“Clark, that’s the gift that keeps on giving the whole year . . . “
FERC passed a ruling on December 1 allowing Energy Efficiency Resources (EERs – think LED upgrades) to get wholesale capacity market credit without encumbrance from a RERRA. What does this mean?
It’s that time of the year! As my family cozied up in front of our favorite holiday movie, I was feeling like the FERC handwringing on grid resiliency was going to be a bit like Clark Griswold getting the Jello of the Month Club Membership for his annual Christmas bonus. I could relate to Clark’s Christmas gift backlash but with Rick Perry in mind . . .
When, what to my wondering eyes should appear . . . but a Federal Energy Regulatory Commission (FERC) ruling on December 1 allowing Energy Efficiency Resources (EERs – think LED upgrades) to get wholesale capacity market credit without encumbrance from a RERRA! Ahhhh, yes, there’s nothing like a FERC ruling and a set of solid TLAs to get me in the holiday spirit!
Here’s the skinny on this gift that truly keeps giving the whole year through:
- By Voltus estimates, there are about 2,000 MWs of EE projects that would qualify for up to four years of capacity market cash earnings that haven’t yet been monetized. This amounts to about $400 million in cash available to these commercial and industrial customers that goes right to their bottom line.
- FERC has jurisdiction to invoke behind-the-meter assets into wholesale energy markets – this includes demand response, onsite generation, energy storage, and energy efficiency. This is granted to FERC in the Federal Power Act, sometimes to the chagrin of states’ jurisdiction over retail energy. A lot of political and regulatory wrestling has resulted over the years on this.
- For example, the 2016 US Supreme Court ruling on FERC Order 745 was partially supported on the notion that, for demand response resources being invoked into wholesale energy markets, states had an opt-out provision that allowed RERRAs (relevant electric retail regulatory authority -typically the state PUC/PSC but also including munis and coops) to bar DR from taking advantage of wholesale energy market programs. FERC “granted” states this provision . . . more to come on the notion of “granted” below.
- The Advanced Energy Economy sought clarity on this landmark ruling to ensure that EERs (energy efficiency resources) could not be banned by a RERRA from capturing wholesale capacity market credits, under the notion that EERs are operationally different than DR resources. Good on you, AEE! FERC’s December 1 ruling provides clarity on this and makes explicit that EERs can’t be barred by a RERRA. This is big news because large commercial and industrial customers have spent billions of dollars on energy efficiency projects that have amounted to thousands of MWs of permanent load reduction, all of which can now be monetized if the energy efficiency measure a) is in a wholesale energy market where FERC has jurisdiction and b) the measure hasn’t already been claimed by a utility and/or hasn’t already been monetized where a RERRA does not bar it from being monetized.
- What’s more, the FERC just opened a big door for DR. If FERC really wanted to make wholesale markets “just and reasonable” it would revoke its “grant” to RERRAs that allow them the right to opt-out of allowing demand response to come to market unencumbered. That would truly level the wholesale energy market playing field once and for all while unlocking the full value that DR can offer to market participants, unleashing billions more per year in bottom line benefits to all energy consumers . . . residential, commercial, and industrial alike.
I have a dream of Rick Perry doing his best impression of Frank Shirley . . . come on, Rick, nobody wants coal in their stocking, not even the biggest buyer of coal!
This development is what Voltus is all about . . . less energy, more cash. If you want to take full advantage of this immediate opportunity, reach out and let us know!
Hap, hap, happy holidays!!!
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