wholesale and retail arkets in the future, and the dark green lines are intended to show the scope of NYISO s DER Roadap initiative. The NYISO s existing Open Access Transission Tariff (OATT) and Market Adinistration and Control Area Services Tariff (Services Tariff) do not recognize the full copleent of wholesale arket services DER are capable of providing. Although DER can currently participate in liited ways, the NYISO recognizes that arket enhanceents to further integrate DER will benefit the syste as a whole. Therefore, the ain objective of this Roadap is to identify the key, high-level concepts we will address in integrating existing and eerging DER technologies. These concepts will be further developed, refined, and ipleented through the NYISO s shared governance process. The objectives described in this Roadap, though focused on wholesale arkets, largely parallel the Public Service Coission s (PSC) REV objectives in order to copleent the retail arket enhanceents undertaken by the PSC and utilities. 2 The NYISO intends to treat dispatchable DER coparable to traditional generators but recognizes that the capabilities of DER ay be different fro traditional generators. For exaple, traditional generators that were awarded capacity in a NYISO ICAP auction, with certain exceptions, currently have a Day-Ahead Market ( DAM ) bidding obligation. 3 We anticipate that dispatchable DER participating in the Capacity arket will have siilar obligations requiring a dispatchable DER to offer into the Energy and Ancillary Services arket each day. 4 Coensurate with the operational flexibility provided to DER ICAP Suppliers, the NYISO intends to reflect the operational value of the DER s contribution to the syste and prorate Capacity payents based on the service provided. Unlike traditional generators, DER are likely to participate in the NYISO s wholesale arkets on an aggregated basis due to individual resource size and capability. The NYISO s current infrastructure was designed to support central-station supply resources using teleetry for real-tie operations and onitoring, and after-the-fact data uploads for financial settleents. This data is collected on a Point Identifier (PTID) basis. 5 We intend to use the existing infrastructure for DER and DER aggregations, however, as described in section VIII below, adjustents to existing etering and teleetry requireents ay be appropriate for DER depending on the configuration of a particular resource or aggregation. It is expected, however, that DER will be required, at a iniu, to provide PTID-level real-tie supervisory control and data acquisition (SCADA) quality teleetry data and after-the-fact revenue quality eter data fro individual resources. 6 The NYISO will explore whether the use of real-tie teleetered data fro a saple set of resources in a DER aggregation ay be appropriate in certain circustances. The arket enhanceents developed over the next three to five years will perit DER participation in the NYISO s Energy, Ancillary Services, and Capacity arkets with the option of being either dispatchable for econoics or non-dispatchable for econoics. The existing Day Ahead Deand Response Progra (DADRP) and Deand-Side Ancillary Services Progra (DSASP) will be replaced with new initiatives eerging fro this Roadap, while the SCR progra, EDRP, and the opportunity for Price-Capped Load Bidding will reain. We also intend to develop rules accounting for wholesale arket 2 Unlike traditional Generators that are connected to the high-voltage transission grid, any DER will be connected to distribution networks posing operations and planning challenges for the NYISO and New York s utilities. 3 See Services Tariff and The NYISO requires ICAP Suppliers, with certain exceptions, to bid, schedule a bilateral transaction, or notify the NYISO of any derates, the full aount of its ICAP obligation on each day. 4 DER electing not to participate in the NYISO s Capacity arket ay offer into the Energy and Ancillary Services arkets based on their capability. 5 A Point Identifier is a resource-specific nuerical identifier used by the NYISO s software systes to identify Generators and other Suppliers. 6 Certain etering and teleetry obligations ay be perfored by an aggregator instead of the individual DER. Distributed Energy Resource Roadap 7

8 load odifiers. Figure 2 depicts the NYISO s vision of future DER participation in the wholesale arkets. Figure 4 - Future Wholesale DER Participation Ipleenting this initiative will entail considerable tie, effort, and stakeholder engageent. This Roadap represents a starting point to initiate discussions that will lead to further refineent on the key arket design eleents, functional requireents, and tariff language necessary to ipleent our vision. Below is a high level tieline depicting the developent and ipleentation of DER Roadap concepts as well as other supporting initiatives. The ipleentation schedules noted below are subject to revision based on the specific arket designs developed with stakeholders, and upon NYISO s budgeting and project prioritization process. Distributed Energy Resource Roadap 8

9 Figure 5 - DER Roadap Tieline IV. Current State of DER Integration The nuber and type of DER operating in New York has grown over the last decade. Distributed behind-the-eter technologies are changing the way energy is produced, stored, and consued. DER also address local needs for power quality, energy cost savings, carbon footprint reduction, and resiliency. Energy storage technology in particular has becoe ore efficient and econoical over the last decade leading to increased penetration. 7 Cobined, these advances will allow consuers to 7 Ultiately, the NYISO believes that DER applications will be a ore effective and coplete solution for grid operators and syste planners with increased grid-scale storage capability. Distributed Energy Resource Roadap 9

