On November 17, 2022, the Federal Energy Regulatory Commission (FERC or Commission) issued a Notice of Proposed Rulemaking (NOPR) that focuses on reliability issues related to the growth of inverter-based resources (IBRs). IBRs refer primarily to renewable sources of generation such as solar photovoltaic, wind, fuel cell, and battery storage technologies. As use of these technologies grows, it is important to ensure that IBR technologies do not adversely impact the reliability of the grid. The proposed rule directs the North American Electric Reliability Corporation (NERC) to develop mandatory standards that adequately account for the unique technological characteristics of IBRs, with the goal of reducing the risks that IBRs can create to the reliability of the electric grid.
Q. What is a Notice of Proposed Rulemaking or NOPR?
A. A NOPR is a document issued by FERC describing proposals for new or modified regulations. The motivation for issuing the NOPR might be to clarify or adjust existing rules, address a concern, reach a goal that is under consideration. A NOPR will contain a detailed explanation of the reasons for the proposal.
Through a NOPR, the Commission invites public comments on the proposals and related issues that are discussed in the document. A NOPR is not a final determination. After the public comment period closes, FERC considers all comments received on the NOPR to decide whether to proceed with the proposals or make modifications. There is a subsequent publication of the final rule along with an explanation.
NOPRs are published in the Federal Register (FR) and made publicly available online. The public can also access NOPRs, as well as other FERC proceedings and documents, using FERC’s eLibrary records information system.
Q. Can the public comment on a NOPR? What are the dates?
A. Yes, the Commission encourages interested persons including members of the general public to provide comments on the NOPR. The Commission seeks comments on the entirety of the NOPR and may pose specific questions on which it would like feedback to inform its decision. Comments on the IBR NOPR are due on February 6, 2023, with reply comments due March 6, 2023. Reply comments give commenters a chance to respond to each other, including the opportunity to emphasize, refute, or otherwise address the comments of others.
If you have questions regarding the NOPR process or if you need assistance with filing comments or accessing the Commission’s administrative record, please contact OPP by e-mail at OPP@ferc.gov or by phone at (202)502-6595.
Q. What is reliability, and why is it so important for the electric grid to be reliable?
A. The dependable flow of electricity drives daily life, business, and critical services, such as medical facilities, public safety resources, and emergency services. When you flip a light switch or turn on a television - or increasingly, if your home is heated by electricity - you can feel confident that your lighting and appliances will respond. This predictability arises because grid operators are making sure that the right amount of electricity is there when it is needed—instantly.
There are three major components of the electric grid – generation, transmission, and distribution. Electric power generators are located all over the grid and span the range of hydroelectric dams, nuclear, natural gas, and coal-fired generators; large wind and solar “farms;” and rooftop solar power. Electricity is delivered from generation sources across long distances on high voltage power lines, usually supported by large steel towers. Substations then switch (“step down”) the transmission voltage to lower levels that are usable by distribution lines, which ultimately deliver electricity to homes and businesses. For the remainder of this explainer, the terms “grid” and “grid-connected” refer to interstate electric power transmission systems, not the electric power distribution system.
“Reliability” refers to the extent to which the grid can be operated without leading to failures, often experienced as service interruptions. Reliable operation requires power plants and other electric supply resources to produce electricity, the transmission and distribution networks to transport the electricity, and for each component to be able to respond to disturbances without leading to unplanned outages. This requires both constant balancing of customer load and generation resources, and also adequate planning and maintenance on all components of the electric system, to ensure that electricity can be delivered to customers when it is required.
FERC’s oversight of grid reliability is done primarily through national reliability standards. As a typical electric consumer, you may be familiar with periodic disruption to your home’s electric service, a “power outage,” which may occur when a distribution line is damaged. While FERC-approved reliability standards do not apply to distribution lines, what happens at the transmission level may also impact consumer experience. So, even though FERC does not have jurisdiction over local outages, if there is a transmission-level outage or violations of reliability standards, it can affect everyone in the region. A region can be an entire state or can span multiple states.
Failures of the transmission system, consisting of high-voltage power lines and related facilities, that result in electric power outages across an entire region are referred to as blackouts. While extremely rare, the impact of a blackout can be widespread and severe because of the interconnectedness of the interstate grid. To prevent or minimize the effects of such outages, FERC may direct the creation of new or modified reliability standards.
