FERC distributed energy resource technical report

A technical report by U.S. electricity regulatory staff assesses the potential reliability issues and likely benefits to the bulk power system resulting from an increased penetration of distributed energy resources. According to the report, increasing penetration of distributed energy resources may bring several associated reliability benefits to the bulk power system -- or could cause reliability concerns, if the resources are not properly accounted for.

Distributed energy resources, or DERs, have no single definition -- but they are generally conceived of as small, geographically dispersed electric resources, installed and operated on the distribution system at voltage levels below the typical bulk power system levels of 100kV. Historically, the term focused on generation like rooftop solar panels or on-site combined heat and power plants, but its meaning has broadened to include energy efficiency, microgrids, and even new technologies like energy storage. Distributed energy resources can be cost-effective alternatives to traditional utility infrastructure and business models.

Distributed energy resources installations have increased significantly in some regions of the United States in recent years thanks to factors including technology advances and state energy policies. In 2016, when distributed energy resources of all types accounted for about two percent of the nation's installed generation capacity, distributed solar photovoltaic (PV) installations alone represented over 12 percent of new capacity additions.  At the same time, regulators and industry participants are working to integrate these resources into the grid from engineering, reliability, and system planning perspectives.

In February 2018, staff of the Federal Energy Regulatory Commission published a report, "Distributed Energy Resources: Technical Considerations for the Bulk Power System." This report filed in Docket No. AD18-10-000 considers how the increasing penetration and integration of distributed energy resources in specific regions may affect bulk power system reliability. It summarizes technical assessments performed by Commission staff using industry power system models and commercially available power system simulation software "to identify the potential reliability issues and likely benefits to the bulk power system" from increasing distributed energy resource penetration. The study notes that its modeling of distributed energy resource capacity was "based on current trends for technology types, operational capabilities, and deployment distributions."

According to the report, greater penetration of distributed energy resources could have associated reliability benefits for the bulk power system. For example, by providing power close to the customer distributed resources can serve to reduce grid losses and reduce system peak load, or can serve as non-transmission alternatives that displace the need for more expensive wires upgrades.

At the same time, the report warns that "increasing DER capacity, if not properly accounted for, could cause reliability concerns for the bulk power system." It calls for improving and refining the data that is available for distributed energy resources for incorporation into planning and operating models, noting, "Collecting and using the most current and accurate data is key to getting a complete picture of how DERs affect the bulk power system."

The report identified key bulk power system reliability topics to explore in light of the growing adoption of distributed energy resources in the U.S., including:

• The impact of the current common industry modeling practice of netting DERs with load, which may mask the effects of DER operation;
• DER capabilities for voltage and frequency ride through during contingencies;
• The potential for improved voltages due to the unloading of the bulk power system associated with the location of DERs at or near customer loads;
• Potential effects upon system -wide transmission line flows and generation dispatch due to changing load patterns;
• The sensitivity of voltage or power needs to different types of DER applications (i.e., providing energy, capacity, or ancillary services);
• The need to develop planning processes that capture more detailed models of DERs and allow for modeling of the interface between the transmission and distribution systems to enable information exchange and more accurate calculations of the DER impact on the bulk power system; and
• The advantages and disadvantages of allowing DERs to participate directly in the organized wholesale electric markets.

The report also calls for continued examination of other issues, such as "sensitivities with higher DER penetration levels, changes in siting patterns, and potential impacts to the system’s response to events, disruptions and outages, including frequency events." It concludes, "Efforts such as these could help track and assess the impact of changing conditions on the bulk power system to identify emerging trends and address potential future reliability challenges."

FERC ends DOE resilience rulemaking, opens new proceeding

U.S. energy regulators have terminated a fast-tracked proceeding opened last fall to consider rules proposed by the Department of Energy that would have compensated certain electric generating plants for reliability and resilience values; instead, the Federal Energy Regulatory Commission has opened a broader case to examine the resilience of the bulk power system.

On September 29, 2017, Secretary of Energy Rick Perry directed the Commission to consider a proposed rulemaking to ensure that "traditional baseload resources, such as coal and nuclear" are rewarded for their reliability and resilience attributes. As proposed, the rule would have required grid operators to set rates for compensation paid to certain "grid reliability and resiliency resources" with a 90-day fuel supply on site and capable of providing "essential energy and ancillary reliability services, including but not limited to voltage support, frequency services, operating reserves, and reactive power."