10 change their consuption profiles in an effort to lower costs, access new sources of revenue, and reduce the environental ipacts of their energy use. While the NYISO does not have coprehensive data on the penetration of DER in the state, it coissioned a study in 2014 to (i) review the potential for DER in New York State, and (ii) explore the various DER technologies available to the public. 8 The 2014 DER Study exained DER investent drivers and the effect of regulatory regies and other policies in deterining the arket potential for DER, including a review of how DER is treated in other balancing authorities and by utilities. 9 The study concluded that DER adoption was well underway throughout the United States due to public policies encouraging DER as well as perforance iproveents and cost reduction of available technology. 10 These findings supported the study s conclusion that there was significant potential for DER expansion in New York. Despite the 2014 DER Study s conclusion that there is potential for expanded DER use, the precise technological ix and scale of DER penetration is unknown and will be influenced by the econoics of the technologies theselves as well as evolving rules and incentives established by public policy and the NYISO s arkets. The arket enhanceents conteplated by the NYISO in this Roadap are intended to encourage integration of a ix of resources, including aggregations that cobine technologies. 11 While the NYISO s efforts to enhance wholesale arket participation of DER are underway, the PSC has been developing concepts for retail DER since 2014 in its Reforing the Energy Vision proceeding. Recognizing the rapid advanceents in DER, the PSC initiated the REV proceeding to encourage deeper penetration of retail DER, engage end users, proote syste efficiency, and eet the challenges presented by New York s aging infrastructure and severe weather events. The proceeding is designed to exaine how regulatory policies, utility business odels, and arket designs could be enhanced to encourage investent in, and operation of, DER technologies. Through the retail arket changes brought by REV, DER will serve local needs through Distribution Syste Platfor (DSP) providers that plan, operate, and adinister retail arkets for distribution-level services. 12 The vision articulated by the REV fraework is, in any ways, consistent with the anner in which the NYISO adinisters wholesale arkets, plans for bulk power syste needs, and operates the grid, and the NYISO shares the goals articulated by the PSC in the REV proceeding. DER has the potential to further enhance the efficiency of wholesale arkets with appropriately located injections and deand elasticity. Uncertainty exists, however, regarding the services DER ay offer the bulk power syste while also serving distribution syste or end-user needs, the level of DER investent likely to be realized, and the liited visibility NYISO s arket and grid operators will have of DER investents and technologies. 8 A Review of Distributed Energy Resources, New York Independent Syste Operator (Prepared by DNV GL) (Sept. 2014), ted_energy_resources_septeber_2014.pdf. 9 The study defined DER as behind-the-eter power generation and storage technologies located on an end user s preises and operated for the purpose of supplying all or a portion of the custoer s electric load, but with the potential to inject power into the transission syste, distribution syste, and/or a parallel local non-utility grid. The definition used in the 2014 DER Study is ore restrictive than that used in this DER Roadap, and therefore we expect greater benefit than described in the study. 10 The 2014 DER Study did not specifically exaine deand response because the goal was to assess the enabling technologies theselves, and not their ipact on the grid. 11 Although the NYISO has reviewed passive and interittent technologies that provide energy efficiency, peak shaving, and other services to co-located loads, we do not anticipate that these technologies will directly provide wholesale arket services. It is expected that these technologies will instead affect wholesale arkets indirectly, in the for of odifications to New York s load profile. Moving forward the NYISO expects to enhance its forecasting tools to assist with ore efficient dispatch of supply resources on the bulk power syste in a separate foru. 12 The PSC, NYISO and resource developers are also deterining the extent to which retail-level DER can also participate in wholesale arkets. Distributed Energy Resource Roadap 10

11 DER provide iportant but liited support to bulk power syste needs under the NYISO s existing arket rules. The vast ajority of DER are facilities participating in the NYISO s econoic and reliability-based deand response progras, and aong all deand response progras, the reliabilitybased progras have ore robust participation. Figure 6, below, illustrates the NYISO s current deand response progras. Load odifiers do not actively participate in the NYISO s arkets but instead are integrated with the various Load Serving Entities (LSEs) in New York to reduce the Load the LSE ust procure fro the NYISO. A. Econoic Progras 1. Econoic Deand Response Figure 6 Current State of DER Integration The DADRP provides eligible resources the opportunity to offer load reduction in response to DAM price signals. DADRP resources offer into the DAM the aount of load reduction they are willing to provide at a particular price (or along a curve). If the bid is accepted, the resource perfors by siply reducing consuption or by self-supplying a portion of their load with DER during the intervals in which it is dispatched. DADRP resources receive energy payents for delivering load reduction as if it were generation. We believe that DADRP is an effective tool to elicit deand elasticity, and although there was soe historical participation, there is no active participation as of the date of this Roadap. 13 Eligible deand response resources ay also subit bids for Ancillary Services through the NYISO s DSASP. Deand response resources that are capable of odulating their load in response to basepoint signals fro the NYISO are eligible to supply and be paid for Operating Reserves and 13 The DADRP was initiated in May 2001 and experienced liited participation through Deceber, There has been no DADRP Resource participation since that tie. Distributed Energy Resource Roadap 11

