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The FERC Order 2222 DER Policy and Implementation Report delivers bi-monthly updates on policy and implementation activities related to FERC Order 2222 across the United States. This report is made available on the FERC2222.org website for stakeholder access.
The bimonthly FERC Order 2222 tracker report provides a summary of the latest developments in FERC Order 2222 and DER policy implementation across the United States.
The January 2026 FERC 2222 Tracker Report provides an overview of the progress and challenges in the implementation of FERC Order 2222, emphasizing the critical need for state-level action to address gaps in DERA/EDC communication protocols. The report highlights the importance of reliable communication between electric distribution companies (EDCs) and DER aggregators (DERAs) for seamless market operations, noting the absence of specific directives from FERC and RTO/ISO compliance filings. Key discussions include the operational coordination required to manage DER operations within aggregated markets, the potential use of tools like DER Registries for efficient data exchange, and the implications of non-performance due to communication issues. While steps are being taken at the state level, such as ongoing policy development and bi-monthly webinars for stakeholder education, no states have fully developed coordination frameworks as of early 2026. The report underscores the growing role of states and local regulators in defining these protocols and ensuring effective coordination amidst the complex dynamics of distributed energy resources (DERs) integration into wholesale markets.
FERC and several states took action on distributed energy resource (DER) policy, the implementation of virtual power plants (VPPs), and FERC Order 2222 in the last several months. A summary of the actions is listed below.
Electricity markets in the bulk grid are beginning to implement market mechanisms that support the procurement of flexible capabilities from wide range of technologies, including distributed energy resources (DERs). The flexibility of these resources will help counterbalance supply uncertainties from large-scale integration of variable renewable generation. To encourage development of distributed and aggregated market participants, FERC Order 2222 was issued in September 2020 to require each Independent System Operator (ISO) in the US to implement rules that enable broader participation from aggregations of DERs in the bulk market. The following paper first describes the generic design of ISO markets before introducing the new market participation rules that ISOs have proposed for compliance with Order 2222. The paper then describes how software performance issues may continue to affect the eligibility requirements and offer structures for DER aggregations participating in ISOs, noting that continued research on computational methods may help reduce burdens for DER integration. The prospects for transmission and distribution system coordination is second major issue discussed, which will require minor changes to existing processes in the short term. In the longer term, there is more opportunity for more wide-ranging reforms, such as the development of a Distribution System Operator (DSO) framework. Newly proposed market rules may affect how Transactive Energy Systems (TES) will help facilitate efficient formation of DER aggregations and operation of the individual DERs within an aggregation. Within the TES context, the challenge is to fully understand how resource eligibility and operational and planning coordination methods will affect the design and implementation of TES.
In September of 2020, FERC issued Order No. 2222, directing ISOs to adjust their long-standing tariffs and participation models to enable the operation of distributed energy resource (DER) aggregators in wholesale energy markets. The rule sought to bring wholesale markets under its jurisdiction up to speed with existing expansion of DERs across the United States and to capture the potential benefits that these technologies can provide. This report describes the implementation of FERC Order No. 2222 and the compliance plans that have been submitted so far, attempt to understand the potential impact the rule may have on distributed wind, and provide opportunities for future work to analyze and encourage deployment under these policy conditions. There is an information gap for the type of market interactions distributed wind may have or how it could be best deployed in DER aggregations under future market conditions. There is significant potential for profitable deployment of distributed wind in states that are served by ISOs and covered under Order No. 2222. Distributed wind and other DERs provide local energy that does not need to travel those distances and avoids the losses typically associated with long-distance energy transmission. Deployment of distributed wind can benefit communities that exist away from large load centers by providing local, clean, and affordable energy. Aggregating DERs that include distributed wind could provide these benefits across multiple far-ranging communities if they have access to participate in wholesale markets. A new baseline valuation of distributed wind in areas covered by Order No. 2222 is required to accurately gauge where it is profitable and how it can compete or complement existing or future DER deployment, including as part of an aggregate.
