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October 3, 2024

‘Hot Mic’ Reveals Montana Move Against Solar QFs

By Amanda Durish Cook

A Montana utility commissioner was caught on a hot microphone last week appearing to confirm what renewable energy advocates say they already suspected: that state regulators knowingly put rules in place that will suppress development of small solar projects by altering the contract terms available to generators under the Public Utility Regulatory Policies Act.

PURPA montana solar bob lake
Lake | Montana PSC

During a break in a June 22 meeting of the Montana Public Service Commission, a microphone — inadvertently left on — picked up Commissioner Bob Lake speaking privately about a recent decision to reduce the standard contract length and rate available to qualifying facilities up to 3 MW under PURPA.

Enacted by Congress in 1978 to encourage diversification of energy supplies, PURPA requires utilities to pay QFs the cost a utility would incur for supplying the power itself or by obtaining supplies from another source. The law leaves it to each state’s utility commission to formulate those rates and set contract terms, depending on project size.

QF Death by Attrition

Lake’s comments were captured in a video posted by the Billings Gazette, which shows him and PSC rate analyst Neil Templeton discussing the commission’s move to cut QF rates by about 40% and reduce contract terms from 25 years to five years with the option to negotiate rates for an additional five years. NorthWestern Energy last year complained that QF rates were 35% above its “avoided costs” and asked that they be reduced (Docket No. D2016.5.39).

“It’s essentially a five-year rate, so … it’s going to probably kill QF development entirely,” Templeton said in the footage.

PURPA montana solar bob lake
Lake and Templeton discussing QF Contracts

“Well, actually, a 10-year [contract length] might do it if the price doesn’t,” Lake replied. “And honestly at this low price, I can’t imagine anyone going to get into it. So, it becomes a totally moot point because just dropping the rate that much probably took care of the whole thing.”

“We’re live,” Lake worries later in the video. An unidentified staffer in the room assures him that microphones are turned off.

The incident follows FERC’s January decision to decline enforcing PURPA against the PSC. Solar advocacy group Vote Solar had complained that the state regulators violated the law when it allowed NorthWestern to suspend its tariff for solar QFs pending a rate review (EL16-117). (See FERC Won’t Act on Montana Regulators in PURPA Dispute.)

No Surprise for Solar Supporters

Jenny Harbine, an attorney with Earthjustice representing Vote Solar, was unsurprised by the content of the recorded conversation but surprised that the comments were captured.

“It’s remarkable that the concession was caught on tape, but as a general proposition, it’s well understood by the rest of the world,” Harbine told RTO Insider. “You can’t finance an energy project with a five-year contract any more than I can finance my home with a five-year mortgage. Commissioner Lake and the commission staff confirmed on the open mic that they understand that solar development [under the new five-year contract] is not feasible.

“When state commissions set unreasonably short contract lengths, development of those projects fall off a cliff. There’s evidence of that,” Harbine added. “What the commissioner conceded is that he understood a shorter contract length would close the door on those projects.”

Another notable point about the commission’s decision, according to Harbine: While NorthWestern had asked the commission to reduce the amount paid to QFs under PURPA, the utility did not ask for a shorter contract length.

“The commission took that upon themselves,” Harbine said, adding that developers should be “hopping mad.”

PSC’s Defense

PSC Communication Director Chris Puyear said the decision to reduce the QF contract length and rate boils down to price fairness for ratepayers.

“It’s not the role of the commission to pick winners and losers in the energy landscape,” Puyear said in an email. “Federal law says ratepayers shouldn’t have to overpay for electricity produced by independent generators, but that’s exactly what was happening in Montana.”

Customers were “forced to pay nearly double the market price of electricity for power produced by independent solar facilities” under Montana’s previous QF rate, he added.

“The commission’s action brings rates for independent power in line with what customers would otherwise pay for power produced by the utility, while ensuring that long-term, fixed price contracts do not shift undue risk to the ratepayer,” Puyear said.

“In making its determination on avoided cost and contract length, the commission relied heavily on record evidence, especially the testimony of the state ratepayer advocate, the Montana Consumer Counsel.”

