If you follow ESIG conferences and webinars you will find some themes and ideas that run through many of the presentations:
- Power systems can operate reliably with high penetrations of variable energy sources.
- Certain ways of operating and planning power systems work well with renewables, and those ways are pretty different from the traditional industry approaches.
- Power systems can operate reliably with high penetrations of renewable energy when they have certain capabilities: able to move large amounts of power back and forth across large geographic areas with regional markets, and robust regional and interregional infrastructure; able to quickly change dispatch in response to changes in net load (load minus generation); able to accurately forecast renewables and load and integrate probabilistic forecasts into system operation in time frames relevant to dispatch and commitment decisions; able to plan for resource adequacy with attention to net load, correlated outages, and severe weather scenarios.
- Inertia becomes important as renewables grow and conventional plants retire, and that is another solvable issue that will require attention. Grid-forming inverters become your friend.
- The physics and economics of power systems are quite similar in every country and continent, and we can learn from others’ experiences.
A Trip to the Federal Energy Regulatory Commission
If you then head over to 888 First Street NE in Washington, DC, or follow FERC conferences and orders virtually, you will learn:
- That through the Federal Power Act, Congress gave this independent agency the power to regulate rates, terms, and conditions of wholesale energy sales and transmission service, as well as practices affecting those rates.
- That FERC’s jurisdiction, while broad, does not apply to all utilities (most of FERC’s authority does not extend to municipal and cooperative utilities). In most circumstances, FERC’s jurisdiction also does not cover the retail, distribution, and parts of the transmission sector (the part bundled in vertically integrated utilities outside of regional transmission organizations (RTOs)) which are regulated by state commissions.
- That FERC has encouraged the formation of RTOs—which now cover approximately two-thirds of US load—and has consistently promoted competitive markets across its many Republican and Democratic appointees for the last quarter of a century.
If FERC decided to use its available authorities and tools and apply the lessons learned above from ESIG to support a reliable and efficient future power system, what would it do? I think it might look something like this:
- Change transmission planning from a reactive approach to a pro-active one in all regions and across regions, taking the future resource mix into account through a comprehensive transmission planning and cost allocation rule and other actions (such as coordinating transmission planning and interconnection policy).
- Review resource adequacy methods to: 1) have appropriate entities in all regions make sure that load can be served in all hours, 2) make sure that some entity, which can be state-determined, is accountable for procuring or providing sufficient resources for all load, 3) ensure that accurate capacity values are assigned to all resources, and 4) make sure there are incentives for resources through requirements and value-based pricing at all times and places to maximize the probability of actual performance when the system needs it.
- Abandon the controversial “Minimum Offer Price Rule” to allow suppliers to sell all of their various products: environmental attributes, capacity, energy, and ancillary services to parties of their choosing without forcing consumers to pay for redundant services.
- Update market designs to make sure that flexibility is attracted and rewarded, and make sure that market rules accommodate renewable, storage, hybrids, and distributed energy resources, including demand response.
- Alleviate interconnection queue logjams through the pro-active transmission planning and cost allocation mentioned above, and undo the policy that allows 100% assignment of shared network upgrade costs to individual generators in RTOs.
- Ensure the deployment of Grid-Enhancing Technologies through requirements and incentives where appropriate, to ensure that existing and future transmission is fully utilized.
- Encourage RTO participation with a variety of carrots and sticks.
- Promote competitive generation solicitation through PURPA (Public Utilities Regulatory Policies Act) authority and “Edgar” and “Allegheny” rules preventing utility affiliate favoritism.
Hang on for the Ride!
FERC has the authority to move all of these priorities forward in some form. New Chairman Glick has already announced a number of initiatives in these areas, beginning with technical conferences on most of them. As an independent agency made up of commissioners from both parties, which must follow extensive procedures to ground decisions in the law and facts in a public record, there will have to be lengthy processes before decisions can be reached and implementation can proceed. Anyone can file comments with the Commission, and should do so by submitting rulemaking comments or reaching out to the new Office of Public Participation.
It will surely be an extremely busy few years at FERC, and the range of initiatives promises to assist in the energy transition by advancing the market rules and infrastructure needed for a high share of renewables in our future energy system.
Grid Strategies LLC