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Federal Register / Vol. 86, No. 59 / Tuesday, March 30, 2021 / Rules and Regulations
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squarely within the Order No. 719 optout, as set forth in our regulations, because they are not solely aggregations of retail customers.70 In addition, for the reasons that follow, we find that extending the Order No. 719 opt-out to demand response resources in heterogeneous distributed energy resource aggregations would undermine the potential of Order No. 2222 to break down barriers to competition, interfering with our responsibility to ensure that wholesale rates are just and reasonable.71 Accordingly, we clarify that the Order No. 719 opt-out does not apply to demand response resources that participate in a heterogeneous distributed energy resource aggregation.
24. One of the principal advantages of distributed energy resource aggregations is their ability to take advantage of the different resources operational attributes and complementary capabilities.72 As the Commission explained in Order No. 2222, permitting distributed energy resource aggregations to participate in the RTO/ISO markets may allow these 70 Compare 18 CFR 35.28g1iii expressly limiting the application of the Order No. 719 optout to an aggregator of retail customers that aggregates the demand response of the customers of utilities, with 18 CFR 35.28b10, g12
requiring RTOs/ISOs to establish market rules applicable to entities that aggregate one or more resources located on the distribution system, any subsystem thereof or behind a customer meter; see also Order No. 2222, 172 FERC 61,247 at P 114
finding that distributed energy resources may include, but are not limited to, resources that are in front of and behind the customer meter, electric storage resources, intermittent generation, distributed generation, demand response, energy efficiency, thermal storage, and electric vehicles and their supply equipment.
71 See Order No. 2222, 172 FERC 61,247 at P
142 finding that the requirement for RTOs/ISOs to allow heterogeneous aggregations will enhance competition in RTO/ISO markets by ensuring that complementary resources, including those with different physical and operational characteristics, can meet qualification and performance requirements; see also id. P 1 finding that existing RTO/ISO market rules are unjust and unreasonable in light of barriers that they present to the participation of distributed energy resource aggregations in RTO/ISO markets, which reduce competition and fail to ensure just and reasonable rates, P 3 finding that restrictions on competition can reduce the efficiency of RTO/ISO markets, potentially leading an RTO/ISO to dispatch more expensive resources to meet its system needs and that, by removing barriers to the participation of distributed energy resource aggregations in RTO/
ISO markets, the final rule will enhance competition and help to ensure that RTO/ISO
markets produce just and reasonable rates; see NARUC, 964 F.3d at 1189 finding that the Commissions decision not to include an opt-out in Order No. 841 was not arbitrary or capricious when the Commission considered the benefits of enabling broad electric storage resource participation to promoting just and reasonable wholesale rates, including the effect of increased competition and the promotion of diversity in technology types.
72 See, e.g., Public Interest Organizations Request for Rehearing at 2324.

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resources, in the aggregate, to meet certain qualification and performance requirements, particularly if the operational characteristics of different distributed energy resources in a distributed energy resource aggregation complement each other. 73 We agree with Public Interest Organizations that diverse aggregations that include demand response can provide capabilities that are valuable to the efficiency and reliability of the grid.74
For instance, the inclusion of demand response resources in a heterogeneous distributed energy resource aggregation can allow the aggregation to collectively deliver ancillary services that those resources would not otherwise be able to provide.75 The aggregation of demand response resources with other types of resources may also enable a distributed energy resource aggregation to collectively satisfy reliability needs in order to meet certain performance requirements.76 Accordingly, we conclude that extending the Order No.
719 opt-out to demand response resources that seek to participate in heterogeneous distributed energy resource aggregations would undermine one of the advantages of Order No. 2222.
25. Similarly, we find that interpreting the Commissions regulations to preclude certain demand response resources from participating in heterogeneous distributed energy resource aggregations would significantly undermine our goal of removing barriers to the participation of distributed energy resource aggregations in the wholesale markets.77 Distributed energy resource aggregations can be 73 Order
No. 2222, 172 FERC 61,247 at P 26.
Public Interest Organizations Request for Rehearing at 2324.
75 See Direct Energy Comments RM189 at 34
describing how the aggregation of a battery storage project with flexible load from industrial customer sites enables the REstore virtual power plant to provide frequency response services by efficiently managing between the two resources and dispatching on a second-by-second basis to respond to system needs.
76 See Exelon Comments RM1623 at 6
explaining that pairing a summer-only demand response resource, such as air conditioning load, with wind that blows more in the winter months can create an aggregated product that satisfies the reliability needs of PJMs Capacity Performance product citing PJM Interconnection, L.L.C., 162
FERC 61,159 2018; Icetec Comments RM189
at 56 explaining that allowing sites that mix load reductions and other types of distributed energy resources to offer their combined capability enables the delivery of full-year capacity to qualify as a Capacity Performance resource and allows rational energy and ancillary services offer stacks that combine relatively inexpensive resources with relatively expensive load curtailments.
77 See Order No. 2222, 172 FERC 61,247 at P 60
We find that the benefits of allowing distributed energy resource aggregators broader access to the wholesale market outweigh the policy considerations in favor of an opt-out..
74 See
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composed of a diverse range of different resource typesincluding energyefficient lightbulbs, distributed generation such as roof top solar, electric vehicles, and smart appliances.78 Ensuring that demand response resources can combine with other forms of distributed energy resources has the potential to increase both the number and the variety of distributed energy resource aggregations, thereby enhancing competition and furthering our mandate to ensure that Commissionjurisdictional rates are just and reasonable.79
26. In addition to enhancing competition, this diversity also facilitates these non-traditional resources ability to provide a wide range of services in RTO/ISO markets, as discussed above.80 We agree with Public Interest Organizations that applying the Order No. 719 opt-out to aggregations that contain a combination of demand response and other types of distributed energy resources could prevent distributed energy resource aggregators from incorporating the complementary capabilities of existing and future demand response technologies.81 Ensuring that demand response resources can participate in heterogeneous distributed energy resource aggregations throughout the country has the potential to enable significantly more such complementary aggregations, which will also help to break down barriers to the entry of emerging and future technologies, thus enhancing competition and contributing to ensuring just and reasonable rates.
27. Lastly, we also find that precluding demand response from participating in heterogeneous distributed energy resource aggregations would undermine the Commissions goal of ensuring a technology-neutral approach to distributed energy resource aggregations, which will ensure that more resources are able to participate in such aggregations, thereby helping to enhance competition and ensure just and reasonable rates. 82 Because we find that the Order No. 719 opt-out does not apply to heterogeneous distributed 78 See
id. P 114.
16 U.S.C. 824e.
80 See Order No. 2222, 172 FERC 61,247 at P
141 finding that limiting the types of technologies that are allowed to participate in RTO/ISO markets through a distributed energy resource aggregator would create a barrier to entry for emerging or future technologies, potentially precluding them from being eligible to provide all of the capacity, energy, and ancillary services that they are technically capable of providing.
81 See Public Interest Organizations Request for Rehearing at 2324.
82 Order No. 2222, 172 FERC 61,247 at P 26.
79 See
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