The request under Section 403 of the Department of Energy Organization Act bore an expedited timeline. The Commission solicited public comments on the proposed rulemaking, and Commission staff issued a series of questions to frame the discussion. Many comments expressed concerns that rapid changes to wholesale markets could have harmful or perverse effects, and prior to yesterday's most seated Commissioners had publicly expressed reservations.

On January 8, 2018, the Commission issued its Order Terminating Rulemaking Proceeding, Initiating New Proceeding, and Establishing Additional Procedures.  In doing so, it recognized "that we must remain vigilant with respect to resilience challenges, because affordable and reliable electricity is vital to the country’s economic and national security." The order recites a history of the evolution of the electric power industry and the Commission's efforts to help ensure bulk power system resilience, including the adoption of NERC reliability standards, reforms to capacity markets and gas-electric coordination.

But the Commission found that neither the Department of Energy's proposed rulemaking nor the record in the case satisfied a key legal standard for Commission action under Section 206 of the Federal Power Act. Specifically, it concluded that the existing tariffs had not been demonstrated to be unjust, unreasonable, unduly discriminatory or preferential.

The Commission also noted potential problems with the proposed rule. For example, it said that allowing all eligible resources to receive a cost-of -service rate regardless of need or cost to the system had not been demonstrated to be just and reasonable, and that the proposed rule's on-site 90-day fuel supply requirement hadn't been shown not to be unduly discriminatory or preferential -- but that it would exclude some resources with resilience attributes.

At the same time, the order states, "The resilience of the bulk power system will remain a priority of this Commission." It continued, "Although the Proposed Rule failed to satisfy the fundamental legal requirements of section 206 of the FPA, the Proposed Rule and the record developed to date have shed additional light on resilience more generally and on the need for further examination by the Commission and market participants of the risks that the bulk power system faces and possible ways to address those risks in the changing electric markets." Noting "a variety of economic, environmental, and policy drivers that are changing the way electricity is procured and used," the Commission said these changes "present new opportunities and challenges regarding the reliability, affordability, and environmental profile of each region’s electric system."

To address these changes, the Commission initiated a new proceeding, Docket No. AD18- 7-000, to take additional steps to explore resilience issues in organized wholesale electricity markets. According to the order, the goal of this proceeding is: "(1) to develop a common understanding among the Commission, industry, and others of what resilience of the bulk power system means and requires; (2) to understand how each RTO and ISO assesses resilience in its geographic footprint; and (3) to use this information to evaluate whether additional Commission action regarding resilience is appropriate at this time."

The Commission directed six regional transmission organizations and independent system operators to respond within 60 days with comments on the definition of resilience, plus how they assess and mitigate threats to resilience. The Commission also solicited public comment within 30 days of the grid operators' due date.

FERC considers geomagnetic disturbance standards

U.S. energy regulators examining reliability standards for the electric transmission grid relating to geomagnetic disturbances have scheduled a technical conference for March 1, 2016.

Geomagnetic disturbance, or GMD, events occur during solar storms when the sun emits charged particles whose magnetic field interacts with that of the Earth.  GMDs can affect transformers, transmission lines, and other electric grid infrastructure.  As the Federal Energy Regulatory Commission noted in its Order No. 779, "there is a general consensus that GMD events can cause wide-spread blackouts due to voltage instability and subsequent voltage collapse, thus disrupting the reliable operation of the Bulk-Power System."

In 2013, the FERC issued Order No. 779 directing NERC to propose Reliability Standards that address the impact of geomagnetic disturbances (GMD) on the reliable operation of the Bulk - Power System.  In 2015, NERC made its proposal, which the FERC has proposed to largely accept.

But the case before FERC, docketed as RM15-11, remains ongoing.  Grid operators, utilities, trade groups, and others have filed comments or otherwise participated in the case.

The Commission has now scheduled a GMD technical conference on March 1, 2016, as a forum for "a structured dialogue on GMD-related topics."  Items specifically identified for discussion at this stage include what kind of GMD event should be used as the "benchmark" for planning purposes, vulnerability assessments, and monitoring of related parameters.