The Federal Energy Regulatory Commission (FERC) issued Order No. 2222 in October 2020. The rule directs Regional Transmission Organizations and Independent System Operators (ISOs) to amend their tariffs and participation models to accommodate heterogeneous distributed energy resource (DER) aggregations in the wholesale energy markets that they operate, including capacity, energy, and ancillary service markets. The Commission issued the rule to better capture the benefits provided by DERs deployed in the United States, whose use has been expanding rapidly. The Commission defines DERs as “any resource located on the distribution system, any subsystem thereof or behind a customer meter,” including but not limited to “electric storage resources, distributed generation, demand response, energy efficiency, thermal storage, and electric vehicles and their supply equipment.” The rule aims to increase DER participation in wholesale markets by allowing the creation of DER aggregations, in which multiple DERs that are too small to meet minimum capacity requirements for wholesale markets individually would be able to participate in markets as a single unit. As of June 20, 2023, all ISOs have filed initial compliance plans and a number have begun implementation. Compliance dates range from 2024 to 2029, with Midcontinent ISO having the latest date of compliance proposed for 2029. Southwest Power Pool still has an outstanding date, having no final order yet from FERC, but a target date of the third quarter of calendar year 2025. The rule, which is technology agnostic and requires ISOs to create participation plans that accommodate different DERs, provides an opportunity for distributed wind market expansion. In addition, distributed wind can bring benefits to heterogenous DER aggregations. These benefits include resource diversity (i.e., a complementary generation profile to other types of distributed generation), its small footprint and ability to be co-located with load, and its potential to provide frequency response, voltage support, and black start services, among other ancillary services. This report provides a status update on FERC Order No. 2222, the current state of ISO compliance, and information relevant to the distributed wind industry as DER aggregators and other stakeholders expand their participation to wholesale energy markets.
A supply chain is the combination of the ecosystem of resources needed to design, manufacture, and distribute a product. In the context of supply chain cybersecurity, the resources that directly influence this ecosystem include software, data, and/or other digital components. Compromised equipment or software in the supply chain may lead to attacks such as financial loss; denial of service; a breach of confidential or proprietary information from a company, its customers, or its suppliers; ransomware that denies operation of automated equipment for payment; and malicious control actions that could damage equipment and endanger personnel. Currently 60.8% of US energy comes from fossil fuels, 18.9% comes from nuclear energy, and the last 20.1% comes from renewable sources. Federal Energy Regulatory Commission order FERC 2222 and Executive Order 14017 on America's Supply Chains are important milestones for safely expanding generation from renewable energy and achieving the goal of a decarbonized U.S. energy sector by 2035. This report analyzes gaps and opportunities in the supply chain currently available to the renewable energy sector, to help stakeholders formulate a coordinated response.
Summary of the latest developments in FERC Order 2222 and DER policy implementation for September 2025.
The increasing integration of distributed energy resources (DERs) plays an important role in improving energy consumption efficiency. In September 2020, the Federal Energy Regulatory Commission (FERC) approved Order 2222 which opens wholesale electricity markets to small capacity DERs. The benefit of this new FERC Order 2222 is that DERs, such as rooftop solar panels and batteries, will be able to participate in regional electricity markets and provide grid services. Meanwhile, the planning and operation strategies of DERs are facing new challenges to account for the impact of the wholesale market with numerous uncertainty factors. Therefore, in this paper, we propose a new planning and retrofitting model for long-term commercial buildings that considers both DER investment and market participation. Specifically, we explore the capability of implementing DERs for grid services. The effectiveness of the proposed model is validated using real-world data. Simulation results also validate that participating in grid services can significantly increase revenues through appropriate building energy management and shorten the payback period of DER investments.
