The California Independent System Operator (ISO) will allow distributed energy systems to be grouped together to participate in its energy and ancillary services markets, becoming the first US grid operator to make such a move.

“This is a step toward the re-design of the power grid. We are seeing a shift from a one-way centralized system to a two-way decentralized system” president and CEO Steve Berberich said on Tuesday.

The Federal Energy Regulatory Commission (FERC) in the US has approved the ISO’s proposal to allow individual energy resources too small to participate in the wholesale market, such as rooftop solar, plug-in electric vehicles, energy storage and demand response systems, to go together so as to meet the minimum 0.5 MW threshold.

An aggregation that includes distributed energy resources located at different pricing nodes may be no larger than 20 MW.

On March 4, the ISO filed its plan to change its tariffs so as to allow distributed energy aggregations. It received FERC approval on June 2.

By integrating more distributed energy onto the grid, California will be able to reduce energy-related carbon emission and also achieve operational advantages. In addition, more distributed energy translates into greater amounts of renewable energy into the state’s power supply.

A month ago it was announced that non-hydro renewables accounted for 18% of the total supply to ISO grid in 2015, marking an increase of two percentage points from 2014.

The ISO is required to submit an informal report on the distributed energy integration efforts in six months, and make annual performance reviews for the next three years. Distributed energy systems that are part of the net metering program cannot participate in the wholesale market aggregation.

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