12 Regulation Service. As of July 2016, the DSASP had 106 MW of registered capability providing Ancillary Services. DSASP resources provide approxiately 16% of the NYCA s 10-inute spinning reserves. The NYISO arkets also perit LSEs to subit Day-Ahead Price-Capped Load bids. Under existing arket rules a LSE ay choose to subit price-sensitive Day-Ahead load bids for soe, or all, of the load it ust procure. That is, a LSE ay choose the Day-Ahead Market price at which it will serve its Load. If the Day-Ahead price exceeds the LSE s Price-Capped Load bid, the LSE will then either reduce its Load or procure energy through another source. DER ay participate in wholesale arkets as a tool LSEs use to odulate load in response to wholesale price signals. LSEs can subit load bid curves to the NYISO reflecting a willingness to buy energy by odifying load bids in response to the NYISO s clearing price. In a typical scenario, LSEs would rely ore heavily on wholesale energy purchases during periods of low prices while activating DER to displace wholesale energy purchases during periods of high arket prices. New York s LSEs subit approxiately 3-5% of their day-ahead Load bids as price responsive, soe of which is used for other purposes such as price hedging. 2. Behind-the-Meter Net Generation Resources Another econoic-based echanis for DER that can inject at least 1 MW into the grid is to participate as a Behind-the-Meter Net Generation (BTM:NG) Resource. 14 This initiative is designed for large facilities that have on-site generation capability routinely serving a local, on-site Load (the facility s Host Load), and that have excess generation capability after serving that Host Load. Exaples of potential BTM:NG Resources include industrial coplexes, large residential facilities, and college capuses. The Resource ust have naeplate generation capability with a iniu rating of at least 2 MW, a iniu Load of at least 1 MW, and an interconnection allowing an export of at least 1 MW to the New York State (NYS) Transission Syste. Eligible BTM:NG Resources can sell Energy, Ancillary Services, and Capacity to the wholesale arkets and participate in a anner siilar to traditional Generators. 3. Load Modifiers Load odifiers are not wholesale arket resources, but instead are a tool that LSEs can use to reduce their wholesale arket load and capacity obligation. Load odifiers can consist of any different technologies that LSEs can use to anage its load. Load odifiers are priarily used: (i) to avoid purchasing high-cost power during peak hours, and (ii) to reduce the LSE s seasonal capacity obligations. Load odifiers are not dispatched by the NYISO and therefore any load reduction is not based on an explicit bulk power syste or wholesale arket need. B. Reliability-Based Progras The NYISO currently has two reliability-based deand response progras: EDRP and the SCR progra. The EDRP offers eligible resources the opportunity to voluntarily curtail load in response to NYISO requests for load reduction to address specific syste conditions such as forecasted operating reserve shortages. 15 EDRP resources can reduce Load in response to a NYISO activation via curtailent, Local Generator deployent, or both, and receive energy payents for verified load reductions. The EDRP is useful to grid operators because it supports near-ter reliability. Because load reductions are voluntary, however, EDRP does not benefit the NYISO s long-ter planning and grid anageent objectives. 14 The arket rules peritting BTM:NG Resource participation in the wholesale energy, ancillary service, and capacity arkets becae effective on Deceber 13, As of July 2016, the EDRP has 75 MW of capability throughout the state. Distributed Energy Resource Roadap 12

13 A ore reliable deand response tool for planning and grid anageent is the SCR progra. 16 The SCR progra is siilar to EDRP in that the NYISO activates SCRs in response to specific reliabilityrelated syste conditions, but, in exchange for receiving capacity payents (in addition to energy payents for real-tie perforance), SCRs are obligated to reduce load when called on by the NYISO. 17 SCRs that fail to respond to appropriate SCR activation notifications can be subject to financial penalties. The SCR progra has been activated on nuerous occasions to aintain reliable syste operation. The SCR progra has proven a valuable tool for grid operators, and planners have relied upon SCR enrollents to deterine if the syste is capable of handling projected peak loads while aintaining copliance with reserve requireents. Despite its value, the SCR progra is an iperfect arket product because resources have little ability to predict or control the effect the SCR progra participation has on a facility s priary day-to-day operations. Fro 2014 through 2016 the NYISO had only a single andatory activation of the SCR progra. In 2013, however, the SCR progra had andatory activations five ties on five consecutive days in several NYISO load zones. Fro the NYISO s perspective, the SCR progra is a generally effective way to reduce strain on the bulk power syste during periods of high deand. However, the progra does have its shortcoings. First and foreost, the SCR progra ust be anually activated: operators ust look at load forecasts as well as generator and transission availability to deterine whether SCR resources will be necessary to aintain reliability. Since NYISO Operations ust anually activate the SCR progra based on the forecasted conditions, these actions are inherently less efficient than autoated coitent and dispatch. Further, there is liited ability to target SCR calls in response to local conditions on the transission grid because SCRs are activated on a zonal basis. Eliinating these inefficiencies will be effective in supporting grid reliability. V. Key Objectives behind this Effort While the types, configurations, and capabilities of DER vary depending on the needs of the custoer, the following key objectives will guide the effort to integrate DER into the NYISO s wholesale electricity arkets: 16 As of July 2016, 1,192 MW of load reduction capability was enrolled in the SCR progra. 17 Under the existing SCR progra rules, the NYISO is required to provide SCRs with a 21-hour advance notification of a potential SCR activation provided that the notification is ade by 3 p. If the notification is provided after 3 p, the NYISO ust provide a 24-hour advanced notification. The NYISO is also required to provide SCRs with a 2-hour intra-day notification of an actual SCR activation. If the NYISO does not eet its notification obligations, resource participation in the SCR activation becoes voluntary. Distributed Energy Resource Roadap 13

