DG Growth and Energy Storage – FERC Reforms the SGIA Process

21 January 2014 Renewable Energy Outlook Blog
Authors: Thomas McCann Mullooly

The Federal Energy Regulatory Commission (FERC) issued Order No. 792 late last year, which amends the pro forma Small Generator Interconnection Procedures (SGIP) and pro forma Small Generator Interconnection Agreement (SGIA) under Order No. 2006. The amendments, many of which are rooted in policies first put in place in California, are intended to remedy undue discrimination and make it more efficient and less costly for small generators (no more than 20 MW) to interconnect to the transmission or jurisdictional distribution grid. The Final Rule also builds on FERC policy to encourage energy storage projects, which was the subject of another Final Rule (Order No. 784) issued last July that promotes the development of energy storage through the unbundling and accounting treatment of ancillary services purchased in electricity markets. (See our prior post on Order No. 784 here.)

Energy storage is becoming increasingly important and California recently became the first U.S. state to mandate that utilities procure set amounts of energy storage capacity. Other states will likely follow as storage technologies evolve. (The order by the California Public Utilities Commission requires that the state’s three largest investor-owned utilities procure a combined 1,325 MWs of energy storage by the end of 2020. A copy of that order is available here.)

In particular, the Final Rule:

  • Provides Interconnection Customers the option to request for a $300 fee a pre-application report from the Transmission Provider. (The report, due within 20 business days of request, is intended to provide existing information about system conditions at the possible Point of Interconnection to assist the Interconnection Customer in making more informed and cost-effective siting decisions.)
  • Revises the 2 MW threshold for participation in the SGIP Fast Track Process, whereby Interconnection Customers that pass certain technical screens automatically receive an SGIA. (The Final Rule raises the threshold up to 5 MW for inverter-based generators (synchronous and induction machines are still subject to the 2 MW threshold). However, projects interconnecting to lines greater than 69 kV are ineligible for the Fast Track Process. This change is particularly relevant because it will allow a much greater number of generators to avoid the Study Process, thus reducing the costs and time to interconnect.)
  • Makes changes to the customer options meeting and supplemental review procedures following failure of the Fast Track screens so that the supplemental review is performed at the discretion of the Interconnection Customer (not the Transmission Provider as provided under the old rules) and includes minimum load, power quality and voltage, and safety and reliability screens to determine if the Small Generating Facility may be interconnected safely and reliably.
  •  Amends the pro forma  SGIP Facilities Study Agreement to allow the Interconnection Customer the opportunity to provide written comments in response to the upgrades the Transmission Provider deems necessary for interconnection. (Upon request, the Transmission Provider must also provide the supporting documentation it used to prepare the Facilities Study. This change is important to remedy undue discrimination in the interconnection process.)
  • Includes energy storage devices under the definition of ”Small Generating Facility” in the pro forma  SGIP and pro forma  SGIA.
  • Changes the definition of “capacity” and explains how to measure the capacity of generating facilities and storage devices. (Specifically, “capacity” refers to the maximum capacity that a device is capable of injecting into the transmission system measured by the amount specified in the interconnection request, not the actual maximum capacity of the device. The Transmission Provider will ultimately determine whether the generator’s method to limit the maximum capacity actually injected into the system is adequate.)

FERC explains that the changes described above are necessary in light of the increased penetration of small generator resources, particularly photovoltaic (PV) generation. This is due in part to the decline in capital costs to install new PV generation as well as the continued focus by states on renewable portfolio standards and distributed generation resources. For example, the Final Rule notes that in 2012 alone, approximately 3,300 MW of grid-connected PV generation was installed in the U.S., up from 79 MW in 2005, the year Order No. 2006 was issued. All told, the amount of installed distributed PV generation is expected to double by 2015.

The Final Rule will become effective February 3, 2014. Transmission Providers are required to make compliance filings within six months of the effective date to revise pro forma interconnection documents.

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