POWER May 2016 - 35

DISTRIBUTED ENERGY RESOURCES
Know Your Acronyms: FERC, ERO, and NERC
The power industry is filled with acronyms
(as is this article). The following three
represent entities that are instrumental in
maintaining a reliable power grid.
FERC. The Federal Energy Regulatory
Commission (FERC) is the independent
agency that, among other things, is responsible
for regulating the transmission
and wholesale sales of electricity in interstate
commerce; reviewing certain
mergers and acquisitions, and corporate
transactions by electricity companies;
reviewing siting applications for electric
transmission projects under limited
circumstances; protecting the reliability
of the high-voltage interstate transmission
system through mandatory reliability
standards; monitoring and investigating
energy markets; and enforcing FERC regulatory
requirements through imposition of
civil penalties and other means.
ERO. Following a cascading blackout
that left about 50 million people in parts
of Ohio, Michigan, New York, Pennsylvania,
New Jersey, Connecticut, Massachusetts,
Vermont, Ontario, and Québec without
power in August 2003, U.S. lawmakers
passed the Energy Policy Act of 2005. It
called for an electric reliability organization
(ERO) to be certified by FERC for the
purpose of establishing and enforcing reliability
standards, subject to FERC review,
for the bulk power system.
NERC. The North American Electric Reliability
Corp. (NERC) was founded in 1968
by representatives of the electric utility
industry, for the purpose of developing
and promoting voluntary compliance with
rules and protocols for the reliable operation
of North America's bulk power electric
transmission systems. In July 2006, FERC
certified NERC as the ERO for the U.S. NERC
develops and enforces reliability standards;
annually assesses seasonal and long-term
reliability; monitors the bulk power system
through system awareness; and educates,
trains, and certifies industry personnel.
NERC's area of responsibility spans the
continental U.S., Canada, and the northern
portion of Baja California, Mexico. NERC is
subject to oversight by FERC and governmental
authorities in Canada.
3. No fiddling on this roof. Ontario, Canada's most populous province, is second only
to California, the most populous U.S. state, in terms of solar penetration at the distribution level.
Courtesy: IESO
tem must register with ERCOT, while other
DG resources can remain unregistered. Paul
Wattles, senior market design analyst for ERCOT,
said that there was virtually no DG installed
in the region 10 years ago (other than
backup generation at hospitals or data centers,
which is not typically used other than
during emergencies).
It has grown though, particularly following
Hurricane Ike, which hit the Texas Gulf
Coast in September 2008. In fact, following
that disaster, the state began requiring some
water utilities to obtain backup power, such
as DERs, for pumping stations and treatment
facilities. Today, the installed capacity of
registered DG in ERCOT is somewhere between
500 MW and 600 MW, most of which
is fossil-fueled generation. The estimated
unregistered capacity is around 100 MW,
mostly solar.
" At some point, if DG penetration reaches
some level to be determined, it will start
impacting transmission grid operations, "
Wattles said. " We're not there yet. We're not
even really close here at ERCOT. "
In the meantime, ERCOT is taking steps to
develop a framework to better accommodate
DERs and enable their effective and efficient
market participation. ERCOT issued a concept
paper in August, detailing some changes
in market rules, such as pricing DERs at the
nodal level, which it believes would provide
long-term benefits for the system.
To understand how that would function,
you have to look at how the system currently
works. The ERCOT region consists of four
competitive load zones: North, South, West,
and Houston. Under existing ERCOT guidelines,
DER pricing occurs at the zonal level.
However, standard generation units receive
localized, or nodal, pricing. The nodal prices
are all the same when there is no congestion
on the system, but when there is congestion,
the prices deviate.
Prices go up in locations where a generator
cheaper than nearly anywhere else in North
America. Therefore, there really hasn't been
a lot of incentive for DG in the competitive
market. Even so, certain NOIEs, which are
mainly municipally owned utilities and cooperatives,
have implemented some incentives
May 2016 | POWER
for DG, which has resulted in DER growth in
the NOIE areas.
In the ERCOT region, DG falls into one
of two categories: registered or unregistered.
Owners of DG with capacity greater
than 1 MW that inject power onto the syswww.powermag.com
could
help solve a congestion problem, which
offers an incentive for plants to come online
or increase generation, if they can. Prices go
down, and can even go negative, in an area
where the generation is not needed, which encourages
operators to shut units down. However,
the zonal rates may not fully recognize
the cost of congestion in their prices, because
it gets averaged over a much larger area. The
fact that DERs do not get that nodal treatment
often dilutes incentives that could otherwise
provide significant benefits to the grid, such as
reducing the congestion, so ERCOT thinks the
change is worth pursuing.
IESO: Canadians Go Green
Ontario enacted its Green Energy and Green
Economy Act in 2009. The act was created
35
http://www.powermag.com

POWER May 2016

Table of Contents for the Digital Edition of POWER May 2016

Contents
POWER May 2016 - Cover1
POWER May 2016 - Cover2
POWER May 2016 - Contents
POWER May 2016 - 2
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