14 A. Integrate DER into Energy, Ancillary Services, and Capacity Markets The NYISO seeks the sealess integration of DER into Energy, Ancillary Services, and Capacity arkets. Currently, there are liited options for DER to participate in the NYISO s arkets. More fully integrating dispatchable DER will provide a eans for DER to take advantage of real-tie scheduling. It is iportant for the NYISO s real-tie systes to access and dispatch these resources in response to price signals reflective of grid conditions and needs. Fro an operational perspective, the intent of this effort is to iniize out-of-arket anual activation of these resources by operators. Ultiately, ipleentation of this roadap is expected to enhance the NYISO s portfolio of DER products by creating a arket environent that facilitates the eergence of DER capable of being econoically dispatched within the wholesale arkets. At the sae tie, the NYISO s vision provides end users added flexibility to eet their energy needs ore econoically by odulating their deand for grid-based electricity in response to price signals. B. Align with the goals of New York State s REV The NYISO s goal to provide additional options for DER to participate in the wholesale arkets aligns with NYS REV objectives of arket aniation leveraging custoer contributions, increasing syste wide efficiency, and iproving syste reliability and resiliency. The NYISO s approach to DER participation is to focus on syste needs and perforance requireents of resources and to provide opportunities for facilitating deand-side elasticity. C. Enhance Measureent and Verification Methodologies Accurate tiely etering and load forecasts are essential to balancing supply and deand in real-tie. Enhancing easureent and verification ethodologies is critical to ensure that NYISO is able to accoodate various technologies and custoer load profiles. The data provided by enhanced easureent and verification will help syste planners and grid operators better prepare for syste needs and support the continued reliability of the bulk power syste while further iproving syste efficiency. Enhanced easureent is also a critical coponent to appropriately copensating resources for the services they provide, which also leads to the next key objective. D. Align Copensation with Wholesale Service Perforance Markets function best when payents are aligned with the value of services provided. In this context, the NYISO intends to align DER incentives and copensation based on the flexibility and easured perforance of the DER (or aggregation), and arket clearing prices based on the needs of the syste. The intent is to treat DER coparably with traditional generators participating in the NYISO s Energy, Ancillary Services, and Capacity arkets. E. Focus on Wholesale Market Transactions Unlike traditional wholesale generators which are priarily connected to the high-voltage transission grid, any of the DER will be connected to the distribution networks. To ensure bulk power syste reliability, it is iportant to accurately represent DER ipacts at their corresponding interface to the bulk power syste, which is typically at the transission-level substation load bus associated with that distribution network. Achieving these key objectives will facilitate the integration of dispatchable DER into the NYISO s wholesale arkets. The NYISO also hopes to achieve a better understanding of the iplications nondispatchable resources have on wholesale load requireents in a future with deand-side aniation. The NYISO envisions that those resources capable of participating in its arkets will do so directly or via Distributed Energy Resource Roadap 14

15 third-party aggregation (including potentially via the DSP providers envisioned in the New York State PSC s REV recoendations) such that saller resources (e.g., those resources less than 100 kw) can be aggregated in a coordinated fashion to respond to price signals in support of bulk syste needs. The NYISO also anticipates that the integration of non-dispatchable DER will require new forecasting and planning tools to easure the ipact of non-dispatchable activity in order to continue operating the bulk syste in an econoically efficient anner. Such tools include solar forecasting, enhanced counications and advanced etering to facilitate increased data exchange and collection, and enhanced coordination with utilities to account for DER investents over a long horizon and the ipacts on resource adequacy and transission security. VI. Integrating DER Integrating dispatchable DER will expand opportunities for eligible resources by opening wholesale electricity arkets to technologies, or cobinations thereof, whose participation is liited under the NYISO s existing arket rules. Specifically, five types of resources will be enabled to participate in the NYISO s Energy, Capacity, and Ancillary Services arkets: 1. Load-only resources end-users that odulate their energy usage in response to a NYISO dispatch signal strictly through load curtailent easures; 2. Load with generation end-users capable of dispatching behind-the-eter generation resources, suppleented with load curtailent, to odulate their energy withdrawals and potentially inject energy into the grid in response to a NYISO dispatch signal; 3. Load with storage end-users capable of dispatching behind-the-eter storage resources, suppleented with load curtailent, to odulate their energy withdrawals and potentially inject energy into the grid in response to a NYISO dispatch signal; 4. Load with generation and storage end-users with a cobination of behind-the-eter generation, storage and/or load curtailent that can odulate the facility s energy withdrawals and potentially inject energy into the grid in response to a NYISO dispatch signal; and 5. Counity distributed generation. 18 The reaining sections of this roadap further describe concepts that ust be enabled in order to achieve the key objectives associated with ore fully integrating DER into the NYISO s wholesale arkets. The DER progra will treat distributed resources coparably with other wholesale arket resources, ore fully integrating the with Energy and Ancillary Services arkets, while awarding payents reflective of the perforance capabilities of the resources. Creating a viable echanis for DER to participate in arkets on an econoic basis offers advantages to NYISO arkets as well as participants. Aniating these resources will iprove econoic efficiency by reducing the need to call high-cost peaking generation. At the sae tie, DER operating in response to econoic signals can work to shift grid-based electricity consuption to off-peak hours, creating the potential for greater stability in prices throughout the day by flattening the load. In this sense, the NYISO s vision for dispatchable DER integration aligns well with REV in that it offers the potential to engage or aniate certain consuers in ways that support ore optiized grid utilization while helping these consuers better anage their own 18 Use cases for each of these resource types are located in Appendix A. Distributed Energy Resource Roadap 15

