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Focus on Regulation

New FERC Rules Help Integrate Wind and Solar into the Electric Grid

At its June open meeting, FERC issued a Final Rule establishing new requirements to better integrate wind and solar generators into the interstate electric grid.  The new policies are aimed at addressing the grid reliability and forecasting challenges posed by renewables, whose output is dependent on the availability of variable inputs (i.e., wind and sunshine).  The Final Rule, which caps a closely-watched rulemaking beginning in 2010, will have substantial implications for renewable generators, as well as transmission providers and their customers.

In November 2010, FERC issued a Notice of Proposed Rulemaking in which it set out three proposals for promoting the integration of so-called Variable Energy Resources (VERs) into the power grid while maintaining the reliability of the grid.  According to FERC, VERs are generating facilities that meet the following three criteria: (i) they produce energy from a renewable resource; (ii) the energy produced cannot be stored by the facility owner/operator; and (iii) the energy source has variability that is beyond the control of the facility owner/operator.  In practice, this means generators that rely on wind and solar resources.

 FERC’s Final Rule establishes two requirements impacting transmission providers and VERs:

  •  15-Minute Scheduling: The Final Rule requires transmission providers to offer all of their customers (not just VERs) the option of 15-minute scheduling intervals.  This requirement will give all customers the option of adjusting their transmission schedules on a shorter interval to accommodate the variability associated with increased electricity from wind and solar resources.  The introduction of intra-hour scheduling will provide relief to VERs that currently pay imbalance penalties when their output does not match their schedules which, until now, were largely made on an hourly basis.  Despite this requirement, FERC is granting transmission owners flexibility to devise alternative scheduling schemes insofar as these alternatives provide comparable or greater relief to VERs from imbalance charges and reserve costs.   
  • Meteorological and Forced Outage Data: FERC also established a requirement for VERs to provide transmission providers with certain site-specific meteorological and forced outage information.  This requirement only applies when the transmission provider engages in production forecasting.  Rather than listing each type of data to be submitted, FERC is adopting a flexible approach and thus allowing VERs and transmission providers to negotiate the frequency and timing of the data submissions.  With respect to the nature of the data, FERC is requiring wind generators to provide data concerning temperature, wind speed, wind direction, and atmospheric pressure.  Meanwhile, solar generators will be required to provide, at a minimum, information on temperature, atmospheric pressure, and irradiance. 

Impacted parties have twelve months from the effective date of the Final Rule to come into compliance with these requirements. 

Notably, the Final Rule eschewed a third proposal from the Commission’s NOPR, namely, to establish a new kind of ancillary service for generator regulation.  FERC reasoned that a one-size-fits-all approach might not adequately address the operational peculiarities of each transmission provider’s system.  Instead, FERC said it would address individual proposals to recover costs from the provision of generator regulation service. To assist with the developments of such proposals, FERC outlined a set of questions it will consider in evaluating specific proposals for charging different (i.e. higher) generation reserve rates to VERs.  In short, these questions aim to illuminate whether the differing generation reserve rate for VERs is adequately supported and not unduly discriminatory.

 We note that this is not quite the final word on FERC’s VERs policies, as the Final Rule is still subject to rehearing and possibly appeal before a federal appellate court.