California High Court Upholds Cap-and-Trade

By Jason Fordney

The California Supreme Court on Wednesday declined to review a challenge of the state’s greenhouse gas cap-and-trade program, preserving the 2006 law that requires power plants and other polluters to reduce carbon emissions or purchase state-issued credits.

The court declined to review the California Chamber of Commerce’s appeal of an April 6 decision by the Third District Court of Appeal favoring of the program.

cap-and-trade greenhouse gas caiso
NRG’s Etiwanda natural gas plant, Ranch Cucamonga

While the business interests represented by the chamber did not oppose the California Global Warming Solutions Act of 2006, which set the emissions limits, they attacked the associated California Air Resources Board (CARB) regulations that created the cap-and-trade program allowing the sale of some greenhouse gas emissions allowances.

The legislation required covered entities such as power plants to reduce greenhouse gas emissions to 1990 levels by 2020 and designated CARB to monitor and regulate emissions sources.

Under the program, large emitters of greenhouse gases must purchase emissions credits at CARB’s quarterly auctions to cover emissions not accounted for with free credits. The plaintiffs said the auction sales exceeded the State Legislature’s delegation of authority to the board, and that the revenue generated amounts to a tax.

The appeals court in its earlier ruling said “the legislature gave broad discretion to the board to design a distribution system, and a system including the auction of some allowances did not exceed the scope of legislative delegation.” The court said the legislature later ratified the system by specifying how to use the proceeds.

The appeals court also said the revenue is not a tax because it is a voluntary decision driven by business judgments regarding whether it is better to buy credits than reduce emissions, which, unlike a tax, has value.

“Reducing air emissions reduces pollution, and no entity has a right to pollute,” the lower court said.

The chamber did not immediately respond to a request for comment on the high court’s decision.

The Environmental Defense Fund and Natural Resources Defense Council intervened in the proceeding on behalf of CARB.

“This is the final step in this case to affirm California’s innovative climate program, including its carbon auctions, which serves as a vital safeguard to ensure polluters are held accountable for their pollution,” EDF senior attorney Erica Morehouse said in a statement.

Even with the court challenge behind it, cap-and-trade still faces an uncertain future. Gov. Jerry Brown is trying to extend the life of the program, which expires in 2020, through a ballot measure.

caiso cap-and-trade greenhouse gas
The California Supreme Court (photographed above) upheld a lower court ruling

“With this Supreme Court victory, now it’s up to us to take action extending California’s cap-and-trade system on a more permanent basis,” Brown said in a statement.

CARB is expected to auction about half of the program’s total allowances by 2020. As of January 2015, about 500 million allowances had been given away and about 75 million were auctioned.

Trump Promises to Make US Energy Dominate

By Michael Brooks

President Trump announced six “initiatives” in a speech at Energy Department headquarters Thursday, saying they would create “American energy dominance” in the world.

Trump (left) and Perry

The announcements were part of the White House’s Energy Week, an effort to highlight the administration’s energy policies.

Some of the announcements were merely approvals by the departments of Energy, Interior and State. Flanked by Vice President Mike Pence, Energy Secretary Rick Perry, Interior Secretary Ryan Zinke and EPA Administrator Scott Pruitt, Trump announced:

  • A review of U.S. policies on nuclear energy resources;
  • The Treasury Department would work to address barriers on financing foreign coal plants;
  • A Presidential Permit for a petroleum pipeline crossing Mexico;
  • Sempra Energy had agreed to negotiate a deal to export LNG to South Korea;
  • Approval of two long-term applications by the Energy Department to export LNG from the Lake Charles, La., facility; and
  • A new offshore oil and gas leasing program.

Trump did not go into specifics about the announcements. They made up a brief segment of a speech punctuated by praise for his administration’s elimination of “job-killing” regulations, celebration of the withdrawal from the Paris Agreement on climate change and jabs at CNN for recent resignations over a retracted story about alleged ties between a Trump ally and a Russian investment fund.

american energy dominance trump
Left to right: Pence, Trump and Perry

Like his speech announcing the withdrawal from Paris, Trump’s remarks had nationalistic overtones, arguing that the U.S. has been taken advantage of by other countries that “used energy as an economic weapon.” The president did briefly mention that America’s “clean, beautiful coal” was in high demand from countries such as Ukraine. And he said the pipeline to Mexico would go “right under” his proposed border wall.