16 energy needs and costs. The potential to iprove grid utilization of existing infrastructure ay help to avoid expensive capital investents that ight otherwise be needed to eet peak deands over relatively few hours during the year. Figure 7 - Future Wholesale DER Participation The NYISO is not proposing to change the existing SCR progra, EDRP, or BTM:NG Resource rules in conjunction with this Roadap at this tie. The NYISO does not propose to add any new rules for LSE use of load odifiers to reduce Load and capacity obligations, nor is it altering existing Price- Capped Load Bidding rules in conjunction with this with this Roadap at this tie. On Noveber 17, 2016 FERC issued a Notice of Proposed Ruleaking (NOPR) on Electric Storage Participation in Markets Operated by Regional Transission Organizations and Independent Syste Operators that included proposed rules for DER. 19 The NOPR describes FERC s current vision for the developent of rules regarding DER in the organized arkets. The NYISO recognizes that soe of the proposals contained in this Roadap do not perfectly align with those contained in the NOPR. FERC s decisions in that ruleaking proceeding ay ultiately ipact the NYISO s final arket design. The NYISO is and will continue onitoring this proceeding and will revisit specific areas of the dispatchable DER arket design if necessary. 19 Electric Storage Participation in Markets Operated by Regional Transission Organizations and Independent Syste Operators, Notice of Proposed Ruleaking, 157 FERC 61,121 (Nov. 17, 2016). Distributed Energy Resource Roadap 16

17 VII. Aggregation and Modeling The NYISO recognizes that allowing Market Participants to aggregate individual DER to eet wholesale arket eligibility and perforance requireents is beneficial to both arket participants and the arkets. The NYISO proposes to aggregate DER siilar to its existing deand response progras, with certain odifications to reduce the iniu aggregation size and to liit the geographical footprint of aggregations to less than a Load Zone. Each aggregation is expected to be odeled and represented by a PTID in the NYISO systes. 20 A. DER Aggregation and Aggregators The rules related to DER aggregation will be the foundation upon which the reaining concepts and rules are built, and will be the first concept developed in the arket design process. As part of the effort to open the wholesale arkets up to all resource types, the aggregation rules will be technology agnostic. Therefore, a single DER aggregation could include a heterogeneous ix of different technologies such as load reduction, generation, and storage technologies that, when cobined, eet NYISO dispatch instructions. The NYISO currently does not believe that aggregations ust be hoogeneous (i.e., consisting of DER with the sae technology), but the NYISO will explore whether hoogenous aggregations can provide additional or different services than heterogeneous aggregations and therefore be valued differently. This will be explored further in the arket design process. We expect to allow DER aggregations of at least one resource. The DER Coordination Entity (DCE) will be the Market Participant interfacing with the NYISO. A DCE ay be a direct custoer, a third-party aggregator (siilar to a Responsible Interface Party in the SCR Progra), or a DSP. B. Granularity Unlike the traditional wholesale generators, which are priarily connected to the transission grid, any DER will be connected to distribution networks. To ensure bulk power syste reliability, it is iportant to accurately represent DER ipacts at their corresponding interface to the bulk power syste, which is typically at a transission node (substation load bus transforer/ptid) associated with a distribution network. Therefore, we propose at this tie, and subject to further study and developent in the stakeholder process, to liit the geographical footprint of DER aggregations to only those resources connected to the sae bulk transission node. This geographical liit to DER aggregations will help ensure DER copensation in the wholesale arkets reflects the locational and teporal value of the DER aggregation on the bulk power syste. Figure 8, below, is an exaple of a transission substation with two transission nodes, where the transission nodes are at each of the two step down transforers. 20 The NYISO updates its power syste odel on ultiple occasions throughout the year days advanced notice is typically required in order for a new resource to be incorporated into the power syste odel. Distributed Energy Resource Roadap 17

18 Figure 8 - Transission Substation with two transission nodes Aggregating DER on a broader level (such as zonally) could create operational issues. To illustrate this point, consider two generators connected on the opposite ends of a constrained transission line (as depicted in Figure 9). Due to the constraint, injections fro Generator 1 will further aggravate the overloaded transission line. Injections fro Generator 2, however, will help alleviate the constraint. In this exaple, to effectively and efficiently anage the constraint the NYISO would dispatch Generator 1 and Generator 2 separately (i.e., dispatch Generator 1, down and Generator 2 up). Figure 9 - Exaple of DER Dispatch If Generator 1 and Generator 2 were aggregated, they would be odeled and dispatched as an aggregated single unit in the NYISO syste. If the aggregation is dispatched up, the constraint will get Distributed Energy Resource Roadap 18

