Certain US inverter-based generating resources (IBRs), including nearly all solar and wind generators, that are not currently subject to federal operational reliability regulation may be regulated under a series of new orders issued by US Federal Energy Regulatory Commission (FERC) on November 17, 2022 (IBR Orders).1
Under the US Federal Power Act, as amended, FERC designated the North American Electric Reliability Corporation (NERC), a special purpose non-profit corporation, as the national electric reliability organization, and NERC, in turn , delegates daily trust management of regional trust entities. NERC’s reliability regulation covers reporting, testing and inspection of equipment and communications, record keeping, auditing, cybersecurity, physical security, and operational procedures.
Prior to the IBR Orders, a generating resource was only subject to NERC reliability registration and compliance if (1) the resource was connected to a bulk electric system transmission or sub-transmission facility rated at or above 100 kV ; (2) the source resource is greater than 20 MVa or, in the case of a complex generating units, 75 MVa; or (3) a particular source resource is determined under NERC rules to be material to the reliability.
What is Pronounced and Ordered
For the first time, the IBR Orders stated that IBRs are, in general, reliability materials and directed NERC to create criteria and rules for the registration of those IBRs connected to transmission or sub-transmission lines.2
The three IBR Orders direct NERC to –
- Under the Registration Order, make certain rule improvements and data collection actions within a three-year additional timeline to (1) complete changes to NERC’s registration processes within 12 months ; (2) identify all owners and operators of jurisdictional IBRs that generally affect the reliable operation of the grid within 24 months; and (3) register the owners and operators of IBRs that generally have a material impact on the reliable operation of the Bulk-Power System for a period of 36 months.
- Under the Reliability Standards Order, create new or revised standards that address four reliability gaps related to IBRs regarding (1) data sharing; (2) model validation; (3) planning and operational studies; and (4) performance requirements (in particular, the ability of IBRs to ride out system disturbances).
- Under the Interconnection Order, adoption of some additional reliability standards related to facility interconnection that will include IBRs as assets subject to regulation.
Which IBRs May Be Affected
At the outset, it should be noted that IBRs larger than NERC exemptions granted and/or connected to higher voltage transmission facilities are always subject to NERC registration and regulation, and, there is no specific materiality findings to reliable, smaller IBRs. and those involved in the local distribution level are never subject to NERC registration and regulation. What the IBR Orders have changed is that, presumably, NERC will expect to treat all IBRs of any size as subject to NERC registration and regulation except for IBRs that are only connected to distribution facilities. distribution IBRs that are grid-level interconnected but are not currently registered with NERC—perhaps regardless of size—may be subject to NERC registration and regulation. The Registration Order states that IBRs “regardless of size and transmission or sub-transmission voltage, have a material effect on … reliability.”3
FERC has not released information on how many IBRs may be affected by the IBR Orders. There are tens of thousands of solar and wind facilities currently connected to transmission and distribution facilities, and many are well below 20 MVa4 and therefore currently not registered with NERC.5 While the IBR Orders suggest that full NERC reliability regulation may not extend to some unregistered and now newly regulated IBRs, with NERC retaining some discretion to exercise some but not all reliability requirements of IBRs depend on materiality,6 the IBR Orders nevertheless create the near guarantee of complex, time-consuming, and potentially expensive operational responsibilities that are now attached to non-dispatchable and essentially passive power supply resources.
What to Expect in Progress
The FERC and NERC proceedings will establish exactly what responsibilities apply where IBRs are concerned; for example, the Registration Order is not expected to result in currently unregistered IBRs actually becoming NERC-registered until more than 36 months have passed from the date the IBR Orders were issued.7—a date easily extended by subsequent order. But the long delay in the results of IBR Orders becoming fully defined and effective should not discourage investors in IBRs from thinking that the requirements will not be disruptive. The IBR Orders will result in NERC regulation that will apply to many times the number of entities than they currently apply, and even small IBRs that are not physically configured will be swept up in the new regime with a large uncertainty about the nature, amount and timing of any required investment in equipment or controls.