Harnessing virtual power plants enhances the integration of distributed energy resources into utility grids for a sustainable energy future. Virtual power plants (VPPs) aggregate DERs to enhance resource adequacy and reduce emissions. U.S. utilities are exploring various technologies to manage DERs effectively. FERC Order 2222 allows DERs to participate in both wholesale and retail markets. Enhancing observability and controllability of behind-the-meter (BTM) DERs is essential for reliable grid operations. A hierarchical control architecture can improve coordination among residential energy resources. Field tests showed nearly 20% energy savings and 30% peak power reduction during grid events. Effective management of DERs requires enhanced situational awareness to prevent grid congestion. Integrating DER management systems (DERMS) with existing planning tools can improve operational security. Near-real-time grid models can validate optimal resource set points against resource uncertainty. Traditional uninterruptible power supplies (UPS) can be upgraded to support grid services and become part of VPPs. Upgrading UPS systems can reduce costs by 75% and unlock significant battery capacity. New battery management systems and grid-aware controllers are essential for optimizing UPS performance. Continued research and development are necessary to address challenges in integrating DERs into utility grids. Encouraging customer participation in pilot programs is vital for the evolution of VPPs. Here, the shift towards price-responsive DERs and VPPs is expected to enhance energy distribution efficiency.
Driven by the goals of clean energy and zero carbon emissions, the power industry is undergoing significant transformations. The rapid growth of diverse distributed energy resources (DERs) at grid edge such as rooftop photovoltaics (PVs) and electric vehicles is transforming the traditional centralized power grid management to a decentralized, bottom-up, and localized control paradigm. Establishing local and distribution-level electricity markets provides an effective solution to managing large amounts of small-scale DERs. New regulations such as the recent FERC Order 2222 in the U.S. open the door to DERs in the wholesale markets. Through coordinating the local and distribution-level markets with the transmission-level wholesale market, the DERs and prosumers can trade energy and flexibility locally with each other and meanwhile provide energy, flexibility and ancillary services to the bulk power grid. During this transition, there are many new technical challenges to address, calling for innovative ideas and interdisciplinary research in this promising direction. Advanced information and communication technologies (ICT) are needed, as a key enabler, for the development and practical implementation of local and distribution electricity markets. Research into local and distribution markets is strongly interdisciplinary, involving the state of the art in power engineering, economics, and digital/information technology. A broad spectrum of contributors from universities, industry, research laboratories and policy makers is sought to develop and present solutions and technologies that will facilitate and advance practical applications and implementations of local and distribution-level electricity markets to uncover the values of DERs.
The Federal Energy Regulatory Commission's (FERC) Order 2222, issued in September 2020, removes barriers for distributed energy resources (DERs) to participate in wholesale energy markets by allowing DERs to aggregate and participate in wholesale markets as a single entity, known as a virtual power plant (VPP). VPPs can provide balancing, reliability, and resiliency grid services and can participate in capacity, energy and ancillary services markets. They can also increase customer energy access and lower electricity bills. This report focuses on VPP business models, including considerations of energy justice (EJ). Through an analysis of the VPP value chain, business models, programs, and pilots, several VPP applications are identified and grouped by their ability to have quantitatively measurable or monetized benefits. Benefits and barriers specific to underserved communities are outlined, and VPP programs with an intentional focus on underserved communities are compared to those without such a focus.
Virtual Power Plants (VPPs) represent a fundamental shift in electric grid operations, aggregating distributed energy resources (DERs) such as solar panels and battery storage to deliver utility-scale grid services traditionally provided by centralized power plants. This report examines the unique architectural, operational, and digital assurance considerations that distinguish VPPs from conventional utility infrastructure as they scale from pilot projects to mainstream deployment across the United States. While VPPs offer significant opportunities for grid modernization and enhanced flexibility, their distributed, multi-stakeholder architecture introduces distinct security challenges that differ fundamentally from traditional generation facilities. The analysis identifies risks in VPP operations, including device-level security gaps, platform vulnerabilities, and communication protocol weaknesses that create expanded attack surfaces compared to centralized power plants. Through examination of real-world incidents and emerging threat patterns, the report demonstrates how some VPPs' reliance on consumer-owned devices, public internet infrastructure, and complex vendor ecosystems require new approaches to digital assurance and operational security. The findings provide practical guidance for utilities, regulators, and aggregators to implement robust security frameworks and operational best practices essential for maintaining grid reliability as VPP deployment accelerates under the Federal Energy Regulatory Commission (FERC) Order 2222 and related regulatory initiatives.
