How California is bringing DER aggregation to wholesale markets
Third party aggregators were given the green light to bid into the CAISO market for the first time
pite getting off to a slow start, California has been pushing forward quickly with demand response.
While its largest power providers are executing a variety of standard programs and cutting edge pilots, utilities will make awards later this month in the most advanced and complicated demand response auction yet.
The Demand Response Auction Mechanism (DRAM) pilot is designed to do many things, but the primary function is to help test utilities’ ability to procure aggregated demand response for resource adequacy. For the first time in the state’s history, third-party aggregators will be able to bid distributed energy resources into the California ISO market next year, potentially profiting in the wholesale day-ahead market as well as from capacity.
In many ways, the auction represents a marketplace laboratory where data aggregators, solar companies and storage providers will put a price on the power they believe they can provide. The structure envisions a wide range of resources — from residential PV to commercial storage projects — and there is strong interest in the value that bidders will place on their capacity.
California’s three largest utilities were directed to procure at least 22 MW in this auction — 10 MW each for SoCal Edison and PG&E, and 2 MW for San Diego Gas & Electric. And at least 20% of the resource must come from residential resources.
Bids were submitted last month and are now being evaluated by the investor-owned utilities. Winning bidders will be notified by Nov. 30.
For now, most of the utilities are playing it close to the vest, keeping the bids confidential.