FERC Order 2222 is a 2020 rule from the Federal Energy Regulatory Commission that requires the country’s Regional Transmission Organizations and Independent System Operators to open their wholesale electricity markets to aggregations of distributed energy resources. Before the order, a rooftop solar array or a home battery had almost no way to sell energy or grid services into the wholesale markets where large power plants compete. The order changes that by letting small resources pool together into groups big enough to bid, with the aggregation minimum capped at 100 kilowatts. Implementation is rolling out on different schedules across the country, with California already live and some markets not scheduled to finish until 2030.
What Counts as a Distributed Energy Resource
The order defines distributed energy resources broadly. Any small-scale generation or storage technology connected to a utility’s distribution system, or sitting behind a customer’s electric meter, can qualify. FERC’s own examples include battery storage, rooftop solar, smart thermostats that enable load reduction, thermal storage like ice systems, energy efficiency measures, and electric vehicles with their charging equipment.1Federal Energy Regulatory Commission. FERC Order No. 2222 Explainer: Facilitating Participation in Electricity Markets by Distributed Energy Resources Individual resource sizes typically run from 1 kilowatt to 10,000 kilowatts.2Federal Energy Regulatory Commission. FERC Order No. 2222 Fact Sheet
Demand response resources fit here too. These are systems that reduce electricity use on command to help balance the grid, such as industrial cooling equipment or water heaters that can be remotely adjusted during periods of high demand. What matters is where the resource sits on the grid, not the brand or model.
There is no minimum capacity requirement for an individual resource to join an aggregation. A single 5-kilowatt rooftop system can be part of a group as long as the whole aggregation meets the market’s minimum.2Federal Energy Regulatory Commission. FERC Order No. 2222 Fact Sheet
Which Wholesale Markets Aggregations Can Enter
The order is not limited to one type of wholesale product. RTOs run several distinct markets, and Order 2222 opens all of them to qualified aggregations: energy markets (buying and selling electricity), capacity markets (committing to be available when needed), and ancillary service markets (reserves, frequency regulation, and voltage support).1Federal Energy Regulatory Commission. FERC Order No. 2222 Explainer: Facilitating Participation in Electricity Markets by Distributed Energy Resources An aggregation that meets the technical qualifications for a given service earns the same compensation as a traditional power plant providing that service.2Federal Energy Regulatory Commission. FERC Order No. 2222 Fact Sheet
Payment for energy injected into the grid or load reduced is generally settled at the Locational Marginal Price for the aggregation’s zone. ISO New England, for example, uses this approach across its aggregation models whether the group consists of generators, demand response, battery storage, or a mix.3ISO New England. FERC Order 2222 Participation Models
The 100 Kilowatt Threshold and Where Resources Can Sit
Each RTO must set an aggregation size minimum that does not exceed 100 kilowatts. That threshold is dramatically lower than what a traditional generator needs to enter wholesale markets, which often sits at 1 megawatt or higher. The low bar is intentional, so community groups, small businesses, and residential aggregators can participate.2Federal Energy Regulatory Commission. FERC Order No. 2222 Fact Sheet
How geographically spread out an aggregation can be depends on the RTO. FERC directed each grid operator to make its locational rules “as geographically broad as technically feasible,” meaning aggregations should not be squeezed into a tiny footprint unless there is a real technical reason.4Federal Register. Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators When an RTO allows aggregations spanning multiple pricing nodes, the aggregator must provide distribution factors at registration and update them with each bid so the operator can price energy and manage congestion accurately.
What the Aggregator Does
The aggregator is the legal entity that faces the wholesale market. It registers the aggregation, submits bids, receives dispatch instructions from the RTO, and takes financial responsibility for the group’s performance. This single-entity model is what makes the whole concept workable: the grid operator does not manage thousands of individual rooftop systems, it manages one aggregator with one resource ID.
The aggregator must maintain operational control over every resource in its portfolio and be able to raise or lower the group’s output in response to market signals. Failing to deliver what was promised can trigger financial penalties, and several RTOs have built penalty structures specifically for distributed resource aggregations rather than borrowing the ones designed for large plants.5Southwest Power Pool. SIR 376 – O2222 P2 DR9 Validation and Penalties Contracts between the aggregator and individual resource owners set how revenue is split, what each asset has to perform, and who carries technical risk. These are private commercial agreements.
One tricky operational question is double counting. A homeowner’s battery might participate in a local utility demand response program and also be part of a wholesale aggregation. Order 2222 allows dual participation but requires RTOs to put “narrowly designed restrictions” in place so the same kilowatt-hour is not paid for twice.2Federal Energy Regulatory Commission. FERC Order No. 2222 Fact Sheet The aggregator’s tracking systems have to demonstrate, kilowatt-hour by kilowatt-hour, which service each unit of output was providing.
