On Feb. 18, 2016, the Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) on possible rule changes addressing the provision of primary frequency response service and compensation for those providing it. FERC is concerned that the ongoing transformation in the nation’s generation resource mix from one dominated by baseload, synchronous units with large rotational inertia to one more diversified with a combination of distributed generation, demand response, wind and solar, has reduced the Bulk-Power System’s frequency response capability, thereby increasing the risks of under-frequency load shedding and cascading outages.

Frequency response is a measure of an Interconnection’s ability to arrest and stabilize frequency deviations within pre-determined limits following the sudden and unplanned for loss of generation or load. Under North American Electric Reliability Corporation (NERC) Standard BAL-003-1, which becomes effective April 1, 2016, each balancing authority is assigned a Frequency Response Obligation that is a proportionate share of the applicable Interconnection’s Frequency Response Obligation, and is based on its annual generation and load. However, nothing in BAL-003-1 requires generators to provide primary frequency response service. In fact, wind and solar resources typically do not provide primary frequency response, since being able to provide it would require the generator to set aside capacity (headroom) so that the resource can automatically increase its MW output in response to drops in frequency. Moreover, NERC’s Resources Subcommittee has found that the gas turbine fleet that has been installed over the past 20+ years is operated in such a way that it provides no frequency response, as is true for many conventional steam plants.

The NOI solicits comments from industry on numerous issues, including:

  • Whether FERC should adopt rules requiring all generators to provide primary frequency response service, limit such a requirement to new generation resources, or address the issue in some other fashion;
  • What would be the costs of retrofitting existing units, including non-synchronous resources, to be capable of providing sustained primary frequency response;
  • Whether there are physical, technical or operational limitations or concerns that affect existing or new resources’ ability to provide primary frequency response promptly in the direction necessary to counteract under-frequency and over-frequency deviations;
  • Whether it would be more appropriate for each balancing authority to identify the optimum resource mix it needs to meet its obligations under BAL-003-1 and to procure the amount of primary frequency response it needs;
  • Whether resources should be compensated for provision of primary frequency response, and if so, how such compensation should be determined and structured; and
  • What procurement requirements or compensation mechanisms could be used for primary frequency response service provided by energy storage resources.

The implications of requiring all generators to provide primary frequency response service may be significant for many in the industry. Generators should consider weighing in with any concerns they have about such an obligation and addressing whether it would be more practical and cost-effective for balancing authorities simply to procure what they need to meet NERC reliability standards.

Comments on the NOI are due April 25, 2016.