Nuclear Energy Institute CEO Maria Korsnick, who attended the speech, thanked the president for the study on the challenges facing the nuclear energy industry.

“If the president wishes for our nation to achieve nuclear energy dominance both at home and abroad, he’ll do it by preserving the existing nuclear fleet, paving the way for the deployment of advanced nuclear designs and stimulating exports abroad,” she said in a statement.

Left to right: Zinke, Pence, Trump, Perry and Pruitt

Tom Kiernan, CEO of the American Wind Energy Association, issued a statement Thursday expressing support for Trump’s “strategic vision to seek American energy dominance.”

“The administration’s all-of-the-above energy strategy, including resources like wind, can work to make America safer and more self-reliant while growing the economy,” Kiernan said.

Sierra Club Executive Director Michael Brune said Trump’s “Energy Week” showed “just how weak he is on energy solutions. Trump’s rhetoric on energy falls short of the reality in which he’s canceling life-saving public health standards that protect clean air and water just to boost the profits of fossil fuel executives. Trump isn’t leading America, he’s trying to drive us backwards and he will not succeed.

“Trump’s head is stuck so far into the sand that it’s no wonder the only thing he can speak of is fossil fuels — he can’t see that solar and wind energy are creating more jobs and powering homes and businesses across the country. If he truly cared about energy dominance, Trump would be investing in growing the booming clean energy economy rather than trying to turn back the clock for dirty fuels.”

Access Northeast Put on Hold by Utilities

By Michael Kuser

Eversource Energy and National Grid notified FERC on Thursday that they are suspending the permitting process for the $3 billion Access Northeast natural gas pipeline expansion project in New England until they can find a way to finance it. The two utilities made the filing (PF16-1) together with pipeline operator Enbridge, according to a report in the Boston Globe.

The story quoted Brian McKerlie, a vice president at Enbridge, as saying that after the companies persuade state legislators to allow a special tariff for electric ratepayers to fund the project, “we’ll be able to re-engage the FERC filing process and be back on track.”

Access Northeast
| Spectra Energy

The companies’ action was not unexpected.

Last August, Eversource and National Grid withdrew requests to bill customers of their four electric distribution companies for natural gas capacity from the proposed pipeline expansion after the Massachusetts Supreme Judicial Court vacated an order by the state regulators approving pipeline capacity contracts. (See Eversource, National Grid Withdraw Requests to Bill for Pipeline.)

The increasing reliance on natural gas to generate electricity in New England has led to reliability concerns, while the source of much of the gas, fracking in Pennsylvania, has led to environmental protests over new pipelines or plans to expand existing ones.

On Tuesday, Massachusetts gubernatorial candidate Setti Warren (D) visited a gas compressor station in Weymouth that serves the Algonquin and would serve its expanded version. Warren, mayor of Newton, criticized the pipeline expansion as a “mistake for Massachusetts” and said Gov. Charlie Baker (R) should oppose it.

Storage Advocates Urge CAISO on DR Product

By Jason Fordney

Tesla and other energy storage companies have urged CAISO to accelerate development of a new demand response product that is based on excess generation, but the grid operator says it must first address many concerns before including the product in any proposal.

The electric automaker and other storage proponents last week submitted comments on a draft proposal of CAISO’s Energy Storage and Distributed Energy (ESDER) Phase 2 initiative, which is unlikely to include establishment of a new proxy demand resource (PDR) that would consume load based on an ISO dispatch instruction, including providing regulation service.

| CAISO

CAISO wants to omit the load consumption product from the ESDER Phase 2 package to be presented to its Board of Governors for approval during its July meeting. (See CAISO Proposes Rules for Distributed Resources, Storage; CAISO Finalizes Rules for DR, Distributed Generation.) The ISO plans to defer the product until a third phase in order to better understand the limits of non-generator resources and other issues identified in its separate “multiple-use applications” initiative related to storage.

Increasing instances of generation oversupply and solar curtailments is creating urgency for a market mechanism that facilitates consumption of surplus power, and stakeholders have generally agreed that CAISO should not let jurisdictional rate issues interfere with development of the bidirectional PDR product capable of both consuming and producing energy.

