Power & Pipes

FERC, CFTC, and State Energy Law Developments

FERC issued three orders focused on increasing regulations for inverter-based resources (IBRs) in fulfillment of one of its primary goals to protect the reliability of the bulk-power system. FERC ensures this reliability through the North American Electric Reliability Corporation (NERC), an independent Electric Reliability Organization that develops and enforces mandatory reliability standards. The reliability standards are only mandatory for certain entities registered with NERC, but most IBRs are not required to register and therefore are not obligated to follow the reliability standards.

As renewable generation continues to constitute an increasing part of the energy mix, more inverters will be added to the grid, creating risk to the bulk-power system. NERC estimates that approximately 860 GW of IBRs will be added to the grid over the next decade. Therefore, FERC’s orders are vital steps to enhance the reliability of the bulk-power system by extending the scope of the reliability standards to IBRs.

FERC’s orders come after multiple studies and reports by NERC, including the findings by NERC’s Inverter-Based Resource Performance Task Force (IBPTF). For years NERC has raised concerns about IBRs, such as finding that IBRs were a primary cause of the 2016 Blue Cut Fire event in California, as well as other events. The FERC orders, and the resulting new and modified NERC reliability standards, will help close the regulatory gap on IBRs and enhance the reliability of the bulk-power system.

What Are IBRs?

IBRs are solar photovoltaic, wind, fuel cell, and battery storage resources that use power electronic devices to convert direct current power to alternating current power to be transmitted on the bulk-power system.

Unique technical characteristics of IBRs compared to fossil fuel generators pose reliability risks that FERC determined will need further investigation and regulation. For example, because no turbine is involved in an IBR’s conversion process, unlike steam-based traditional generation, the inverters can produce energy at any frequency. Consistency and predictability are required to make IBRs compatible with the bulk-power system, which is maintained within a controlled frequency range.

In addition, synchronous generators like natural gas-fired power plants can “ride through” disturbances on the grid, but IBRs cannot unless they are programmed to do so.

FERC Orders

First, FERC directed NERC to modify its compliance registry criteria to include IBRs. Currently, a generator must register with NERC if (1) it is connected to the bulk-power system at a voltage equal to greater than 100 kilovolts or above with an individual nameplate rating greater than 20 megavolt amperes (MVA) or an aggregate nameplate rating greater than 75 MVA, or (2) the generator is a dispersed power-producing resource that aggregates to a total capacity greater than 75 MVA. Under these criteria, IBRs are usually excluded because of their relatively low size and connection voltage.

FERC directed NERC to file for FERC approval a plan explaining how it will identify and register IBRs and how unregistered IBRs will be accounted for within 12-month milestones from the approval of the plan. FERC noted that while it expects IBRs to be registered, NERC should have flexibility in determining which reliability standards should apply to IBRs. FERC also acknowledged that NERC may find that some of the current requirements for generator owners and operators are not suited to IBRs.

Second, FERC issued a notice of proposed rulemaking (NOPR) directing NERC to develop new or modified reliability standards for IBRs. These reliability standards must cover (1) data sharing, (2) model validation, (3) planning and operational studies, and (4) performance requirements, including the ability of IBRs to ride through system disturbances.

FERC also proposes directing NERC to submit a compliance filing within 90 days of the final rule’s effective date containing its plan, which must include a comprehensive standards development and implementation plan to ensure all new or modified reliability standards are submitted to FERC within 36 months of approval of the plan. Public comments are due within 60 days after publication of the NOPR in the Federal Register.

Third, FERC issued an order approving the revised Facilities Design, Connections and Maintenance (FAC) FAC-001-4 and FAC-002-4 filed by NERC. The revised FAC reliability standards clarify the types of changes to an existing interconnected facility that must be evaluated through the interconnection process.

Pursuant to recommendations by the NERC IBPTF, the revised FAC reliability standards require planning coordinators to identify and publish a list of the types of “qualified changes” to existing interconnected facilities that should be studied. Although planning coordinators have discretion in defining qualified changes, guidance by the NERC standards drafting team suggests that certain changes in the control settings of an IBR should be included. The revised FAC reliability standards will become effective January 1, 2024.


Some IBRs are large enough that they are already registered entities subject to the NERC reliability standards. However, under FERC’s orders, significantly more IBRs may become subject to NERC registration and regulation (unless they meet limited exceptions such as being interconnected to distribution facilities only).

The orders will add regulatory costs and complexity to many IBRs that have never before had to deal with reliability compliance. At the same time, the orders should better protect the bulk-power system from the reliability risks posed by the thousands of IBRs expected to join the grid in the coming years.