Wholesale Power

by Caryl Terrell

Flick a switch, press a button, swipe a screen—power at our fingertips. It comes in through a wire attached to the home, office or shop, and somewhere out there some company, organization or utility is generating the electricity we take almost for granted, typically by burning coal, oil or natural gas, fossil fuel resources that come from out of state. 

But our clean energy future depends upon access to home-grown locally generated renewable energy contributions from windmills, solar panels, and energy generating/saving innovations like electric cars, energy efficiency projects, and intermittently produced electricity stored in batteries or other equipment that acts like batteries (gyro, pumped storage, underground compressed air storage) that can be used to replace electricity produced through fossil fuels. 

So how do we get clean energy electrons instead of those generated by burning fossil fuels? A quick peek into the wholesale regulatory world that presides over those who generate power and those who resell that power to customers as retailers will help us grasp the basics. It will leave most of us swimming in a sea of acronyms. But here goes:

Our physical electron-moving sources (like solar panels and windmills) along with some other innovations that let us formalize and marketize the opportunity to avoid fossil-fuel electricity are generally considered Distributed Energy Resources (DERs). Wisconsin’s high voltage transmission system (grid) is operated and monitored for reliability by the Midcontinent Independent System Operator (MISO). How MISO deals with DERs and the sale of electricity in a wholesale power market is regulated by the Federal Energy Regulatory Commission (FERC). In 2008, FERC Order 719 explicitly prohibited sale of distributed and intermittent energy supply (aka DERs) on the wholesale market. 

Now, FERC has just made a big attempt to level the energy playing field with respect to DERs with two new policy orders, Order 2222 adopted in October 2020 and Order 2222-A issued March 18, 2021. Together they remove current barriers to using DERs on the grid. There is a chance these two FERC policies—Orders 2222 and 2222-A—will be implemented in Wisconsin in the coming year or so. This could really speed up Wisconsin’s transition to clean energy.

For instance, now Madison Gas and Electric (MGE) can only sell locally generated renewables to their customers. But in the future MGE might have the option to sell on the wholesale market an aggregation of locally generated renewable energy wind and solar as well as the intermittent distributed generation from battery storage, demand response, energy efficiency projects, thermal storage and electric vehicles batteries and their charging equipment.

This opportunity increases the portfolio value of MGE’s past investments in public-private projects like the solar array at the Dane County Airport, Middleton's Morey Air Field, and the solar panels on the roof of the Middleton Police Building because FERC no longer excludes these energy sources from being sold on the wholesale market. MGE and other Wisconsin utilities will also get an added incentive to increase investments in public-private renewable energy facilities and the Focus on Energy Program. And that would be a win-win for all.

Learn more and have your questions answered when you join us Tuesday, April 13, for the League’s virtual Public Issues Forum, Watts Ahead—Financing Our Energy Future, 7–8 p.m. Register here!

• How does the history of the electricity sector contribute to today’s current challenges?

• How can everyone benefit equally/fairly from clean energy and energy efficiency? 

• What specific policies will amp up our shift to a carbon-free energy system?

FOR MORE INFORMATION:

CPower offers a primer for understanding FERC Order 2222, which many people describe as a landmark achievement in the history of the energy industry.

Open Access offers an audio interview with Chairman Chatterjee and Commissioner Glick, explaining what FERC Order 2222 will mean for bringing new technologies and resources online, making the market more efficient and making the grid more reliable.

FERC Order 2222, issued September 17, 2020. 

Using Distributed Energy Resources, A How-To-Guide for Federal Facility Managers. Office of Energy Efficiency and Renewable Energy.

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