The California Independent System Operator filed with federal energy regulators its latest round of enhancements aimed at better integrating energy storage and distributed energy resources onto its grid.

CAISO on Sept. 3 filed its Energy Storage and Distributed Energy Resources Phase 3 initiative with the Federal Energy Regulatory Commission, following a lengthy stakeholder process. ESDER 3 includes proposals in two main areas: providing hourly and 15-minute scheduling options for demand-response resources in CAISO's real-time energy market, and removing a requirement that demand-response resources aggregate DR within a single load-serving entity—also converting the "net benefits test" from a settlement adjustment to a bid floor. CAISO's Board of Governors approved ESDER Phase 3 in September 2018.

The first set of proposals would allow demand-response resources to submit hourly and 15-minute block bids in CAISO's real-time markets, which are options currently available to "intertie resources" that import and export through the CAISO balancing authority area.

"Many demand-response resources in California are air-conditioning cycling and other consumer programs," CAISO said. "They frequently struggle to respond to real-time dispatch on a five-minute basis, with only two to three minutes notification before the dispatch interval." Enabling these resources to be dispatched in 15- or 60-minute intervals—like intertie resources—will notify them further in advance and lengthen minimum event windows, CAISO said, allowing them to participate in real-time markets more effectively while acknowledging their constraints.

The second set of changes also removes hurdles to demand-response participation in the CAISO markets, the grid operator said. In that proposal, CAISO removed the requirement that end-user aggregations forming single demand-response resources all be located within a single load-serving entity's territory. Market participants have had difficulty meeting CAISO's minimum 100-kW-capacity participation threshold for demand-response aggregations due to the migration of end users to new, smaller LSEs such as community choice aggregators, CAISO said.

FERC approved CAISO's ESDER Phase 2 in October 2018.

CAISO also launched ESDER Phase 4 in February. ESDER 4 will address several specific topics: enhancements to CAISO's non-generator resource model, including reviewing CAISO's market optimization of NGRs and participation agreements; consideration of bidding requirements to optimally use energy storage resources and reflect the operational characteristics of proxy demand resources; and consideration of "multiple-use application" rules and market participation.