FERC Order 2222: CAISO and ISO-NE Complete DER Compliance
- CAISO completed Order 2222 compliance November 1 2024 with 100 kW minimum aggregation threshold
- ISO-NE completed Order 2222 compliance in 2024
- NYISO reached largely complete compliance April 2024
- PJM delayed full compliance to February 2028 for energy and ancillary services
- PJM capacity market compliance target February 2027 for 2028/2029 BRA
- 13 states restrict third-party DER aggregators from wholesale markets
FERC Order 2222, finalized in September 2020 to remove barriers to distributed energy resource participation in wholesale electricity markets, reached a significant implementation milestone in late 2024 when both CAISO and ISO-NE completed their compliance programs. However, PJM — which operates the grid serving the highest concentration of industrial and commercial DER potential — pushed its full implementation to February 2028, leaving behind-the-meter generators, battery systems, and aggregated industrial loads unable to bid into capacity and energy markets for years longer than originally anticipated.
CAISO and ISO-NE Complete Implementation in 2024
CAISO implemented its FERC Order 2222 DER aggregation program on November 1, 2024, becoming the first major U.S. grid operator to reach full compliance. The program allows DER aggregations as small as 100 kW to participate in energy and ancillary services markets, down from an initial 500 kW threshold proposed before FERC directed the lower limit. ISO-NE also completed its Order 2222 compliance program in 2024, enabling DER aggregations in New England to participate in capacity, energy, and ancillary services markets through standardized participation models.
NYISO reached largely complete compliance in April 2024 after implementing its DER aggregation program, though FERC directed additional compliance filings to allow heterogeneous aggregations to provide all ancillary services for which individual DERs are technically capable.
PJM Delays Full Compliance to 2028
PJM, which covers 13 states plus Washington D.C. and represents the highest potential market for industrial behind-the-meter DER aggregation, received FERC approval for its third compliance filing in 2024 — delaying full implementation to February 2028 for energy and ancillary services, and February 2027 for the capacity market, enabling participation in the 2028/2029 Base Residual Auction. PJM stated it needs at least 24 months from Commission approval without radical divergence from its proposals to build the required DER Aggregator Participation Model and IT systems.
The delay is significant because PJM’s service territory includes the highest concentration of industrial manufacturing, data centers, and large commercial facilities capable of providing demand response and on-site generation capacity to wholesale markets. Industrial on-site generators, behind-the-meter battery systems, and demand response programs that could collectively provide hundreds of megawatts of capacity will remain locked out of PJM’s wholesale markets until the 2028 compliance date.
Remaining Barriers: State Opt-Outs and Data Access
FERC Order 2222 contains small-utility and state demand-response opt-out provisions that researchers at the Citizen Utility Board’s advocacy network have identified as capable of severely curtailing the rule’s effectiveness. Thirteen states, mostly within MISO, SPP, and PJM territories, restrict or prohibit third-party aggregators from participating in wholesale markets, preventing industrial customers from monetizing demand flexibility through DER aggregation even where RTOs have completed compliance programs.
Data access remains a fundamental coordination challenge. Distribution utilities must communicate curtailment requests to DER aggregators in real time, and FERC’s compliance tracker report from March 2025 identifies gaps in current RTO tariffs and the absence of clear state-level rules governing this distribution-transmission coordination interface as among the most significant barriers to effective DER aggregation at scale. MISO is targeting a phased implementation through 2029, while SPP is seeking a delay until 2030.
Critical Perspective
CAISO allows aggregations as small as 100 kW. PJM’s delay to 2028 mirrors the slow integration of solar in Texas, which saw capacity factors drop by 15% in its first five years. The California ISO’s 2014 integration of demand response faced significant curtailment issues. Will these new DER aggregations truly improve grid reliability or simply add complexity?
