On January 8, the Federal Energy Regulatory Commission (FERC) voted unanimously to reject the Department of Energy’s (DOE) proposed rulemaking on grid reliability and resilience pricing. The rule would have provided cost recovery to power plants holding 90 days of on-site fuel supply. Only nuclear and select coal facilities would have qualified. Rather than create a new power market product or refine the pricing rules of existing products, the proposal departed from principles of electricity market design by subsidizing power plants with a specific characteristic.
FERC’s ruling confirmed that both the goal – promoting 90 days of on-site fuel – and the mechanism proposed were not valid approaches to enhancing resiliency and electric market performance. More broadly, FERC noted that grid operators did not identify any past or planned generator retirements that threaten grid resilience and pointed out that numerous reforms have already improved market resiliency. FERC also suggested that reliability and resiliency may be related but separate concepts, with resilience lacking any uniform definition across the industry.
While FERC’s decision terminated the docket on the proposed DOE resiliency rulemaking, it opened another proceeding to evaluate the resilience of the organized wholesale power markets under its jurisdiction. The goals of the new resilience initiative are to:
- Develop a common understanding of bulk power resiliency;
- Understand how organized wholesale electricity markets assess resilience; and
- Evaluate whether additional Commission action regarding resilience is appropriate.
Devin, Thanks for preparing this Discussion. Over the past few weeks, when I read about resiliency and reliability, I often perceive the terms to be correlated but perhaps their meanings… Read more »
Thanks Charles. The definition of resiliency, especially whether and how it differs from reliability, is the $64,000 question. I thought the Commission’s response and some individual Commissioner’s opinions were quite… Read more »
Distributed, modular renewable resources are inherently more resilient than centralized power generation. Individual solar systems or wind turbines can fail and not effect overall power generation. Furthermore, distributed energy generation… Read more »
Thanks Dan. I agree that distributed resources offer the opportunity for greater local resiliency for events that damage high voltage transmission lines (e.g., your point on Puerto Rico). However, we’ve… Read more »
I agree that centralized power production will be with us for decades. My point is that decentralized sources are inherently more resilient. Of course, the devil is in the details… Read more »
I think of resilience as the ability to withstand difficult circumstance, and I think there are multiple levels at that can test resilience: maintaining sufficient energy supply (and reserves) that… Read more »
Thanks Brent. You raise a number of points, and I’ll try to speak to a couple of them. Since you framed resiliency, in part, as a function of demand patterns,… Read more »
Thanks Devin. I would like to see a role for expanded demand participation, but the economics can get tricky. My understanding is that for residential consumers, the monthly revenue is… Read more »