FERC Decision Opens Door for Microgrid Industry

An important decision was reached by the Federal Energy Regulatory Commission (FERC) on Monday, January 8th, when they ruled against a Notice of Proposed Rulemaking (NOPR) that would have provided cost recovery for coal and nuclear plants that keep  fuel on site. The NOPR, filed by the Department of Energy (DOE), cited grid resiliency as the reason to keep these power plants up and running. But are coal and nuclear plants as resilient as Secretary of Energy, Rick Perry, and the DOE suggest? The FERC doesn’t think so.

As FERC Commissioner Glick stated, the rule “had little, if anything, to do with resilience, and was instead aimed at subsidizing certain uncompetitive electric generation technologies.” Had the NOPR been accepted, the bailout would ruin the balance of the competitive energy market and increase the cost for customers. The DOE favors plants that keep fuel on site, however, transmission and distribution lines, not fuel supply interruption, are the cause of the vast majority of power outages. Because most transmission and distribution lines are completely exposed, weather events such as heavy winds, flooding, and hurricanes increase their risk of failure during a time when power is needed most. Commissioner Glick acknowledges microgrids as a solution to this problem. Enchanted Rock Ltd. (ERock), a Houston-based energy technology company that specializes in natural gas-powered resiliency microgrids, uses incredibly robust underground natural gas infrastructure that remains unaffected by severe weather. Their resiliency was proven during Hurricane Harvey, when ERock supplied power to its customers for over 100 hours. Being able to provide power in any circumstance is the level of resiliency that our national grid needs.

While the trend of decarbonization electricity continues on an absolute and relative basis,
the NOPR would have slowed it down. A natural gas combined cycle power plant emits about ½ the carbon of a coal plant, so delaying the closure of uneconomic and old coal power plants would not help the effort to decrease our carbon footprint. There is also no evidence that this transition from coal to natural gas, wind, and solar has harmed electric grid reliability. In fact, Commissioner Glick states that “the addition of a diverse array of generation resources” has “contributed to the resilience of the bulk power system.” New technologies such as microgrids and distributed generation not only improve resiliency, but are also better for the environment.

The microgrid industry has been paying close attention to the NOPR proposal and decision of the FERC, as resiliency is a defining feature of microgrids. The confusion over the functionality of the grid is that resiliency has never been clearly defined. However, with the rejection of the NOPR, the FERC provided the first real definition – “The ability to withstand and reduce the magnitude and/or duration of disruptive events, which includes the capability to anticipate, absorb, adapt to, and/or rapidly recover from such an event.” This is an important step in finding a solution for our unreliable power grid. “ERock is an integral part of the solution going forward in several ways,” said ERock founder, president, and CEO, Thomas McAndrew. “ERock builds and operates ultra-clean and quiet resiliency microgrids specifically to provide electricity for critical services when the transmission and distribution cannot deliver. We own and operate these microgrids, providing electrical resiliency as a very affordable service by maximizing revenues from selling to the electric grid, thus minimizing the price to our customer. When we sell to the grid, we respond very quickly to help buffer the intermittent nature of wind and solar, thus enabling continued growth of these renewables and decarbonization of electricity,” McAndrew said. ERock’s innovative microgrids could be the answer our power grid is looking for.

This decision not only sets a standard for the future of energy in this country, but also follows the tradition of keeping the FERC an agency independent of the executive branch. Many were pleasantly surprised, as three out of five regulators are Republicans and four were appointed by President Trump. “It is good to see common sense prevail,” said McAndrew. “The FERC decision is moving our country toward a more robust and accurate discussion of gird resiliency.” McAndrew, like other leaders in energy across the country, is relieved to see the FERC prioritizing the well-being of the country over personal interests.