FERC Proposes Changes to Small Generator Interconnection Process Designed To Encourage Solar, Distributed Resources

February 4, 2013

Responding to a petition filed by the Solar Energy Industries Association last year, the Federal Energy Regulatory Commission ("FERC") at its January meeting issued a Notice of Proposed Rulemaking ("NOPR") soliciting comments on changes to its rules governing interconnection of small generators. Citing the rapid growth of solar photo-voltaic ("PV") systems and expanding state renewable portfolio standards, FERC argues that changes in the Small Generator Interconnection process are necessary to keep up with changes in the industry. The proposed changes are aimed at encouraging distributed generation by streamlining the interconnection process, especially for generators with capacity of 5 MW or less. Comments on the NOPR are due June 3, 2013. FERC will hold a technical conference on the proposals prior to that date.

Under the current process, small generators (defined as generators with no more than 20 MW of capacity) may interconnect with FERC-jurisdictional transmission utilities by following the pro forma Small Generation Interconnection Procedures ("SGIP") and signing a pro forma Small Generator Interconnection Agreement ("SGIA"). Under the existing SGIP process, small generators with a capacity between 2 and 20 MW are required to follow the "Study Process," in which they file a request for a study with the interconnecting utility, which then carries out system impact studies to identify any reliability or safety problems that might be created by the new generator and the system upgrades that the generator must pay for to remedy these problems.

Rather than going through the Study Process, generators under 2 MW of capacity go through the "Fast Track Process." The Fast Track Process relies on a series of "technical screens," rather than studies, to identify potential safety and reliability concerns. If no problems are identified, the generator can then sign a SGIA and interconnect. If problems are identified, then the interconnecting utility generator can work through options with the interconnecting utility to resolve those problems. Finally, very small generators, with 10 kW of capacity or less, can interconnect using the "10 kW Inverter Process," which allows them to interconnect if they use a certified inverter designed to avoid safety and reliability issues and pass the "technical screen" process.

In the NOPR, FERC proposes several changes to the Small Generator Interconnection process. The proposed changes are:

1. Pre-Application Report: FERC proposes to give the Interconnection Customer the option, at a cost of $300, to obtain a "pre-application report" from the interconnecting utility. The report would provide information about the existing and proposed generation interconnecting at the same point, known constraints related to the point of interconnection, and other system conditions. FERC hopes that providing key information at the beginning of the process will cut down on the number for formal interconnection requests and increase the efficiency of the interconnection process.

2. Increase Threshold for Fast Track Process to 5 MW: FERC also proposes to increase the threshold for participation in the Fast Track process so that generators with up to 5 MW of capacity may use this process rather than the Study Process, although the eligibility of these larger generators would be conditioned on the size of the line and distance from the nearest substation of the proposed point of interconnection.

3. Revised Fast Track Process: FERC proposes to add three additional technical screens to the ten existing screens provided in the Fast Track Process. In addition, FERC proposes new procedures if the interconnection request fails one or more of the technical screens provided in the Fast Track Process. In those circumstances, FERC proposes that the interconnecting transmission utility would: (1) offer to perform facility modifications necessary to interconnect the proposed generator and provide a good-faith estimate of the costs the interconnecting customer would bear for those modifications. If the interconnecting customer accepts this proposal, the utility would be required to offer a SGIA within five business days; (2) offer to perform a supplemental review for $2,500; or, (3) process the interconnection request under the Study Process. These changes are meant to make the interconnection process easier and less expensive when a proposed interconnection facility cannot pass one or more technical screens.

4. Review of Required Upgrades: FERC proposes to give the interconnection customer the option to review and comment upon the upgrades required by the interconnecting transmission utility. This process is intended to allow the interconnecting customer to identify and propose alternatives to the upgrades identified by the interconnecting utility, although the interconnecting utility ultimately must agree to those upgrades.

FERC also proposes a series of minor amendments to the existing SGIP and SGIA, one of which bears mentioning. Based on experience with events in Germany and the U.S., FERC is concerned that both residential and commercial-scale PV systems have tripped offline during frequency deviations, creating a reliability problem. Noting that Germany has ordered expensive retrofits to PV systems, FERC hopes to head this problem off by requiring PV systems to comply with the latest reliability standards, which are designed to avoid these problems.

Although many transmission utilities in the Pacific Northwest are not FERC-jurisdictional, the proposed changes in the Small Generator Interconnection process are nonetheless important for this region for two reasons. First, major non-jurisdictional transmission providers such as Bonneville Power Administration can be expected to adopt any changes to the Small Generator Interconnection process in order to maintain "reciprocity" status with jurisdictional transmission providers. Second, many distribution utilities use FERC's Small Generator Interconnection process as a model for interconnections on their distribution systems and FERC's changes will doubtless influence how interconnections are carried out on the region's electric distribution systems.

If you have any questions about the FERC's Small Generation Interconnection procedures, or other matters discussed in this post, please contact a member of GTH's Renewable Energy practice group or Environment & Natural Resources practice group. These practice groups are consistently recognized as among the best, both nationally and in the Pacific Northwest.