Jun 6, 2024

FERC transmission rule only part of the grid reliability solution argues former FERC Chairman Jon Wellinghoff

FERC Order 1920 aims to address long-term transmission system planning across the US in a bid to improve resilience and reliability. But former FERC Chairman Jon Wellinghoff reasons that is only half the story.

FERC transmission rule only part of the grid reliability solution argues former FERC Chairman Jon Wellinghoff

With the recent FERC ruling, Order No. 1920, the US energy regulator has mandated specific long-term planning requirements for regional transmission facilities. The rule requires transmission operators to conduct planning over a 20-year time horizon to anticipate future needs and determine how to pay for new assets that are required. The new rule is designed to ensure grid resilience in the face of multiple emerging challenges and it marks the first time in more than a decade that the regulator has addressed regional transmission policy and the need for long-term transmission planning.

However, while Order 1920 is welcomed, former FERC Chairman Jon Wellinghoff argues that by addressing transmission planning in isolation, FERC has made little progress on resolving the grid resilience issue in a satisfactory way.

Wellinghoff, Chief Regulatory Officer for the leading US virtual power plant operator and distributed energy resource technology platform Voltus, says that FERC must now try to resolve issues with Order 2222 as a matter of urgency: “There’s no doubt that grid resilience is becoming an increasingly fraught issue in the face of climate change, increasing electrification and the growing impact of renewables on the grid. While this FERC ruling is to be welcomed as it addresses long-term grid planning, it falls woefully short of what is required,” says Wellinghoff, adding: “It’s really important that FERC has extended the planning horizon to 20 years and they have put more emphasis on planning criteria by requiring that they be considered, but we simply cannot expect this to result in radical changes to the planning process that the US needs to ensure a reliable electricity system for the long term.” He continues: “The most important thing is that in resolving Order 1920, this will now allow the Commission to turn to the most important issue facing this country - demand side resources and FERC Order 2222.”

First announced in 2020, with updates in 2021, the main goal of FERC Order No. 2222 is to better enable distributed energy resources (DERs) to participate in the electricity markets run by regional grid system operators. Despite this ambition, grossly inadequate compliance plans have been submitted by numerous regional transmission authorities. The outcome is a patchwork of rules and significant differences between one authority and the next.

“Forecasts already indicate some 26 million electric vehicles will be on US roads by 2030 and consumers are not going to stop buying electric vehicles, controllable thermostats, rooftop solar or batteries in their homes. Ultimately, all of these resources are going to be plugged into the grid and potentially that will cause reliability problems if they are not managed and utilized in an effective way. Conversely, if they are deployed in a rational and effective manner they are going to be of huge support to the grid. DERs can be made a reliability asset instead of a liability, simply by having competitive aggregators manage these resources in wholesale markets,” says Wellinghoff, adding: “The very fact that those aggregation customers can effectively enter the wholesale market also drives consumer prices down because more competitive resources are inevitably available in those wholesale markets.”

Wellinghoff concludes: “You can’t do transmission planning without doing demand side planning at the same time and understanding what those demand side loads are doing and how they are either contributing positively or negatively to the grid. FERC intends them to contribute positively with Order 2222, but right now it is dysfunctional. It’s time for the Commission to look at how it can rationalize across all RTOs and ISOs consistent responses to Order 2222 to allow the nascent demand side industry to actually thrive. The alternative is chaos.”