A rooftop solar array or a single home battery is far too small to matter to a wholesale electricity market, where resources are dispatched in megawatts. Order No. 2222 is the Federal Energy Regulatory Commission's answer to that scale mismatch: it lets many small resources be added together into an aggregation that, as a unit, is large enough to participate. The Commission issued the order in September 2020, and it amends FERC's regulations governing the organized wholesale markets run by Regional Transmission Organizations and Independent System Operators (RTOs and ISOs).

The order's scope is stated compactly in the rule itself:

The Federal Energy Regulatory Commission (Commission) is amending its regulations to remove barriers to the participation of distributed energy resource aggregations in the capacity, energy, and ancillary service markets operated by Regional Transmission Organizations and Independent System Operators (RTO/ISO).— Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators (Order No. 2222), source

What 'distributed energy resource aggregation' means

A distributed energy resource is a small resource located on the distribution system or behind a customer's meter — rooftop solar, a residential or commercial battery, an electric-vehicle charger, a controllable water heater, a backup generator, or a demand-response commitment to reduce load. Individually, each is below the size threshold to register in a wholesale market and is invisible to the grid operator. An aggregation is the combination of these resources, organized by an aggregator, into one entity that the market treats as a single participating resource. The order requires each RTO and ISO to establish rules for that aggregator to register, to be dispatched, and to be paid through the same wholesale markets that conventional generators use.

The three named markets in the rule describe what an aggregation can be paid for. The energy market pays for electricity delivered in real time or day-ahead. The capacity market pays a resource for committing to be available when the grid needs it. Ancillary service markets pay for the supporting services — such as frequency regulation and operating reserves — that keep the grid stable moment to moment. By opening all three, the order lets an aggregation stack the roles a distributed fleet can physically perform: a network of home batteries can deliver energy, count toward capacity, and provide fast-responding reserves.

A single aggregation can also mix resource types. The order contemplates that an aggregator may combine heterogeneous resources — solar with storage, storage with demand response, generators with controllable load — into one aggregation, so the bundle can present a steadier, more dispatchable profile to the market than any one resource could alone. A fleet that pairs solar generation with batteries, for example, can shift output across the day and offer a more reliable commitment than solar by itself. The aggregator is the market-facing entity: it registers the aggregation, receives dispatch instructions from the grid operator, allocates them across the underlying resources, and is settled for the aggregation's performance. To the wholesale market, the complexity behind the meter is hidden; what it sees is a single participating resource with a defined capability.

Why it is a directive, not a market design

Order No. 2222 does not itself write the participation rules. It directs each RTO and ISO to file tariff changes implementing the order's requirements, and FERC then reviews and accepts, rejects, or modifies those filings region by region. That is why the order issued in 2020 but its effects appear gradually and unevenly across markets — each region's compliance filing sets the specific size thresholds, metering and telemetry requirements, and coordination procedures with the local distribution utility. The order also addressed how aggregations interact with the distribution utilities that physically host the resources, since a wholesale dispatch instruction can affect the local distribution system.

That distribution-coordination question is one of the harder parts of implementation. The resources in an aggregation sit on a local distribution system operated by a utility that is often not the same entity as the regional grid operator. A wholesale instruction to discharge a thousand home batteries at once has real effects on the local circuits those batteries feed, so the order requires coordination so that the distribution utility can review and, where necessary, override dispatch that would threaten local reliability or safety. The compliance filings work out the mechanics of that coordination, along with how to avoid double-counting a resource that might also be enrolled in a retail program. Order No. 2222-A and Order No. 2222-B, the orders on rehearing, addressed arguments raised against the original rule and clarified parts of it without changing the core directive.

The mechanism is significant because it changes what counts as a grid resource. Before the order, the capability sitting on millions of rooftops, in home garages, and in commercial basements could not be sold into the wholesale markets that set the price and reliability of power. By requiring market operators to remove the barriers to aggregated participation, the order creates a pathway for that distributed capability to be dispatched and compensated alongside central-station generation. What it does not do is guarantee any particular resource gets in: each aggregation must still meet its region's accepted rules, register, and perform. The order is the document that makes the pathway exist — its plain instruction is to remove the barriers so that distributed energy resource aggregations can participate in the capacity, energy, and ancillary service markets.