Seal of the United States Federal Energy Regulatory Commission (Photo credit: Wikipedia)
Like a Jedi responding to changing events by striving to bring balance to the Force, the Federal Energy Regulatory Commission under Chairman Jon Wellinghoff has been rapidly reshaping the formerly sclerotic electricity sector to make it responsive to new technologies.
Some of the sector’s fossil fuel-centric rules left a high barrier to entry for so-called variable resources: energy like wind and solar that are only created when the wind blows or the sun shines, unlike, say, a gas or nuclear power plant that generates electricity around the clock.
A year ago, Wellinghoff told me: “[North American Electric Reliability Corporation] projects in its 2010 Long-Term Reliability Assessment that approximately 60 percent of all new resources expected to be added to the bulk power system by 2019 will be new wind and solar resources.”
The FERC aims to remove regulatory barriers to ensure that all of these resources can get access the grid and play a competitive role in the energy markets.
To that end, the Federal Energy Regulatory Commission passed a rule last week to make it easier for solar and wind providers to distribute their power to the grid.
Under the old system, service schedules were set once an hour. This exposed variable providers to excess service charges to smooth out their supply because their generation varied within the hour. The new rule allows for variable providers to set schedules to 15-minute increments, giving them the ability to manage exposure to excess charges when generation input changes within the hour.
However, Wellinghoff pointed out that the opportunity to schedule transmission service on a 15-minute basis -- and the predicted cost savings -- will be available for all types of resources, not just variable providers.
The rule also requires variable generators to provide transmission owners with meteorological and operational data to create more accurate forecasts of power production. FERC said this requirement will help transmission providers better manage resource variability.
"This final rule eliminates undue burdens on these resources and will help transmission providers and their customers effectively manage the costs of integration," Wellinghoff said last week.
FERC says the ruling also benefits electric consumers by ensuring that services are provided at reasonable rates. The rule takes effect 12 months after publication in the Federal Register.
Energy Storage
Also last week FERC issued a notice of proposed rule (NOPR) regarding energy storage, known as ancillary services for the three basic services it provides:
- Frequency regulation: Grid operators must keep power flowing reliably to users, a task made more difficult by the addition of unpredictable generating resources like solar and wind power, which can change output rapidly if, say, a cloud crosses the sun or the wind drops off.
- Intermittency: Solar and wind also have longer term production discrepancies: the sun does not shine at night, and in many places, wind is calm during the day.
- Peak demand: Peak demand arises at different times of the day, week and year. Utilities must be able to deliver electricity in time to meet peak demand.
For all of these services, utilities have traditionally relied on ramping up additional fossil fuel power plants, usually natural gas, called “peaker plants.”
However, storage technologies, including pumped storage hydroelectricity, compressed air, flywheels and large batteries, can respond faster to these shifts than fossil fuel plants: in seconds, rather than minutes. Storage-supplied electricity also requires less overall energy in general, because fossil fuel plants run most efficiently at full power; ramping them up and down is inefficient.
Under the current system, it is difficult for storage developers in most markets to get paid for these services because storage is not a recognized asset. The Commission’s NOPR proposes to revise existing complex market policies that have largely excluded electricity storage providers from the market.
It also proposes to reward the faster service and accuracy energy storage can provide over gas peaker plants with a higher price. Measuring these attributes and better reporting methods on storage use are also required in the proposed rule.
Distributed Services
Finally, both the Final Rule about transmission policies and the notice of a proposed rule (NOPR) governing storage highlight the transmission provider’s obligation to provide information on requirements for customers who wish to supply their own electricity storage to prevent discrimination against them in the market.
Wellinghoff told me that he was “starting to see more and more people who have very creative ideas of using distributed storage in ways that I think will become very economical.”
Wellinghoff, appointed to the commission by President Bush and promoted to chairman by President Obama, has long had a clear vision for the reforms required to bring the U.S. electricity sector into the modern era. These proceedings show him meticulously executing that vision.
Because FERC’s commissioners are appointed, the agency supersedes politics to a large degree. It can make sweeping policy changes, such as these, that have long-term impacts. Wellinghoff’s term expires in 2013.
