FERC let a pool of home batteries bid into power markets as one plant

US wholesale power markets were built for big generators. Minimum size, metering and performance requirements kept rooftop solar, home batteries, EV chargers and smart thermostats out, even as millions were installed — US DER capacity was projected to reach 387 GW by 2025. A single household device is far too small to bid, and in markets such as ISO-NE, aggregators had historically been capped or excluded.

On 17 September 2020 FERC issued Order No. 2222, declaring those barriers unjust and unreasonable. Each RTO/ISO got 270 days to revise its tariff to create the DER aggregator as a market participant. Aggregations had to be accepted at sizes no larger than 100 kW, and tariffs were forbidden to set any minimum size for the individual resources inside a pool. A single qualifying DER could act as its own aggregator. Tariffs had to cover locational requirements, metering and telemetry, and coordination among grid operator, aggregator, distribution utility and state regulators.

The design grew out of CAISO's Distributed Energy Resource Provider model, running since 2015, where aggregators already bid pooled resources. An aggregator collects each device's deployment schedule, bids the total like a small power plant, and passes compensation back to owners — often covering metering costs and non-performance penalties so participation is close to risk-free for a household.

Admit the pool, not the device, as the participant

Treating the aggregator as the participant unlocked millions of devices with one rule change, instead of rewriting tariffs for each technology.

The 100 kW cap on aggregation size is small enough for a single building or a modest fleet, so almost any pool qualifies.

Banning minimum sizes for individual devices stopped grid operators from re-erecting barriers inside the pool.

Coordination protocols and state rules against double compensation answered the reliability objections utilities had used to justify exclusion.

When entry rules exclude valuable small players, the cheapest fix is often not a subsidy but redefining who counts as a participant — let one aggregator stand in for a thousand devices.

RTOs filed compliance tariffs through 2021-2022, and in March 2021 FERC's rehearing order (No. 2222-A) reaffirmed the rule while limiting how far states could opt demand response out of aggregations. Aggregation spread beyond CAISO into ISO-NE, NYISO and other markets, and Order 2222 became the regulatory foundation of the virtual power plant boom, with utilities and startups paying homeowners to dispatch pooled batteries at peak hours.