“CAISO staff has indicated that owing to the retail billing implications of customer participation in a hypothetical load consumption product, such a product is too fraught to consider developing and implementing until such implications are addressed,” Tesla said in its comments. The company “strongly disagrees with this perspective,” provided that customers understand that their retail bills will be impacted by a decision to charge a storage device based on the billing determinants they are subject to pursuant to their retail tariff.

Tesla said that customers of the program should be able to determine for themselves whether to provide load consumption based on the difference between retail rates and wholesale pricing. Customers would find value in offsetting their retail bills through negative wholesale prices while helping California mitigate oversupply, the company contended.

While storage advocates are urging CAISO to develop a bidirectional PDR product, “a broad cross-section of stakeholders” said it should “take more time to resolve issues, consider options and coordinate with” the California Public Utilities Commission, CAISO said.

Among these concerns are the effects on retail rates, customer interest, demand charges and technical implementation issues.

Pacific Gas and Electric’s “excess supply pilot has delved into these issues and has reported that participants are concerned about rate impacts and ratcheting demand charges,” CAISO said in its revised proposal.

“Contrary to comments from the storage community, the CAISO does not view these barriers as jurisdictional in nature, but as real impediments to customer interest and robust customer participation in a bidirectional PDR product,” the ISO said.

Energy storage companies said CAISO should also work on enabling behind-the-meter storage to participate in the wholesale market via the PDR product. There is unused potential in BTM energy storage because to do so currently requires participation as a non-generator resource, said Tesla, energy storage company Stem and EV charger manufacturer eMotorWerks.

Tesla Distributed Battery Storage Power Plant | Tesla

There has also been discussion within the Load Consumption Working Group, which Tesla said CAISO staff “appears to defer to stakeholders to revive and manage.” Storage companies want the ISO to take a leadership role in the working group.

The California Energy Storage Association (CESA), which represents more than 60 companies, said it “supports rapid action” on the group performing further work and having CAISO lead it, adding that the ISO should ensure ESDER promotes nondiscriminatory access to markets.

“CAISO should focus on how to ensure resources like PDRs can show up in CAISO markets to compete to provide services,” CESA said.

FERC: MISO Gas Data Sharing Plan Falls Short

By Amanda Durish Cook

A MISO plan to share generators’ hourly gas-burn estimates with select natural gas pipeline operators will require more explanation before getting federal approval, FERC staff said Tuesday.

Agency staff issued the RTO a deficiency letter in response to a proposal to share nonpublic, day-ahead gas-usage profiles with pipeline companies — which currently include Northern Natural Gas, ANR Pipeline and DTE Energy — before this winter as part of a pilot program meant to improve gas reliability (ER17-1556). (See “3 Pipeline Companies to Receive Gas Profiles Before Winter,” MISO Reliability Subcommittee Briefs.)

In filing the proposal, MISO stressed that it would share only aggregated data, while also contending that sharing nonpublic operational data was allowed under FERC Order 787. The RTO plans to execute nondisclosure agreements with relevant pipelines and utilities under the proposal.

But FERC staff were primarily concerned with a provision that would also allow MISO to share data with local distribution companies (LDCs) and intrastate pipelines in addition to interstate operators.

While the deficiency letter acknowledged that Order 787 recognized the “significant” role of LDCs and others in maintaining reliability of both interstate pipeline systems and electric transmission systems, it also noted the order “declined to provide blanket authorization for the disclosure of nonpublic, operational information” to LDCs, intrastate pipelines or gas gatherers, instead requiring a case-by-case approach. FERC staff determined that “MISO does not provide support for this aspect of its proposal” and gave the RTO 30 days to provide more supporting information to justify sharing nonpublic information with LDCs.

Agency staff also said that MISO’s proposal failed to expressly prohibit the use of nonpublic, operational information “to the detriment of any natural gas and/or electric market,” as an earlier, similar proposal from PJM promised. MISO’s proposed nondisclosure agreement merely prohibits the “receiving entity from illegal and non-legitimate use of the nonpublic, operational information,” FERC staff said, asking MISO to explain the omission.

