In September 2020, the Federal Energy Regulatory Commission issued Order 2222, a landmark rule requiring regional grid operators to let distributed energy resources — batteries, rooftop solar, demand response, and electric vehicle fleets — participate directly in wholesale electricity markets, either individually or aggregated together.
What Changed
Before Order 2222, small-scale distributed resources were largely shut out of wholesale markets because individual devices are too small to meet minimum bid-size rules. The order requires each RTO and ISO to create rules allowing “aggregators” to bundle many small resources into a single market participant that can bid alongside traditional power plants.
Why FERC Acted
FERC found that existing market rules were unjust and unreasonable because they discriminated against distributed resources based on technology and size rather than actual grid value. Distributed energy has grown sharply, and the Commission concluded wholesale markets needed rules that reflect the modern, increasingly decentralized grid.
Implementation Across ISOs and RTOs
Each of the seven U.S. ISOs and RTOs was required to file a compliance plan and later implement its own aggregation rules on its own timeline, and implementation has proceeded at different speeds across regions. Watts & Wire tracks compliance filings and implementation status region by region as part of our regulatory coverage.
Why It Matters for the Market
Order 2222 is widely viewed as one of the most significant U.S. electricity market reforms in years, opening a path for distributed energy resource aggregators, virtual power plants, and demand response providers to compete directly with conventional generation. For utilities, developers, and traders, it reshapes how flexibility and capacity get valued at the grid edge.
This is a regulatory explainer based on FERC’s public order and docket filings, not investment advice — see our Data Sources & Disclaimers page for sourcing details.