The North American Energy Standards Board on February 7 will hold a kick-off meeting for the development of a standardized model contract to facilitate the acquisition of distribution services from distributed energy resource aggregations.
The meeting is being held at the request of the U.S. Department of Energy and the request “is supportive of the U.S. DOE’s activities to work with the electric industry to identify challenges and proactively address grid transformation issues as part of the Distribution Grid Transformation Program,” NAESB said.
To initiate the effort, during the kick-off meeting, Joseph Paladino, Program Manager, DOE’s Office of Electricity, will provide background on the related program activities that have been underway at the DOE that resulted in the request submitted to NAESB and will describe how the development of a model contract can provide clarity and enhance the scalability of DER projects.
Per the DOE request, a significant market barrier inhibiting the provision of distribution services from DER aggregations is the lack of a standard contract that specifies discrete services and related performance expectations from aggregators, NAESB said.
“Currently, contracting practices can widely vary between jurisdictions and even utilities within the same state. The NAESB standard distribution services contract will incorporate terms and conditions, developed through a consensus-based process, that align with key aspects of state policies while providing flexibility for regulators and trading partners to adapt to unique circumstances,” NAESB said.
The intent is to create an agreement with broad applicability that will support consistency in contracting terms and definitions, minimize uncertainties in the contracting process, and reduce costs associated with counterparty negotiations.
The NAESB process, open to members and non-members alike, provides for participation by any interested stakeholder regardless of market segment, “making NAESB a uniquely situated organization to incorporate cross-market considerations into a model contract.”
Per the request, this will encourage market and operational coordination across distribution and wholesale interactions, enabling more seamless participation for DER aggregators seeking to participate in wholesale markets, consistent with FERC Order No. 2222 requirements, according to NAESB.
As described in the U.S. DOE Pathway to Commercial Liftoff: Virtual Power Plants, the use of VPPs comprised of DER aggregations could result in upwards of $10 billion in annual savings of grid costs.
“In recognition of the crucial role VPPs may play in the energy landscape, the DOE issued an urgent call to action to accelerate commercial viability, noting that the expansion of VPPs is reliant on increased penetration of DER aggregations,” NAESB said.