Q. What is the Commission’s role in reliability?
A. To understand FERC’s role in overseeing the reliable operation of the nation’s electric grid, it is useful to first describe key developments that have shaped U.S. reliability policy.
On August 14, 2003, the North American power grid experienced its largest blackout ever due to a variety of factors. The 2003 Northeast Blackout affected large portions of the Midwest and Northeast United States and Ontario, Canada. Although utilities successfully restored power to most customers within hours, some areas lacked power for several days.[i]
In the wake of this widespread blackout, several measures were taken to strengthen the U.S. electric grid. In particular, utility companies’ voluntary compliance with reliability and security guidelines were no longer seen as sufficient. Congress directed FERC to certify an electric reliability organization in charge of developing mandatory reliability rules and standards for the electric industry. NERC applied to be the electric reliability organization, as it had already developed a track record of coordinating among utilities and creating voluntary standards to ensure the reliability and safety of the grid. In 2006, NERC was formally certified as the entity responsible for carrying out the reliability provisions of the newly enacted legislation.[ii]
In this role, NERC is recognized as the primary electric reliability standards-setting organization for North America. FERC oversees NERC in the United States, as do provincial governments in Canada. NERC has six regional entities displayed below that have been assigned to perform some functions like enforcement of the reliability standards. NERC provides industry-wide perspective and oversight, while the regional entities oversee their constituents based on the unique circumstances in each region. Together, NERC and its regional entities ensure that the industry follows NERC rules and standards.[iii]
The overall purpose of NERC is to develop and enforce reliability standards that provide for an adequate level of reliability of the bulk power system. Further, NERC achieves this mission by the development and enforcement of reliability standards. NERC has developed over 80 mandatory reliability standards that aim to ensure the reliability, efficiency, safety, and risk management of transmission grid operations. As the designated electric reliability organization, NERC has a governance structure that is independent of the electric industry members and businesses that it oversees. NERC also has enforcement powers, and can impose (again, with FERC oversight) monetary penalties and non-monetary penalties (such as mitigation plans).
Q. How do the Commission and NERC create new or modified reliability standards?
A. NERC operates under rules that are subject to FERC review, including rules governing its standards development process. NERC must submit any proposed revisions to its rules to FERC for approval before they may take effect. FERC may propose to change a NERC rule, which takes effect after notice and opportunity for public comment, and a finding by FERC that the change is “just, reasonable, not unduly discriminatory or preferential, [and] is in the public interest.”[iv] While FERC does not write reliability standards, it may direct NERC to create new or modified standards to address specific reliability concerns or NERC may independently create such standards and submit them to FERC for approval.
Q. What are inverter-based resources?
A. Historically, electricity in the United States has been primarily generated from a mix of hydropower, nuclear, coal, and natural gas resources. The physical and mechanical properties of these “synchronous” generation resources, which naturally produce AC power, are needed to transmit electricity over long distances. These types of generation resources also laid much of the groundwork for the reliable operation of the grid. As the generation mix includes more renewable energy sources, synchronous generation resources that traditionally provided services necessary for maintaining reliability (i.e., managing frequency, generation-load balancing, and voltage) are being displaced by IBRs, such as wind, solar photovoltaic, and battery storage. In contrast with conventional synchronous generation resources, IBRs rely on inverters to turn their DC electrical output into AC power so that it can be sent to the grid.[v]
An inverter is a power electronic device that transforms DC power to AC power. IBRs present new opportunities but can also introduce new operational challenges and potential reliability risks to the electric system as it currently operates. In certain circumstances, IBRs can behave differently than synchronous generation. While IBRs produce power similar to synchronous generation resources, they do not react to disturbances on the electric grid in the same way. As their name indicates, synchronous generation resources are synchronized (i.e., spinning/rotating at identical speeds and angles) to the grid; thus, they automatically contribute to supporting reliability by “riding through” a disturbance without ceasing to operate. In contrast, IBRs must be programmed to “ride through.” Otherwise, they may reduce power or stop providing power during a disturbance. As the use of solar, wind, and other generation technologies that use inverters grows, it is necessary to factor in the unique characteristics of these technologies for the reliable operation of the electric grid.
