FERC Order 827 and reactive power

Federal energy regulators have issued a final rule requiring all newly interconnecting non-synchronous generators to provide reactive power, which supports the reliability of the electric grid.  The rule adopted by the Federal Energy Regulatory Commission in Order No. 827 primarily affects wind generators, who have previously been exempt, and some solar projects.

Reactive power -- and generators capable of supplying or consuming it -- play an important role in controlling system voltage for efficient and reliable operation of an alternating current transmission system.  Previously, as a condition of interconnection under the FERC's pro forma Large Generator Interconnection Agreement and Small Generator Interconnection Agreement, most generators have been required “to maintain a composite power delivery at continuous rated power output at the Point of Interconnection at a power factor within the range of 0.95 leading to 0.95 lagging.”

But historically, the costs to design and build a wind generator that could provide this kind of reactive power were high.  In recognition that requiring wind generators to provide reactive power could have created an obstacle to the development of wind generation, the Commission previously exempted wind generators from the general requirement to provide reactive power, absent a study finding that the provision of reactive power is necessary to ensure safety or reliability.

But in 2014, a FERC staff report found that the cost of providing reactive power no longer presents an obstacle to the development of wind generation.  So-called Type III and Type IV inverter-based turbines now offer inherent reactive power capabilities.  As described in Order No. 827, "The resulting decline in the cost to wind generators of providing reactive power renders the current absolute exemptions unjust, unreasonable, and unduly discriminatory and preferential."  The Commission also noted that integrating increasing amounts of wind increases the potential that some systems will need more reactive power.

Acting under Section 206 of the Federal Power Act, on June 16, 2016, the Commission found "that wind generators should not have an exemption from the reactive power requirement which is unavailable to other generators." At the same time, the Commission recognized technical differences that would add costs if non-synchronous generators were required to provide reactive power at the Point of Interconnection -- and that these "added costs will ultimately be borne by customers, whether through reactive power payments in regions that compensate for reactive power capability, or through elevated prices for capacity or energy in regions that do not compensate for reactive power capability."

It thus adopted reactive power requirements for newly interconnecting non-synchronous generators, but let non-synchronous generators provide dynamic reactive power at the high-side of the generator substation, as opposed to the Point of Interconnection.

The Commission described its expectation that non-synchronous generators may meet the dynamic reactive power requirement by utilizing a combination of the inherent dynamic reactive power capability of the inverter, dynamic reactive power devices (e.g., Static VAR Compensators), and static reactive power devices (e.g., capacitors) to make up for losses.

The Final Rule will become effective 90 days after its publication in the Federal Register.  Its requirements will apply to all newly interconnecting non-synchronous generators that have not yet executed a Facilities Study Agreement as of the rule's effective date.