What States Still Control
Order 2222 is federal, but it does not sweep aside state authority. The relevant electric retail regulatory authority, typically a state public utility commission, keeps several roles. States remain responsible for the interconnection of individual resources to the distribution system and for cost allocation when metering or infrastructure upgrades are needed to enable wholesale participation.6Midcontinent Independent System Operator. 2024 Order 2222 Compliance Framework
FERC drew a clear line on one point: state regulators cannot broadly ban distributed resources from participating in wholesale markets through aggregations.2Federal Energy Regulatory Commission. FERC Order No. 2222 Fact Sheet States can still prohibit aggregators from bidding the demand response of retail customers into regional markets, and the exact interaction between those two positions is still being worked out.
Small utility customers get a separate protection. RTOs cannot accept bids from aggregations of customers served by utilities with annual sales of 4 million megawatt-hours or less unless the state regulatory authority affirmatively opts them in.7Federal Energy Regulatory Commission. FERC Order No. 2222: A New Day for Distributed Energy Resources
Getting Registered
Registration begins when the aggregator submits a package to the RTO through its designated portal. The submission has to include detailed information on every asset in the group: physical location, maximum capacity, technology type, and operational characteristics. Telemetry is non-negotiable. The RTO needs real-time visibility into the aggregation’s output, available capacity, and, for batteries, state of charge. Specific reporting intervals and data formats vary by RTO and live in each grid operator’s tariff and business practice manuals.1Federal Energy Regulatory Commission. FERC Order No. 2222 Explainer: Facilitating Participation in Electricity Markets by Distributed Energy Resources
Metering has to record injections and reductions at the intervals the market requires, often five minutes. FERC encouraged RTOs to lean on existing distribution utility metering rather than force new hardware everywhere, with the state utility commission deciding who pays when upgrades are needed.6Midcontinent Independent System Operator. 2024 Order 2222 Compliance Framework
The local distribution utility then gets up to 60 calendar days to review the proposal for safety hazards or conflicts with the physical limits of its wires and transformers. FERC clarified that both the eligibility review and the reliability review must fit within that same 60-day window.8Midcontinent Independent System Operator. FERC Order 2222 Compliance A utility that objects has to put its concerns in writing and point to specific safety, reliability, or double-counting problems. Anything the utility tells the RTO about a resource in the aggregation must also be shared with the aggregator.9Southwest Power Pool. Motion for Leave to Answer and Answer of Southwest Power Pool, Inc.
Once the review clears, the RTO assigns the aggregation a unique resource ID, and the aggregator signs a participation agreement binding it to the market’s operational rules and financial obligations. Only then can the aggregation begin bidding.
When Order 2222 Takes Effect in Each Region
FERC issued Order 2222 in September 2020, but implementation has not been simultaneous. Each RTO filed compliance tariffs on its own schedule, and FERC has reviewed and revised those filings in an iterative process stretching over several years. As of 2026, the rollout looks very different depending on where you are.1Federal Energy Regulatory Commission. FERC Order No. 2222 Explainer: Facilitating Participation in Electricity Markets by Distributed Energy Resources
- CAISO in California completed implementation in November 2024, the first RTO to fully comply.
- NYISO in New York is targeting full implementation by the end of 2026, though it filed a motion in April 2026 requesting a deferred effective date.
- ISO-NE opened its capacity market to aggregations for Forward Capacity Auction 19 in February 2026, with energy and ancillary services scheduled for November 1, 2026.
- PJM’s capacity market participation is set for June 2026, with energy and ancillary services planned for February 1, 2028.
- MISO is taking a two-phase approach, with Phase 1 targeted for September 2026 and Phase 2 for June 2029.10Midcontinent Independent System Operator. Distributed Energy Resources – FERC Order 2222
- SPP has the most distant timeline, proposing implementation in the second quarter of 2030.
These dates have shifted before and could shift again. Anyone planning to enter a specific market should check that RTO’s compliance docket for the current schedule.
Where the Order Does Not Apply
Order 2222 covers only the wholesale markets FERC has jurisdiction over. The biggest exclusion is ERCOT, which runs the Texas grid independently and sits outside FERC’s authority because it does not cross state lines. ERCOT has its own pilot program for integrating distributed resources. The order also does not reach Alaska, Hawaii, or Puerto Rico.1Federal Energy Regulatory Commission. FERC Order No. 2222 Explainer: Facilitating Participation in Electricity Markets by Distributed Energy Resources Regions without an RTO or ISO, which serve roughly a third of the country’s electricity load and are concentrated in the Southeast and parts of the West, are also outside the rule’s direct reach. Owners of distributed resources in those areas do not currently have a federally mandated route into wholesale market aggregation, though some states are building their own frameworks.