New FERC Rule Grows Clean Energy’s Role in Grid Resilience

As variable renewable energy and energy storage resources continue to fuel an ongoing energy transition, regulators and grid operators are looking to also grow these resources’ responsibility towards the electric grid’s resilience. Last week, the Federal Energy Regulatory Commission (FERC) announced a final rule that requires all new electric generation plants connecting to the transmission grid—except nuclear and combined heat and power plants—to install equipment for primary frequency response capability. This post will examine what primary frequency response is in relation to grid resilience, how clean energy sources can contribute, and what limitations exist in the new FERC rules.

The resilience concept features prominently in contemporary energy policy debates. The Department of Energy justified its proposal to subsidize coal and nuclear plants by arguing that such conventional power plants “provide ERS (essential reliability services) and fuel assurance critical to system resilience.” The subsidization of the latter aspect, i.e. on-site fuel assurance, has been debunked by experts and rejected by FERC. Still, the other aspect of essential reliability services (such as voltage support and frequency response) remains an important area of improvement.

FERC’s new rule effectively says that renewables and storage can increasingly provide these essential reliability services too, undercutting arguments that only conventional resources possess these particular system resilience attributes.

One of the essential reliability services, primary frequency response is the ability of generators on the electric grid to automatically and autonomously adjust their megawatts (MW) of power output when the grid frequency deviates significantly from a stable 60 Hertz (Hz), which happens following the sudden loss of generation or load. This response is crucial to grid resilience, because an uncorrected frequency disturbance can lead to “a cascading, widespread blackout.” Primary frequency response is distinct from secondary frequency control (or frequency regulation), as the latter initiates after the centralized grid operator sends signals to individual generators, incurring longer delays.

In terms of the necessary equipment, primary frequency response has historically been achieved with electromechanical governors or control systems on conventional synchronous generators, such as coal power plants. Synchronous generators spin at the grid frequency, and their governors or control systems can autonomously sense a drop in the grid frequency to correspondingly increase power output, or vice versa.

Technological innovations in electronic power controls have enabled variable renewables to also provide primary frequency response. In 2016, the California Independent System Operator, First Solar, and the National Renewable Energy Laboratory collaborated to demonstrate that a solar photovoltaic plant using advanced electronic controls can provide a variety of essential reliability services, including primary frequency response. Wind generators and energy storage are also able to provide fast and accurate primary frequency response. According to FERC, the capital costs to install such new controls equipment have declined significantly and would not severely harm project profitability.      

However, more than mere capability, actually providing frequency response during a sudden low-frequency event requires generators to withhold “headroom”— the difference between a generator’s current power output level and its maximum possible level. (Conversely, “floor-room” is required for the provision of frequency response during over-frequency events.) FERC acknowledges that the “greatest cost associated with providing primary frequency response results from maintaining headroom.”

Specifically, wind and solar projects face zero marginal costs, and thus have the highest lost opportunity costs from curtailing production for the purpose of headroom. In the United States, there are currently no market or cost-based systems to compensate primary frequency response. So wind and solar generators will always like to produce at the maximum levels subject to the weather at each time, in accordance with their financial incentives like production-linked power purchase agreements and tax credits. An important exception is when renewables are curtailed anyway for other reasons like negative energy prices, where the curtailed amount of power generation could contribute towards primary frequency response headroom. In all other times, FERC’s new rule does not guarantee that renewables will have enough headroom for primary frequency response, and conventional generators would still be needed to actually provide sufficient headroom.

While current levels of primary frequency response satisfy the North American Electric Reliability Corporation’s (NERC) requirements (see table), renewables’ rising contribution to the energy generation mix may increase the need for primary frequency response, while decreasing the availability of conventional resources to provide this service. In order for regulators and grid operators to fully engage variable renewables’ technical capabilities for primary frequency response, a FERC-commissioned report by Berkeley Lab points out the need to address “the commercial arrangements that currently create strong financial incentives for wind and solar to operate without headroom.”

FERC’s new rule is an important first step to install the technology, but more work may be needed to align the economics.

Thomas Lee

Research Assistant

Thomas Lee is a graduate of the Jerome Fisher Program in Management and Technology, where he obtained dual degrees in economics and computer science, and an M.S.E. in electrical engineering. He was a research assistant at the Kleinman Center.