FERC Approves Plan to Register Certain Inverter-Based Resources as part of NERC Mandatory Standards Compliance Program

On May 18, 2023, the Federal Energy Regulatory Commission (FERC) issued an order approving NERC’s compliance filings describing how it will identify and register owners and operators of inverter-based resources (IBRs) that are connected to the Bulk-Power System, but that are not currently required to register with NERC under its approved bulk electric system (BES) definition.

IBR based generation owners and operators should prepare for the new registration and compliance requirements to roll out in a phased approach within 24-36 months.

In its compliance filing, NERC explains that its IBR registration strategy will address the high risk to the reliability of the Bulk-Power System posed by the increasing, rapid integration of IBRs. Under NERC’s current registration program, many owners and operators of individual IBRs are not registered and, therefore, would not need to comply with the Reliability Standards, even though these IBRs have the potential to pose a significant aggregate reliability impact on the Bulk-Power System as demonstrated through a number of major event analysis reports.

Background

On November 17, 2022, FERC issued the IBR Registration Order directing NERC to submit a work plan describing how it planned to identify and register owners and operators of currently unregistered IBRs.

NERC’s work plan was required to explain how registration process modifications would encompass unregistered IBRs, whether through a change to the BES definition, a change to its Rules of Procedure related to registration, or some other solution.  The work plan also was required to include implementation milestones ensuring that unregistered IBR owners and operators meeting the new Registry Criteria are identified within 24 months of the approval date of the work plan and are registered and required to comply with applicable Reliability Standards within 36 months of the approval date of the work plan.

FERC’s current regulations require each user, owner and operator of the Bulk-Power System to be registered with NERC and to comply with applicable mandatory Reliability Standards. NERC registration occurs through either application of its BES definition or its materiality test to an entity’s Facilities and Elements.

Approved Registration Plan

In its approved IBR registration plan, NERC proposes a three-phased approach to identify and register certain unregistered IBRs within 36 months. An IBR project that does not have Elements that fall within the NERC BES definition may then be required to registered if it can be demonstrated that the IBR projects have a material impact on Bulk-Power System reliability.

To determine whether users, owners and operators of Facilities and Elements that fall outside the BES definition are material to Bulk-Power System reliability and must be registered, NERC will use a non-exclusive set of factors referred to as the materiality test.  All registration decisions regarding materiality will be made by a NERC-led registration review panel.

NERC’s Registry Criteria allow NERC to limit the compliance obligations of a given entity or of a similarly situated class of entities to a “sub-set list” of Reliability Standards.

In its plan, NERC proposes to develop revisions to its Rules of Procedure and its Registry Criteria to include Generator Owner – Inverter Based Resources (GO-IBRs) as a new registered entity function. The new function would include IBR projects that:

(1) have an aggregate nameplate capacity of less than or equal to 75 MVA and greater than or equal to 20 MVA interconnected at a voltage greater than or equal to 100 kV and

(2) have aggregate nameplate capacity of greater than or equal to 20 MVA interconnected at a voltage less than 100 kV.

NERC is not proposing to modify its BES definition and the associated inclusions or exclusions.  While it is currently focused on revisions to its Rules of Procedure, NERC will continue to examine whether revision of the BES Definition might be considered as the grid transforms. NERC’s work plan does not address IBRs that connect to the local distribution system and does not address IBRs that are Distributed Energy Resources (IBR-DER).

During the first year of its work plan, NERC will consider applying a sub-set list of its Reliability Standards to the new GO-IBRs. NERC will also consider whether to add the new GO-IBR function to the applicability section of the current Reliability Standards or use some other means to identify the Standards with which GO-IBRs will need to comply in the future.

Next Steps

These FERC and NERC actions are a significant regulatory event which will implement fundamental jurisdictional changes in IBR based generator owner compliance and operating obligations.

TRC recommends that its IBR based generation owning and operating clients review the FERC Order and the NERC Registration Plan. The process will evolve through NERC Rules of Procedure changes and will ultimately lead to the need to the develop compliance programs for projects which up to now thought that perhaps they would not need to do so. Generator Owners of IBR based technology should consider beginning the process of internally reviewing how they would create or modify their NERC mandatory standards compliance programs, procedures, and internal controls to comply with  the future NERC registration obligation.

Resources:

FERC Order Approving NERC IBR Registration Plan

NERC Compliance Filing for Registration of IBRs

NERC Amendment to its Compliance Filing for IBR Registration

NERC Major Disturbance Event Analysis Reports

NERC Bulk Electric System Definition

TRC Services – NERC Compliance

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