19 further aggravated due to injections fro Generator 1. If the aggregation is dispatched down, NYISO would not be effectively using Generator 2 to relieve congestion. The NYISO believes granular onitoring and control of DER aggregations at the transission substation load bus level is needed to effectively and efficiently anage transission syste congestion and reliability. Therefore, the NYISO proposes that dispatchable DER aggregation boundaries to be liited to all DER interconnected to, and having direct ipact on, the sae transission substation load bus. C. Sizes and Types Aggregations represented by a DCE will be known as a DCE Aggregation (DCEA). The NYISO is not proposing a iniu size restriction for the individual DER that are part of the DCEA, however DCEAs ust be a iniu of 100 kw in total size. DCEAs will be allowed to participate in Capacity arkets and be able to set Capacity prices. The NYISO runs Security Constrained Econoic Dispatch (SCED) noinally every five inutes. SCED is a coplex atheatical optiization to dispatch resources to eet load for the least total production cost while respecting transission constraints. Adding a ultitude of saller resources below a certain size to this already coplex proble adds significant coputational tie with each sall resource having little to no ipact on the total production cost. The NYISO believes this iniu DCEA size appropriately balances the additional coputational coplexity of integrating sall resources with the benefits to total production cost. The NYISO will integrate DCEAs based on the service provided: 1. Energy, Operating Reserves and/or Regulation DCEAs that are 1 MW or greater will be eligible to provide Energy, Operating Reserves and/or Regulation. DCEAs that are qualified to provide Operating Reserves and/or Regulation are expected to be treated and odeled as a single PTID for scheduling and optiization purposes. Such DCEAs will be optiized by SCED, and they will be eligible to set prices in NYISO s Energy, Operating Reserves and/or Regulation arkets. 2. Energy Only DCEAs that are less than 1 MW can still participate in the NYISO wholesale arket but can provide energy only. In order to axiize DER participation opportunities while iniizing ipact to SCED, the NYISO will cobine the offers of all DCEAs less than 1 MW into a Super Aggregation (SA) with the offers of all other such DCEAs at the sae transission node. SAs will be optiized by SCED, and they will be eligible to set prices in NYISO s Energy arkets. After the schedule for the SA is deterined, NYISO will disaggregate the schedule aong individual DCEA. Distributed Energy Resource Roadap 19

20 Figure 10 - Concept for DCEAs in Energy, Operating Reserves and Regulation D. Coordination between the NYISO, Utilities, and DCEs In order to facilitate the participation of DER in the NYISO s wholesale arkets, it will be iportant that the NYISO establish sealess coordination practices with the NY utilities and the DCEs. This will ensure that the participation of DERs in the wholesale arket does not coproise the reliability or safety of the transission and distribution systes. To allow for the accurate accounting of individual DER on the syste and to ensure that all parties are aware of potential obligations for the DER and potential risks to the grid, the NYISO will establish registration processes that coordinate with the utilities and DCEs. This will allow the NYISO to verify that all DER part of the DCEA are capable of providing services to the NYISO and accurately ap the DCEA to the correct transission location. Additionally, this coordination will provide the utilities an opportunity to (i) review all individual DER, (ii) assess the DER ipact on the distribution syste, including apping the individual coponents of the DCEA to the correct distribution location, and (iii) infor the NYISO if the DER or DCEA will present any reliability risk to the distribution syste. Further coordination will be required between NYISO, the utilities, and the DCEA to facilitate realtie electric syste reliability and iproved electric syste planning processes. For exaple, the NYISO will expect that any offer provided by the DCEA account for any operational restrictions of the DER in the aggregation, as well as the distribution syste that the DCEA is connected to. This obligation will require the DCEA and the utility to work closely with the NYISO ensuring that any dispatch instruction provided by the NYISO is a valid and executable instruction by the DCEA and aintains safe and reliable operation of the distribution syste. Distributed Energy Resource Roadap 20

21 VIII. Measureent and Verification DER participating in the NYISO s Energy or Ancillary Services arkets will be scheduled and dispatched in a anner coparable to traditional Generators. DER will also be held to coparable copliance obligations as traditional Generators. Failure of DER to perfor as scheduled ay result in higher costs to consuers and ay ipact grid reliability. Therefore, the NYISO will work to develop perforance criteria and copliance etrics for dispatchable DER. These criteria and etrics will be developed once greater clarity and consensus is reached on arket rules related to aggregation. The NYISO has identified the following high-level topics it expects to address ore fully in stakeholder discussions. A. Metering and Teleetry Requireents 1. Real-tie Teleetry for DCEA DCEAs will be required to have 6-second real-tie teleetry. The NYISO s current eter data infrastructure supports PTID-level data, priarily collected through real-tie teleetry for real-tie operations and onitoring functions, and after-the-fact uploads to support settleent. The integration of dispatchable DER into Capacity, Energy, and Ancillary Service arkets is expected to follow a coparable odel. DCEAs will be required to provide PTID-level (i.e., aggregation level) real-tie teleetry data for operations and onitoring functions. More granular circuit location data ay be requested by the utilities as outlined in the individual utility interconnection requireents and the Suppleental Distributed Syste Ipleentation Plan (SDSIP). In addition, DCEAs will be required to provide, and after-the-fact eter data fro individual resources for settleents which ay not be as granular as the 6-second real-tie requireent. To ensure that NYISO and the utility have situational awareness, all real-tie teleetry counications will be either through the utility (who then counicates with the NYISO), or, alternatively, to the utility and NYISO at the sae tie. 2. After-the-fact Meter Data for DER All DCEAs will be required to have revenue-quality (iniu of ANSI C12 hourly interval etering) eter data for settleent and billing purposes, and for quality assurance of real-tie data. The NYISO will use the sae tielines for after-the-fact eter data subission for DCEA as that of traditional generators. Meter data for settleents and billing will be collected per DCEA. The NYISO will require DCEs to provide the net eter data for each DER for verification purposes. If such a DER has on-site generation and/or storage, the NYISO will consider requiring afterthe-fact eter data fro two of the following: net eter, load eter, and generator/storage eter. The NYISO recognizes that the New York utilities are undertaking an effort to install Advanced Metering Infrastructure (AMI) eters in their service territories and NYISO intends to leverage this eter data to the extent possible. 3. DCEA Sapling The NYISO is considering peritting aggregations of less than 1 MW to use real-tie teleetered data fro a saple set (at least 30%) of DER in a DCEA. This is priarily intended for residential and sall C&I custoers. The purpose of sapling is to provide a representative view of the real-tie perforance of the entire DCEA without subjecting sall DER to onerous etering requireents. The NYISO will explore whether this sapled data can be used for settleent, billing, audit/verification and teleetry. The feasibility and associated requireents of this approach will be developed as part of the detailed arket design phase of this initiative. Distributed Energy Resource Roadap 21