Some MISO stakeholders earlier this year voiced opposition to the pilot program, saying it could affect reliability if participating gas operators make burn rate decisions relying solely on partial day-ahead data. (See MISO Stakeholders Question Electric-Gas Info Sharing.)

ITC ‘Tour’ Includes Call for Increased Tx Investment

By Amanda Durish Cook

ITC Holdings on Tuesday offered a rare look into its Michigan control room as part of a company update that included an appeal for increased investment in transmission.

ITC holdings transmission
ITC Control Room

Blair

During the online “virtual tour” and accompanying web seminar, CEO Linda Blair called for a sense of “urgency” for the industry to develop new electric infrastructure.

“Now is a critical time to support investment for the years ahead,” Blair said, adding that “no meaningful interregional planning process” exists to address extra demands being placed on the grid, particularly from the growth of wind generation.

“We have to have a requirement that transmission lines have a way to come to fruition. … I think it requires action from FERC,” she said.

ITC was acquired by Canadian utility Fortis last October. Immediately following the $11.3 billion sale, Blair took over as president and CEO of the Michigan-based company.

Blair said ITC has not changed its company vision since the acquisition. “We’re a transmission-only company. We breathe, sleep and eat transmission. That’s what we do, and we do it well,” she said.

Jipping

“A strong grid promotes economic development,” Chief Operating Officer Jon Jipping added.

Jipping said ITC is awaiting approval by the U.S. Army Corps of Engineers on the Lake Erie Connector project, a 1,000-MW, bidirectional, underwater HVDC transmission line that will ship electricity between Ontario’s Independent Electricity System Operator and PJM territory in Erie, Pa. He expects the company to wrap up the permitting process for the $1 billion project in late summer.

ITC executives also touted the reliability of the current ITC system that spans Michigan, Iowa, Minnesota, Illinois, Missouri and Oklahoma.

Slocum

Vice President of Operations Brian Slocum said ITC’s system remained operational during Michigan’s historic March 8 wind storm and weather-related outages that affected more than 1 million people.

“Over the years, we’ve seen less unplanned outages on this wall,” Slocum said from a virtual ITC control room. But more needs to be done to improve the country’s transmission grid, which was not designed to handle so many renewable sources of generation, he said.

“Fortunately, there’s a dialogue underway” on infrastructure improvements in this country, Slocum added.

Trump Taps Senate Aide, Former Lobbyist for FERC

By Michael Brooks

The White House late Wednesday announced that President Trump intends to nominate Richard Glick, general counsel for the Democrats on the Senate Energy and Natural Resources Committee, to replace outgoing FERC Commissioner Colette Honorable.

trump richard glick ferc
Glick | Avangrid Renewables

Glick has been with the committee since February 2016. Prior to that, he was a lobbyist at Avangrid Renewables, PPM Energy and PacifiCorp. Glick also served under the Clinton administration as an adviser to Energy Secretary Bill Richardson. He earned his bachelor’s from George Washington University and his J.D. from Georgetown University.

Glick’s term would end in 2022. The announcement came two days before Honorable’s term at the commission ends, leaving acting Chair Cheryl LaFleur, a Democrat, as the only commissioner. (See FERC’s Colette Honorable Says Goodbye.)

Pennsylvania Public Utility Commissioner Robert Powelson and Neil Chatterjee, energy adviser to Senate Majority Leader Mitch McConnell (R-Ky.), have already advanced out of committee and are awaiting confirmation votes by the full Senate.

Powelson and Chatterjee, both Republicans, would restore the commission’s quorum, but it is unknown when McConnell intends to schedule the votes: The Senate has been consumed by Republicans’ efforts to replace Obamacare, and reports say that Democrats have refused to consent to votes on other items while debate on the bill is ongoing.

The confirmation of the three nominees would leave only the seat vacated in February by former Chair Norman Bay, a term that would end next year.

ferc trump richard glick
FERC’s membership will see a nearly complete turnover if Republicans Robert Powelson and Neil Chatterjee and Democrat Richard Glick are confirmed by the Senate to join acting Chair Cheryl LaFleur. President Trump has not yet nominated a third Republican.

Numerous reports have identified Kevin McIntyre, co-head of the energy practice at law firm Jones Day, as the third Republican nominee and likely chairman, but he has not been formally named.