Accurate solar photovoltaic (PV) capacity estimation requires high-resolution, site-specific solar irradiance data to account for localized variability. However, global datasets, such as the National Solar Radiation Database (NSRDB), provide regional averages that fail to capture the fine-scale fluctuations critical for large-scale grid integration. This limitation is particularly relevant in the context of increasing distributed energy resources (DERs) penetration, such as rooftop PV. Additionally, it is critical to the implementation of the U.S. Federal Energy Regulatory Commission (FERC) Order 2222, which facilitates DER participation in U.S. bulk power markets. To address this challenge, this study evaluates Nearest-Neighbor Random Forest (NNRF) and Nearest-Neighbor Gaussian Process (NNGP) models for spatiotemporal downscaling of global solar irradiance data. By leveraging historical irradiance and meteorological data, these models incorporate spatial, temporal, and feature-based correlations to enhance local irradiance predictions. The NNRF model, a machine-learning approach, prioritizes computational efficiency and predictive accuracy, while the NNGP model offers a level of interpretability and prediction uncertainty by numerically quantifying correlations and dependencies in the data. Model validation was conducted using day-ahead predictions. The results showed that the average Goodness of Fit (GoF) of the NNRF model of 90.61% across all eight sites outperformed the GoF of the NNGP of 85.88%. Additionally, the computational speed of NNRF was 2.5 times faster than the NNGP. Finally, the NNGP displayed polynomial scaling while the NNRF scaled linearly with increasing number of nearest neighbors. Additional validation of the model on five sites in Puerto Rico further confirmed the superiority of the NNRF model over the NNGP model. These findings highlight the robustness and computational efficiency of NNRF for large-scale solar irradiance downscaling, making it a strong candidate for improving PV capacity estimation and real-time electricity market integration for DERs.
Increasing integration of distributed energy resources (DERs) within distribution feeders provides unprecedented flexibility at the distribution-transmission interconnection. With the new FERC 2222 order, DER aggregations are allowed to participate in energy market. To enable market participation, these virtual power plants need to provide their generation cost curves. This paper proposes efficient optimization formulations and solution approaches for the characterization of hourly as well as multi-time-step generation cost curves for a distribution system with high penetration of DERs. Network and DER constraints are taken into account when deriving these cost curves, and they enable active distribution systems to bid into the electricity market. The problems of deriving linear and quadratic cost curves are formulated as robust optimization problems and tractable reformulation/solution algorithm are developed to facilitate efficient calculations. The proposed formulations and solution algorithm are validated on a realistic test feeder with high penetration of flexible resources.
In 2020, the Federal Energy Regulatory Commission (FERC) approved a rule, Order 2222, that requires market operators to create pathways enabling distributed energy resource aggregators (DERAs) to compete in all regional organized wholesale electric markets. The goal is to encourage various forms of distributed energy resources (DERs) to participate in electricity markets in a way that would enhance competition, encourage innovation, and drive down costs for consumers. In this document, we briefly discuss how FERC Order 2222 affects the opportunities for participation in electricity markets for building owners and operators, the role of aggregators, and the involvement of buildings in the electricity market.
Blockchain technology is a relatively novel technology that can be used to develop more decentralized, autonomous and tamper-evident solutions. A feature that can aid Transactive Energy Systems to reach their goals by enabling individual actors to communicate and reach consensus with other participants in a more decentralized fashion. However, technical barriers to evaluate and adopt this type of technology within the electrical domain still exist. To facilitate this task, BLOSEM Unified Testing Platform (UTP), a DOE-sponsored, multi-lab effort intends to accelerate the development of solutions by offering a common set of reusable services that can be used to interconnect existent grid tools with blockchain services. UTP is intended to serve as development platform that can provide application engineers with the technical means to evaluate potential blockchain solutions, by enabling them to concentrate on the actual application functionalities while at the same time abstracting the connectivity and performance measurement tasks. The use of BLOSEM UTP is further demonstrated by implementing two potential use cases that are intended to validate both the feasibility of implementing these applications as blockchain-based solutions while also demonstrating the features provided by UTP.