22 4. Meter Data Service Providers The NYISO s existing deand response progra rules require deand response resources to have the utility or a New York PSC-certified Meter Data Service Provider or Meter Service Provider read the interval eters used for wholesale arket participation. The NYISO recognizes that this is a potential barrier to entry for DER and will explore options to address this barrier as the DER progra evolves. This will be evaluated as part of the 2017 study on eter data requireents for DER. B. Baselines A baseline is the estiated aount of energy use expected by a facility if a load reduction had not occurred in response to the NYISO instruction or schedule. The NYISO currently uses baselines to easure perforance of deand response resources, and expects to use baselines for DER that are net loads. 1. Recoendations fro the 2014 Baseline Study The NYISO and DNV GL conducted a Baseline Study in 2014 to investigate baseline ethodologies for the SCR progra. 21 Notably, the study recoended that the Average Coincident Load (ACL) baseline should be used to deterine the upper liit on the aount of capacity a SCR could offer, and that a Custoer Baseline Load (CBL) should be used to easure resource perforance in the Energy arket. The NYISO plans to draw on conclusions of that study for dispatchable DER relying on a baseline ethodology to easure perforance. DER participating in the Ancillary Services arket will be easured by the current DSASP baseline to evaluate perforance for the ancillary product. The NYISO will work on establishing detailed arket rules to easure the perforance of a net load DER that is siultaneously providing energy and reserve products. The study also recoended potential enhanceents for the CBL ethodology. The enhanceents were specifically related to the exclusion rules and the caps on in-day weather adjustents. The NYISO intends to incorporate these recoendations in the baseline ethodologies used for DER. 2. Baselines for Different Technology and Load Types The NYISO plans to adapt these general baseline ethodologies to accoodate different technologies and load types. For exaple, a CBL ethodology for a highly variable load ay be different fro the CBL ethodology for a load with a high load factor. The NYISO also recognizes that existing baseline ethodologies ay not accurately represent the load profile of sall custoer, weathersensitive loads, and intends to explore different baseline easureent ethodologies for such resources. Siilarly, the NYISO recognizes that the existing ethodologies ay not be appropriate for behind-the-eter energy storage devices and intends to evaluate baseline ethodology options that account for the unique characteristics of behind-the-eter energy storage. Although the NYISO intends to use CBL ethodology to easure Energy arket perforance in instances when DER are net-loads (i.e., consuing energy fro the grid) and net eter data when DER are net injectors (i.e., injecting energy into the grid), the NYISO is evaluating whether baselines ay still be needed for net injectors in special situations. 21 NYISO SCR Baseline Study, New York Independent Syste Operator, Inc. (prepared by DNV KEMA, Inc.) (Mar. 2014), urce_icap_progra/nyiso%202013%20scr%20baseline%20study%20report-final.pdf. Distributed Energy Resource Roadap 22

23 C. Settleents The NYISO expects DER settleents to be coparable to the existing settleents processes for traditional generators. DER will be easured at their applicable PTID and will be subject to the sae settleent tielines for eter data subissions as that of traditional generators. The NYISO currently has special settleent provisions for the electricity consued to charge the storage devices participating as Liited Energy Storage Resources (LESR). The NYISO will consider evaluating if additional settleent rules would be required for the electricity consued to charge behindthe-eter storage devices participating in the dispatchable DER progra. IX. Perforance Obligations A. DER that are ICAP Suppliers Traditional generators participating in the NYISO Capacity arket are required to subit Day- Ahead Market bids for at least the aount of capacity they sold in the Capacity arket. The NYISO proposes to require dispatchable DER to subit Day-Ahead Market bids for at least the aount of capacity they sell in the Capacity arket. At this tie the NYISO believes DER desiring full capacity payents will be expected to be capable of delivering its full capacity for a full 24 hour period, coparable to what is expected of traditional generators. The NYISO recognizes that soe DER will be unable to deliver capacity in all 24 hours due to its physical characteristics (e.g., DER aggregations consisting of load curtailent assets that have a typical 9 to 5 load profile). These DER are still valuable to the syste, but perhaps less than a full 24 hour DER. In order to deterine the varying degree of operational benefit that different DER can provide to the grid, the NYISO intends to develop options for service tiers that dispatchable DER can provide to help the NYISO eet its daily load. The NYISO currently proposes three such tiers - full day service, on-peak service and daytie peak service, where: 1. Full day service is the provision of wholesale service for all 24 hours in a day; 2. On-peak service is the provision of wholesale service to help the NYISO eet its load during early orning through late evening hours; and 3. Daytie peak service is the provision of wholesale service to help the NYISO anage its daily peak hours. Consistent with the key principle of aligning payents with syste requireents, the NYISO believes that Capacity arket copensation coensurate with a DER s capabilities and perforance is appropriate, and, therefore, the NYISO expects to develop arket rules through the stakeholder process to prorate capacity and associated capacity payents. As part of this effort, the NYISO also plans to look at establishing a window of tie in which the DER ust offer for those providing fewer than 24 hours of service. This window is expected to be consistent with the service that DER is intended to perfor for the NYISO to balance supply and deand. Distributed Energy Resource Roadap 23

