The Federal Energy Regulatory Commission (FERC) plays a crucial role in regulating the interstate transmission of electricity, natural gas, and oil. One of its recent actions, FERC Order 1920, has significant implications for the energy sector, particularly concerning resource adequacy and the integration of renewable energy. This article provides an overview of Order 1920, its objectives, potential impacts, and examples of utilities taking proactive steps forward.
What is FERC Order 1920?
Issued on May 13, 2024, FERC Order 1920 aims to enhance the reliability of the electricity grid in response to evolving energy dynamics. It specifically addresses resource adequacy—the ability of an electricity supply system to meet consumer demands reliably—while acknowledging the challenges posed by increasing integration of variable renewable energy sources like wind and solar. The order mandates regional transmission organizations (RTOs) and independent system operators (ISOs) to develop effective resource adequacy frameworks that accommodate various energy technologies, including Grid Enhancing Technologies (GETs) including Advanced Conductors.
Key Provisions of Order 1920
One of the primary requirements of Order 1920 is long-term planning, which mandates transmission providers to plan on a 20-year horizon. This includes considering multiple scenarios and assessing the benefits of proposed regional projects. The aim is to help anticipate future demands and improve overall system reliability.
The order also requires RTOs and ISOs to implement planning processes that account for the variability of renewable energy resources. This includes adopting sophisticated forecasting tools and methodologies to ensure that supply meets demand effectively.
In terms of market structure, Order 1920 encourages reforms in capacity markets to reflect the true value of diverse resources, including demand response and energy storage. This approach is essential for incentivizing investments in technologies that enhance flexibility and support grid reliability.
Another notable provision is the mandate to incorporate Advanced Technologies, particularly Advanced Conductors, which can enhance the efficiency and capacity of existing transmission infrastructure. This capability facilitates better integration of renewable resources and reduces congestion on the grid to help reduce consumer costs.
FERC also emphasizes the importance of engaging a wide range of stakeholders, including state regulators, utilities, and consumer advocates, in the resource adequacy planning process. This collaborative approach aims to build consensus and ensure that diverse perspectives are considered.
Implications of Order 1920
The implications of Order 1920 are significant. By addressing the challenges of variable renewable energy sources and incorporating Advanced Technologies, the order aims to enhance overall grid reliability. A robust resource adequacy framework can mitigate the risk of outages and better align supply with demand.
Moreover, the reforms outlined in the order could incentivize investment in clean energy technologies. Recognizing the value of advanced conductors and other grid-enhancing technologies may facilitate greater integration of renewables into the grid, contributing to a cleaner energy future.
The changes prompted by Order 1920 may also lead to substantial shifts in energy markets. As capacity markets evolve to reflect the true value of diverse resources, market participants will likely need to adapt their strategies, potentially creating new business models and opportunities.
Implementing the provisions of the order will require significant coordination among RTOs, ISOs, and state regulators, which may pose challenges, especially in regions with varying regulatory frameworks and priorities.
Finally, the changes brought about by Order 1920 could affect electricity prices and consumer choices. A more reliable and responsive grid can provide consumers with a stable energy supply, although it may also lead to adjustments in pricing structures.
Utilities Taking Positive Steps
Several utilities in the U.S. have proactively adopted Advanced Conductors and other Grid Enhancing Technologies (GETs) in response to the objectives outlined in FERC Order 1920. For instance, Southern California Edison (SCE) has utilized CTC Global’s ACCC® Advanced Conductors in its transmission projects to enhance capacity and reduce line losses. Florida Power & Light (FPL) has similarly incorporated these technologies to improve efficiency in its transmission system. American Electric Power (AEP) has deployed ACCC Conductors in specific line upgrades, focusing on reliability and minimizing environmental impact. Arizona Public Service (APS) has implemented these technologies to address capacity constraints and enhance grid performance. Additionally, NV Energy has integrated ACCC Conductors into its transmission network to improve efficiency and deliver power to a number of quickly growing industrial businesses. These initiatives underscore the commitment of utilities to modernize the grid and support the integration of renewable energy sources.
Conclusion
FERC Order 1920 represents a pivotal step in modernizing the framework for resource adequacy in light of evolving energy technologies and climate goals. By focusing on long-term planning, flexibility, and stakeholder engagement—along with the incorporation of Advanced Technologies—the order aims to foster a more resilient electricity grid. As the energy landscape continues to transform, the implications of this order will unfold, potentially reshaping how we generate, distribute, and consume electricity in the future. Successfully implementing these reforms will be crucial for achieving a sustainable and reliable energy future.