Q. What, specifically, is this NOPR seeking to address?
A. Maintaining power system reliability is not a new challenge, but the growing share of IBRs have presented new kinds of grid challenges. The NOPR reflects the Commission’s concern that existing reliability standards inadequately address the reliability risks related to IBRs. Currently, reliability standards do not account for technological differences between synchronous generation resources and IBRs, which can increase reliability risks. Underlying this concern, NERC has also reported a number of events that have demonstrated challenges to transmission planning and operations of the electric system posed by gaps in reliability standards for IBRs.[vi]
The NOPR directs NERC to develop new or modified reliability standards to address four primary areas of concern:
FIRST KEY AREA: Data Sharing
Various entities responsible for ensuring the reliability of the electric grid, such as transmission planners, transmission operators, and reliability coordinators, rely on accurate and complete data to monitor the grid and respond to problems. This means that entities that plan and operate the grid need to understand all the elements on the grid, particularly those that are relatively new, like IBRs. Current reliability standards do not include the necessary specificity with respect to IBRs to ensure that sufficient information and data is provided from IBRs to account for the behavior and resulting impacts of IBRs on their systems.
SECOND KEY AREA: Model Validation
Once transmission planners and operators have IBR data, they must ensure the accuracy of such data to create meaningful computer simulation models of all of the elements on the grid. These power system models enable planners and operators to plan, monitor, and forecast the behavior of IBRs on the grid. Inaccurate models lead to unrealistic expectations as to how the grid will behave under varying circumstances, which may result in an otherwise avoidable blackout. Without new reliability standards or modifications to current reliability standards, transmission planners and operators would need to conduct extensive work in coordinating and validating IBR models submitted by different entities who own or operate IBRs.
THIRD KEY AREA: Planning and Operational Studies
Power system models are used by planners and operators to assess the reliability impacts of both individual and collective IBRs on bulk power system performance. Current reliability standards do not ensure that these planning and operational studies assess the performance and behavior of IBRs. As such, FERC found that inadequate planning assessments may lead to false expectations that system performance requirements are met and may have the unintended effect of masking potential reliability risks that are experienced during real-time operations.
FOURTH KEY AREA: Registered IBR Performance
Generators must do more than just provide homes and business with a dependable supply of electricity. A reliable electric system depends on “essential reliability services,” which are necessary for maintaining frequency, addressing imbalances between supply and demand, and helping the system recover after a transmission system equipment failure.
Some components of these essential reliability services are provided automatically by the technologies that set the initial standards for grid reliability. By contrast, IBRs must be specifically and purposely configured and programmed to provide these services. Current reliability standards do not require registered IBRs to provide such services.
Q. How will NERC implement these changes?
A. After consideration of public comments, the Commission will issue a final rule. Unless the final rule is contested within a certain period, the final rule would become effective on a specified date. In this case, if the final rule closely tracks the NOPR, the final rule would direct NERC to develop mandatory standards that account for the technological characteristics of IBRs and reduce the reliability risks that IBRs create.
NERC will then have to create a plan for how it will implement the requirements in the final rule. Namely, NERC must submit to the Commission a compliance filing which details how it would comply with the final rule within 90 days of the date that the final rule becomes effective. The compliance filing must include a detailed, comprehensive standards development plan to ensure all new or modified reliability standards necessary to address the IBR-related reliability gaps identified in the final rule are submitted to the Commission within 36 months of Commission approval of the plan.
[i] For more background on FERC’s history in overseeing the reliable operation of the electric grid, as well as specific terminology used in this explainer, please refer to FERC’s “2020 Reliability Primer,” available at https://www.ferc.gov/sites/default/files/2020-04/reliability-primer_1.pdf
[ii] Specifically, Congress added section 215 to the Federal Power Act in 2005, which authorized the development of mandatory reliability standards by an independent electric reliability organization.
[iii] For background NERC and its regional entities, please refer to NERC’s website available at https://www.nerc.com/AboutNERC/Pages/default.aspx.
[iv] As part of the Energy Policy Act of 2005 (EPAct 2005), Congress expanded FERC’s role and jurisdiction under the Federal Power Act (FPA) by adding a new section 215 of the FPA pertaining to electric grid reliability. FERC’s authority under section 215 of the FPA primarily focuses on the oversight of the development, review, and enforcement of mandatory reliability standards.
[v] For more information on inverter-based resources and synchronous versus nonsynchronous generation, please consider this U.S. Department of Energy (DOE) report, available at https://www.energy.gov/eere/solar/solar-integration-inverters-and-grid-services-basics
[vi] NERC major event analysis reports that describe events of IBRs causing reliability impacts, available at https://www.nerc.com/pa/rrm/ea/Pages/Major-Event-Reports.aspx