Glick’s nomination may be an effort to appease Democrats and enable simultaneous votes on all three nominees. If that’s the case, FERC will have to wait on a White House notorious for its slowness in officially submitting nominations and for Glick to go through the committee process.

Honorable’s “departure again underscores the urgent need to re-establish a quorum at FERC,” Committee Chair Lisa Murkowski (R-Alaska) said yesterday. “Getting the agency back to the normal course of business remains a top priority for me. I will continue to push for a confirmation vote for Neil Chatterjee and Robert Powelson. … I hope my colleagues among the Senate minority will join us in enabling a quick vote for Mr. Chatterjee and Mr. Powelson.”

FERC Tentatively OKs New MISO-PJM Project Type

By Amanda Durish Cook

CARMEL, Ind. — FERC on Monday approved a proposal by PJM and MISO to create a new category of small interregional transmission projects while cautioning that the measure could see future revisions.

The proposal updates the PJM-MISO joint operating agreement with a targeted market efficiency project (TMEP) type, which applies to projects that reduce historical congestion along the RTOs’ seams.

Still, in its June 26 delegated order, FERC staff said that preliminary analysis indicates the proposal has “not been shown to be just or reasonable” and left open to the possibility that it could be subject to refund after being implemented (ER17-721). The RTOs are eligible to use the project type starting June 28.

The RTOs filed jointly last year to create TMEPs to encourage construction of cost-effective and congestion-relieving seams projects that might otherwise be overlooked because of their low cost and small size. Their proposal stipulates that TMEPs cost less than $20 million, be in service within three years of approval, and within four years of operation provide congestion relief equal to or greater than the cost of construction. Costs will be apportioned to MISO and PJM based on the percentage of congestion relief benefits accruing to each RTO.

The RTOs have so far identified $17.25 million worth of upgrades in five TMEP candidate projects, and expect those projects to deliver a 5.8:1 benefit-cost-ratio and realize $100 million in benefits within four years of going in service. (See MISO-PJM TMEP Projects Drop to Five.) Both RTOs hope to finish evaluation of TMEP candidates by September and seek respective board approvals by the end of the year.

Exelon, the Organization of MISO States, Northern Indiana Public Service Co., the Indiana Utility Regulatory Commission and ITC Mid Atlantic Development supported the proposal in comments to FERC. MISO South regulators protested the filing, claiming that the RTOs’ benefits analysis fails to take congestion hedging revenues into consideration.

Speaking on behalf of the MISO Transmission Owners sector, Ameren Senior Director of Transmission Policy Dennis Kramer said that the factoring in of congestion hedging revenues would “complicate” the TMEP study process.

“Excluding the congestion hedge costs is consistent with the TMEP goal of straightforward, efficient metrics that can be easily reproduced by stakeholders,” Kramer said in comments submitted for a June 13 FERC workshop on the TMEP issue. “Adding congestion hedges … would fundamentally change the nature of the TMEPs by changing the study from a simple analysis of historical flowgate congestion to a multifaceted deconstruction of a series of complex financial hedging instruments which differ in each RTO. Such action would counteract the RTOs’ ability to implement the quick-hit, high-value project types.”

Regional Cost Allocation

FERC must still also act on separate proposals by MISO and PJM regarding how they plan to allocate their portion of TMEP costs regionally.

MISO plans to pursue a bifurcated cost allocation, using a local transmission pricing zone when the constraint exists on lines belonging to one or more MISO transmission owners. For constraints wholly within PJM, MISO is seeking a postage stamp allocation for the entire MISO Midwest region.

However, MISO missed its targeted April filing deadline to complete a regional cost allocation because it needed more time to develop the process with stakeholders. Spokesman Mark Adrian Brown said the RTO will submit an allocation proposal “as soon as possible.”

PJM in April filed a regional cost allocation proposal that would assign TMEP costs to zones and merchant transmission facilities “that are shown to have experienced net positive congestion over the two historical years prior to the TMEP study period” (ER17-1406).

DER: A Threat to the Grid?

