California’s grid operator on Tuesday said it now has FERC approval for a first-in-the-nation tariff change to encourage more distributed generation on the grid. It is another move toward redesigning power grids that has implications for both natural gas and electricity operations.

While the federal action is aimed most directly at renewables, plug-in electric vehicles (EV) and energy storage, a California Independent System Operator (CAISO) spokesperson told NGI that the Federal Energy Regulatory Commission approval also could include gas-fired distributed generation, but usually that is already part of the grid operator’s market.

FERC’s June 2 approval of CAISO’s latest proposal applies to distribution generation below the wholesale market’s minimum requirement size for generation of 0.5 MW. Usually gas-fired combined heat-power and cogeneration electric projects involve larger output above the wholesale minimum, the spokesperson said.

“The aggregator model [in the newly approved proposal] is for resources too small to individually reach the [minimum] 0.5 MW threshold,” the spokesperson said.

Calling it a step toward a redesigned power grid, CAISO CEO Steve Berberich said he is seeing “a shift from a one-way centralized system to a two-way decentralized system” that promises to open new market opportunities to distributed energy resource products and services.

Distributed energy resources (DER) are defined by CAISO as “resources on the customer, or distribution side, of the electric meter,” including rooftop solar systems, plug-in EVs, storage and demand response, along with other forms of gas-fired, customer-owned power produced as an offshoot of onsite operations.

CAISO officials said the benefits of getting more distributed sources of power onto the grid include cutting carbon emissions and incorporating more renewable energy into the state’s power supply in the years ahead.

“DERs are becoming an increasingly important part of our system because of lower costs and customer preference,” said Berberich, adding that CAISO will be giving a progress report to FERC in six months and annual reports to the federal regulators for three years thereafter.