24 Figure 11 Exaple of Winter Load Figure 12 Exaple of Suer Load Distributed Energy Resource Roadap 24

25 The purpose of NYISO s DAM is to procure enough supply to eet the load bid in the NYISO s DAM. All 10-inute-capable traditional generators east of Central East have an obligation to offer into the real-tie arket. The NYISO intends to apply the sae obligation to dispatchable DER to offer in the real-tie arket. If ore supply resources are required due to syste condition changes in real-tie, NYISO operations can initiate its Suppleental Resource Evaluation (SRE) process. All NYISO capacity resources are eligible for selection and are required to respond to a SRE request in real-tie regardless of whether they received an award/schedule in the DAM. Consistent with the obligations of traditional generators, DER with a Capacity obligation ust also be available in real-tie for the aount of capacity sold into the capacity arket. Because SRE is a anual operator action and inherently involves operator judgent, it does not guarantee lowest production cost. Given the expected size and nuber of DER, it is operationally challenging to SRE these resources in real-tie if they do not clear in the DAM, and therefore will necessitate additional operator tools to facilitate the ost econoic SRE process for such resources. The NYISO also intends to evaluate whether to extend these obligations to the Day-Ahead Reliability Unit process as well. As part of this effort, the NYISO also plans to evaluate the feasibility of arket software and NYISO syste operators aking coitent decisions for DCEAs. This could potentially involve evaluation of DER-specific thresholds of existing offer paraeters, such as iniu down tie, 22 iniu run-tie, response rate, and to introduce a new DER offer paraeter, axiu coitents per day. The threshold for the iniu run-tie for DER is the iniu tie a resource will be coitted by the Real-Tie Coitent software. Response rate is the speed with which a resource can reach its upper operating liit within the iniu run-tie. DER will be required to be available during all intervals in which they subit offers to provide wholesale service. If DER is derated or unavailable, it ust report its unavailability to NYISO. Given the expected size and nuber of DER, the NYISO expects to odify its outage software to accoodate DER. Because aggregations are likely to include ultiple technologies, the NYISO expects to develop arket rules that will allow DCEs to anage the perforance fro various resource types in order to eet the requireents discussed above. For exaple, an aggregation with a 24-hour capacity obligation ight rely on load curtailent assets to provide perforance during the day and generation assets when sufficient load curtailent capability is not available to eet the aggregation s obligation. In another scenario, if an aggregation is scheduled for four hours, the DCE ay choose to eet its obligation by discharging storage devices for two hours and by load curtailent for the reaining two hours. Iportantly, the NYISO intends to establish perforance obligations at the aggregation level, and not at individual resource level. 22 Miniu down tie in the context of load curtailent assets would ean the tie between consecutive interruptions. Distributed Energy Resource Roadap 25

26 Figure 13 Capacity Resource Obligations NYISO has received stakeholder feedback requesting consideration of additional perforance attributes when we begin the arket design process. Stakeholders have indicated such attributes include service duration, operational flexibility, and response rate. The NYISO anticipates exploring these three additional attributes, as well as others recoended by stakeholders. B. DER that are not ICAP Suppliers DER that are not ICAP Suppliers ay offer into the Energy and Ancillary Services arkets and be scheduled by the NYISO. DER that are participating only in the Energy and Ancillary Service arket will be expected to have siilar obligations as traditional generators when they are only participating in the Day-Ahead and/or Real-Tie Markets. X. DER Integration into Syste Planning Integration of DER into the NYISO s Energy, Ancillary Services, and Capacity arkets will likely require changes to the existing planning, interconnection and forecasting rules and procedures. These changes, however, will be dependent on arket design details that will be deterined through the upcoing stakeholder process. Once the NYISO has ore clarity and consensus on these details, revisions to existing rules and process will be proposed. XI. Siultaneous Participation in Retail/Distribution-Level Progras The NYISO expects that any DER will be connected to the distribution networks and capable of providing distribution level services to the extent its utility seeks such services. The NYISO recognizes that DER would like to provide wholesale service and retail service, thereby accessing ultiple revenue streas. With the exception of certain deand response progras, siultaneous participation is a new concept to the NYISO, and is being explored to deterine ipacts to the arkets and grid operations. Distributed Energy Resource Roadap 26