By Terry Brinker

Recently, I attended a solar power event hosted by Solar Energy Industry Associates (SEIA) and Smart Electric Power Alliance (SEPA). The event was well attended by industry thought leaders, manufacturers, solar companies and even legislators. Of course, being a solar event, most of the speakers lauded the benefits of solar: how it’s better for the environment, how the price of solar continues to decrease, how photovoltaic panels continue to improve and how the industry has made it easier to integrate solar into more communities. If you were not from this planet, you would question why everyone does not have solar. It sounds like the best thing since sliced bread.

Brinker

In the words of Lee Corso, the colorful ESPN football analyst, “Not so fast, my friend.”

Others might have a completely different take on solar and distributed energy resources altogether. Ironically, this event was held in Atlanta, which is also where NERC is headquartered. NERC has raised some concerns about DER. In fact, I wrote an article about it. NERC is not alone in its concerns. According to a study issued by Accenture, many utility executives see DER as the biggest stress on grid reliability. Nearly 60% of the executives surveyed expressed concerns.

Adding to the complexity of this debate is the efforts by many states and cities to “go green.” California just passed legislation requiring the state to be 100% renewable by 2045. Other states are certain to follow California’s lead. Many, like North Carolina, already have ambitious renewable goals. Recently the Atlanta City Council approved a measure aimed at making Atlanta 100% renewable by 2035. So, who is right?

Recent studies have suggested that DERs are not a threat to the grid and may even help the grid to be more reliable. CAISO — in collaboration with the National Renewable Energy Laboratory, First Solar and Southern Co. — used a 300-MW solar facility to conduct a study that determined that “solar photovoltaic resources can provide ancillary services in a way comparable to or even better than conventional generation resources.” General Electric has stated, “The days of relying on synchronous generation for everything are over.” And who could argue against the technological advances that have been made in the industry such as plant-level controllers and virtual oscillator controls, which are designed to respond to changes in load, frequency and voltage similar to conventional generation? I highly suggest reading the article “Can Smarter Solar Inverters Save the Grid?” found here.

distributed energy resources DER
Distributed Energy Resources | Clean Coalition

The DER industry will point to these studies, articles and advancements and say, “Move on, there is nothing to see here.” However, (insert Lee Corso quote here), there is ample evidence to show that we are not quite there yet.

On Aug. 16, 2016, there was a significant event resulting in the loss of nearly 1,200 MW of PV generation. In short, a fire caused a fault that resulted in three facilities ceasing output instead of riding through the fault. DER detractors will point to events like this to show that instead of providing support to the grid, DER actually hurt the grid when needed at the most critical time. NERC and the Western Electricity Coordinating Council conducted a study of the event and published a report. (See CAISO Boosts Reserves After August Event Report.) The 2016 Australia blackout has been attributed to its reliance on wind power. Another concern of NERC is that with so many DER projects in the works, it cannot adequately account for and plan for these additional megawatts. Planning is essential to grid reliability. So where do we go from here?

Although I claim to be a subject matter expert (I have stayed at a Holiday Inn Express before), I do not claim to have all of the answers. However, with legislators mandating renewable energy usage and renewable energy becoming cheaper with each passing year, we have to adequately plan for this new normal. To that end, it is critical that the various stakeholders — DER industry, regulators, legislators and utilities — work together to effectively and strategically integrate renewables into the grid while also providing the reliability that is necessary. We cannot afford legislative mandates like the one in Hawaii that had to be rewritten because of unintended consequences. We also cannot afford the installation of solar farms that cannot respond appropriately to disturbances on the grid, like the August 2016 Southern California event. We cannot afford burdensome regulation that overreaches. We can afford to have thought leaders at companies such as First Solar, Southern and Duke Energy; government agencies like FERC, NERC, NREL and the Energy Department; industry associations like SEIA, SEPA and the Institute of Electrical and Electronics Engineers; and state legislators work together and create strategic policies that ensure that we all succeed in this new normal.

Is DER a threat to the grid? Not if we all work together to ensure that it is not.

Terry Brinker, who has 23 years of experience leading, facilitating and implementing improvements in power plant operations, control room operations, compliance and regulatory matters, is the president of Reliable Energy Advisors. Terry previously served in leadership roles during a five-year stint at NERC, where he served as senior manager of standards information and personnel certification, manager of registration services, and senior event investigator.