US seeks to standardise acquisition of DER aggregation services

The North American Energy Standards Board (NAESB) is looking to develop a standardised contract model for the acquisition of distribution services from DER aggregations.

At the request of the US Department of Energy (DoE), the Board held a kick-off meeting on February 7, 2024, for the contract’s development.

According to the Board in a release, the lack of such a standard contract marks a significant market barrier inhibiting the provision of distribution services from DER aggregations. Said contract would specify discrete services and related performance expectations from aggregators.

Michael Desselle, NAESB’s chairman, stated: “We appreciate the US DoE’s recognition of the impact NAESB model agreements have had in improving transactional efficiencies within wholesale markets and for competitive retail energy services.

“There is a growing need for standards to support integration and interoperability of DERs and DER aggregations, and the framework established by a NAESB model distribution services contract may lead to future standards development that can improve data sharing practices and enhance cybersecurity.”

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Currently, contracting practices can widely vary between jurisdictions and even utilities within the same state.

The NAESB standard distribution services contract would aim to 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.

The intent, states the Board, would be to create an agreement with broad applicability that will support consistency in contracting terms and definitions, minimise uncertainties in the contracting process and reduce costs associated with counterparty negotiations.

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.

According to the US DoE Pathway to Commercial Liftoff: Virtual Power Plants, cited by NAESB, 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 US DoE issued an urgent call to action to accelerate commercial viability, noting that the expansion of VPPs relies on increased penetration of DER aggregations.