Renewable Energy Regulation: Follow the Leader
Last week, we saw an important shift in interconnection policy as the federal Small Generator Interconnection Procedures (SGIP) were updated for the first time since their initial adoption in 2005. We have been working for nearly two years to build stakeholder consensus at FERC on the changes adopted last week, which follow the example set by leading states such as California, Hawaii and Massachusetts. It is a monumental accomplishment, symbolically and substantively.
The success of the renewable energy market is partly illustrated by the rapidly increasing number of small renewable energy systems connecting directly to the distribution grid. For this changing market to continue to thrive, we must ensure that these systems can access the grid in a safe, efficient and cost-effective manner. And this means acknowledging that small systems need smaller hoops to jump through for evaluation of their safety and effectiveness.
Last week, we saw an important shift in interconnection policy as the federal Small Generator Interconnection Procedures (SGIP) were updated for the first time since their initial adoption in 2005. The action by the Federal Energy Regulatory Commission (FERC) sets a positive tone for states to adopt similar interconnection standards on a state level.
The changing nature of the electrical grid makes it important for states to follow the federal lead and examine the technical standards and processes used to evaluate small renewable energy systems. And if states wish to support the growth of their market, they will want to act early to ensure that interconnection does not become an obstacle.
We have been working for nearly two years to build stakeholder consensus at FERC on the changes adopted last week, which follow the example set by leading states such as California, Hawaii and Massachusetts. It is a monumental accomplishment, symbolically and substantively. However, it is only some wholesale distributed generators that are required to use the federal interconnection procedures; most small generators are interconnected using state-jurisdictional procedures.
The action at FERC does not require any change to state procedures, SGIP simply acts as a model and guide. So while we have turned a groundbreaking corner for small generating systems – one that is likely to have a far-reaching impact – we must now work with states to take notice and follow suit.
By enabling a greater number of systems to be processed efficiently, the procedures are attractive not only to generators, but also to utilities and ratepayers. They reduce the number of unnecessary and costly interconnection studies that must be conducted, so utilities can avoid the challenge of managing lengthy interconnection queues. These increased efficiencies can lower the overall cost of renewable energy and also help to maximize use of existing infrastructure.
Most importantly, the updated procedures ensure that all of these improvements are achieved without undermining the safety and reliability of the grid.
In the coming months, we will be working with partnering organizations across the country to encourage states to consider adopting changes similar to those set out in SGIP. In particular, those states that are beginning to see high volumes of interconnection applications and higher penetrations of distributed generation will benefit most immediately.
The key hallmarks of the FERC order include:
- Creating a pre-application report process that enables generators, in exchange for a reasonable fee, to obtain available system information about a particular point of interconnection. This information will assist them in evaluating the potential costs and timeframe associated with interconnecting at that point.
- Increasing the size of systems that can proceed through SGIP’s expedited review process or “Fast Track.” The new, more technically based, limit evaluates the system type and location in addition to the size to determine which projects are eligible for Fast Track. This should allow a greater number of systems with capacities of up to 5 MW to avail themselves of the more efficient process while still protecting the safety and reliability of the grid.
- Improving the supplemental review process to allow more projects to avoid a full study. The new process also provides utilities with additional time to verify that eligible generators will not create safety, reliability or power quality impacts to the grid. As higher penetrations of distributed generation are reached, these new procedures create a pathway for efficient interconnection up to 100 percent of minimum load.
The complete FERC order is available at http://www.ferc.gov/whats-new/comm-meet/2013/112113/E-1.pdf
Sky, Of Counsel to Keyes, Fox & Wiedman LLP, represents IREC in regulatory matters.
