The FERC SGIP: Time for a Tune Up

The average size of distributed photovoltaic systems is on the rise. In fact, the average size of all PV systems installed in 2011 grew by 64% over 2010. In addition to larger system sizes, penetration of solar on the grid is increasing in many states. In Hawaii, for example, 20 percent of the distribution circuits are already above 15 percent of peak load, a common benchmark for high penetration. These trends, coupled with the growing interest and declining costs in distributed generation (DG), are causing utilities across the nation to propose lengthy studies to determine the potential grid impact of increased DG capacity.

Last month, however, we heard an important announcement that could smooth the path of further DG development, enabling larger and greater numbers of DG systems to connect to the grid in a more expeditious manner. On January 17, the Federal Energy Regulatory Commission (FERC) issued a proposed rule that contains a number of important changes to its Small Generator Interconnection Procedures (SGIP). In the proposed rules, FERC notes that the proposed reforms are “intended to ensure that the time and cost to process small generator interconnect requests will be just and reasonable and not unduly discriminatory.” This is welcome news for the renewable energy community, especially considering that FERC’s original intent was to re-evaluate the rules two years after they were first published and six years have now passed since FERC has had an opportunity to consider possible modifications.

Two proposed revisions deserve special note. The first of the two important revisions proposes to modify the size limit for systems eligible for the Fast Track application process, which is currently set at 2 Megawatts (MW). Instead of applying a single size limit for all distribution system interconnections, FERC proposed a more nuanced alternative of adopting a size limit that would vary depending upon the voltage of the line, the thickness of the wire and the generator’s distance from the substation. These are important considerations in determining the existing carrying capacity of the local distribution system for interconnecting additional generation. On page 19 of the proposed rules, FERC proposes a table that contains generator size caps for the Fast Track application process, varying generator eligibility based on the distance to a substation and the size of the line. If adopted, generators up to 5 MW could potentially interconnect using the expedited process.

Additionally, FERC also included a supplemental review process that allows more generators to interconnect under the expedited process at higher penetrations, so long as certain technical screens are passed. The proposed supplemental review process would allow certain systems to avoid a costly full study process. In the proposed rules, generators that fail any of the existing Fast Track initial review screens would be subject to a supplemental review process rather than having to undergo a full study process. This supplemental review process would evaluate whether the generator plus any other generating capacity on a distribution line would surpass 100% of minimum load on that line. The proposed supplemental review process also includes two additional screens that allow a utility to determine a generator’s impact on safety, reliability and power quality.

The FERC SGIP was originally intended to serve as a model for state procedures, which many states fully embraced. The 2012 Freeing the Grid publication grades for state interconnection procedures show that 20 out of 35 states plus the District of Columbia have based their technical screens off of those in the FERC SGIP. Fifteen of those 20 states have also decided to improve upon FERC’s model by dropping or replacing one or more screens that were overly burdensome to developers or utilities, as long as they did not impact grid safety, reliability or power quality.

If you consider the wide range of interconnection facilities and situations to which the FERC SGIP must apply, it has done an impressive job of establishing safe and efficient parameters for interconnection. If these new proposed rules are adopted, they will open up even more flexibility for larger projects to be cost-effectively interconnected. They also provide a more streamlined and efficient avenue for utilities that are fast becoming overwhelmed with interconnection applications. Hopefully, states will continue to follow FERC’s lead, to better prepare for the steadily growing increase of interconnection applications.

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