FERC considers Physical Security Reliability Standard

Federal energy regulators are considering a new national standard for protecting the physical security of the U.S. electric grid.  Given the importance of electric reliability and concern over terrorist attacks and sabotage, electric reliability organization NERC has proposed a Physical Security Reliability Standard known as CIP-014-1.  If adopted by the Federal Energy Regulatory Commission (FERC), the standard would become enforceable against transmission owners and operators.

Under U.S. law, the FERC has jurisdiction over the network of wires and transformers that make up the nation's bulk transmission system.  The Energy Policy Act of 2005 expanded the Commission's authority to impose mandatory reliability standards on the bulk transmission system.  Working with the nation's chief electric reliability organization (North American Electric Reliability Corporation, or NERC), the Commission has adopted a series of reliability standards covering matters including communications among utilities, cybersecurity, and interconnections.

On July 17, 2014, the FERC issued a notice of proposed rulemaking proposing to approve NERC’s proposed Physical Security Reliability Standard (CIP-014-1).  NERC has described this standard as designed to enhance physical security measures for the most critical Bulk-Power System facilities and thereby to lessen the overall vulnerability of the Bulk-Power System to physical attacks.  The standard requires owners and operators of transmission facilities to identify and protect critical transmission stations, substations, and control centers whose damage through physical attack could result in spreading outages or other reliability problems.

The proposed physical security reliability standard also includes provisions protecting sensitive or confidential information from public disclosure, calling for third party verification and periodic reevaluation of critical facility identification, threats assessment, and security plans.

The FERC solicited public comment on the proposed physical security reliability standard through September 8, 2014.  Over 30 parties filed comments, with additional reply comments filed by September 22.

With the proposed Physical Security Reliability Standard now pending before the FERC, we may soon see its adoption.  The FERC has scheduled the matter for its November 20 deliberations.  Assuming CIP-014-1 is adopted, owners and operators of regulated facilities will need to comply with the new standard, and to plan for further tightening up of the physical security of the electric grid in the coming years.

FERC considers bulk electric system definition

In a society dependent on electricity for many essential and desired services, maintaining the reliability of the electric grid bears increased importance.  From hospitals and home heating to business operations, "keeping the lights on" has become a matter of national significance.  How electric reliability is regulated is the subject of an ongoing administrative case noticed in today's Federal Register.

At the federal level, chief regulatory responsibility for electric reliability falls on the Federal Energy Regulatory Commission.  Following the August 2003 blackout, when 50 million people lost power in the U.S. and Canada, Congress authorized the creation of an “electric reliability organization” to manage the reliability of the North American bulk power system.

Today, that organization is the North American Electric Reliability Corporation (NERC).  NERC's mission is to ensure the reliability of the North American bulk power system.  To achieve this mission, NERC establishes and enforces reliability standards for the bulk power system.

In 2010, FERC issued Order No. 743 (104-page PDF), which ordered NERC to revise its definition of the "bulk electric system" -- a specific subset of the bulk power system.  Historically, that term has been defined differently by each of each of eight regional entities.  In Order No. 743, FERC recognized concerns arising from inconsistencies among these regional definitions, and recommended replacing the regional entities' discretion to define the "bulk electric system" with a bright line threshold.  This bright line standard would include all facilities operated at or above 100 kV except defined radial facilities.  FERC also recommended that NERC adopt an exemption process and criteria for removing facilities from NERC's authority that are not necessary for operating the interconnected transmission network.

After stakeholder input, NERC proposed a core definition that included all transmission elements operated at 100 kV or higher and real power and reactive power resources connected at 100 kV or higher, while establishing an express exclusion for facilities used in the local distribution of electrical energy as well as certain behind-the-meter generation facilities.  NERC also proposed changes to how entities targeted for inclusion in its compliance registry as part of the bulk electric system may seek an exception from regulation.

FERC proposes to adopt NERC's proposal, and has issued a Notice of Proposed Rulemaking (or "NOPR", a 94-page PDF) on the issue.  In the NOPR, FERC seeks public comment on several issues, including whether NERC's proposal properly distinguishes between local distribution and transmission, and whether NERC's proposed procedures for seeking an exclusion from registration are sufficient.  Comments are due to FERC by September 4, 2012.