The U.S. energy grid struggles with inflexibility and inefficiency, relying on centralized power plants and expensive, polluting peaker plants to meet demand spikes. Renewable energy sources like solar and wind add complexity due to their intermittent nature. Order 2222 from the Federal Energy Regulatory Commission (FERC) offers a solution by allowing distributed energy resources (DERs)—such as rooftop solar, EV batteries, and industrial demand response—to participate in wholesale energy markets. However, DERs face barriers like complex market rules and lack of aggregation mechanisms.

How DER Aggregation Could Work

One way to address these challenges could be by pooling small-scale DERs into larger, grid-scale resources. For example, a platform could aggregate thousands of home solar panels or EV batteries, allowing them to bid collectively into energy markets. This could provide utilities with flexible, low-cost alternatives to peaker plants while enabling DER owners to monetize underutilized assets. Initially, the focus could be on commercial and industrial demand response, which requires no new hardware, before expanding to residential solar and storage.

Stakeholder Benefits and Incentives

Different groups stand to benefit from this approach:

• DER owners could earn revenue from their solar panels, batteries, or demand-response capabilities.
• Utilities and grid operators could access cost-effective, flexible resources to balance supply and demand.
• Consumers might see lower energy prices due to reduced reliance on expensive peaker plants.
• Policymakers could advance climate goals by integrating more renewables into the grid.

Execution and Challenges

A pilot program with a single grid operator (like PJM or CAISO) could test the feasibility of DER aggregation. Key challenges include navigating varying market rules across regions and ensuring reliable participation from DER owners. Potential solutions might involve standardized APIs to connect DERs to a central platform and offering guaranteed minimum payments to incentivize participation.

While companies like Enbala and Voltus already work in this space, there may be opportunities to expand DER participation beyond demand response and into long-term power contracts. Success could depend on regulatory expertise, early partnerships with grid operators, and proving the reliability of aggregated DERs at scale.