New FERC Rule Could Prompt States To Improve Interconnect Processes For Distributed Solar


The U.S. Federal Energy Regulatory Commission (FERC) has issued a modification to its Small Generator Interconnection Agreements and Procedures (SGIA) rule, enabling certain appropriately located, inverter-based generators below 2 MW to qualify for ‘fast track’ approval procedures. Previous rules required such small generators to be between 2 MW and 5 MW to quality for fast track consideration.

The rule change also specified that energy storage be included in the definition of what constitutes a small generator.

The FERC decision is not likely to have an immediate impact on residential photovoltaic installations as they cover projects that interconnect directly with grids under its jurisdiction, which relates to interstate electricity sales. The vast majority of residential connections are under the jurisdiction of state public utility commissions. Nevertheless, solar sector observers expect states to take notice of the decision and use it as a model for their own interconnect policies.

‘The FERC decision is not only a model and a suggestion for states to modify their interconnect policies, it is a nudge to do so,’ says Sky Stanfield, an attorney with Keyes, Fox & Wiedman LLP who represents the Interstate Renewable Energy Council (IREC) in regulatory matters. Generally speaking, states tend to follow FERC recommendations closely, she says, citing California's adoption of its Rule 21 that modified project interconnect screening policies along FERC's guidelines.

Stanfield says the rules enabling interconnection screens with fewer studies is a very important development because a utility's need to perform studies is what really creates a backlog of interconnect applications. The modified rule puts in place a supplemental review process for generators that fail initial fast track review screens rather than proceeding to a full utility study.

‘By restructuring the process, a greater number of small generators can proceed without studies,’ Stanfield says. ‘At the same time, it enables a utility to increase the number of projects it can review.’

IREC has been active in developing proposals to reduce interconnect backlogs that inhibit solar energy installations. The organization has proposed that utilities move from a fixed size threshold as the basis for approving fast track status to variable size limit based on generator type, line voltage at the point of interconnection, wire thickness and the generator's distance from the substation. It says the new SGIP rules are a welcome step in achieving this goal.

The Solar Energy Industries Association (SEIA) was enthusiastic in its reaction to the FERC decision, saying it will help to spur solar deployment nationwide.

‘We applaud FERC for recognizing the challenges facing wholesale distributed generation development, which is one of the fastest-growing segments of America's solar energy industry,’ says Rhone Resch, president and CEO of SEIA, in a statement. ‘At the same time, the new rule maintains electric system safety and reliability.’

For its part, the Electricity Storage Association (ESA) says it is also pleased with the decision. The ESA filed comments with FERC that it says were cited and addressed in the order.

‘We commend the FERC commissioners for acknowledging that energy storage should be able to participate in the small generator interconnection process on our electric grid and that our rules and policies should evolve as well,’ says Darrell Hayslip, chair of the ESA, in a statement. ‘These reforms are good news for storage project developers and further facilitate the deployment of storage on the power grid.’

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