Understanding Grid Interconnection Policies
Utility interconnection refers to the process of connecting a new solar array to the existing electric grid.
Grid interconnection rules are essential for ensuring electric reliability, but can be costly and complicated.
Depending on whether a new solar array connects to the transmission grid or the distribution grid, federal, regional, state, and utility-specific rules and fees may apply to the interconnection process. The interconnection of solar arrays remains a significant regulatory issue because of the technical and procedural requirements needed to safely, reliably and efficiently interconnect a new solar array.
Federal Authority over Interconnection
At the federal level, the Federal Energy Regulatory Commission (FERC) has broad authority over all wholesale sales of electricity and over interconnection of new energy generators to the transmission grid. FERC has issued several orders governing interconnection procedures for new electricity generators under its jurisdiction. FERC Order 2003 established a procedure to standardize the interconnection process for large electric generators, greater than 20 MW. The standardized interconnection procedures and agreements for large generators include studies conducted by the transmission provider, which FERC uses to evaluate the request to interconnect, and standardized requirements covering frequency, voltage, and other power standards.
FERC has also addressed interconnection procedures for small generators under 20 MW, initially in Order 2006, which also included a streamlined process for generating facilities with capacity less than 2 MW. In 2013, FERC responded to a rapid increase in small-scale, distributed solar deployment with Order 792, allowing certain inverter-based interconnections up to 5 MW to qualify for a streamlined “fast-track.” Eligibility to apply “for the fast-track interconnection process is based on the generator type and size, and the line voltage and type at the point of interconnection.”
While the interconnection rules developed by FERC legally only apply to projects under FERC jurisdiction, several states have used the FERC rules as a model in designing rules governing interconnection to the distribution grid.
The North American Electric Reliability Corporation (NERC) is designated by FERC as the nation’s Electric Reliability Organization (ERO), meaning that NERC establishes nationwide grid maintenance and testing standards for transmission, generation, load shedding, and other technical requirements. Ultimately, NERC ensures the reliability of the North American “bulk electric system.”
While FERC and NERC set national interconnection and reliability standards, the United States has not developed a single, unified set of interconnection requirements for connection to the distribution grid.
It is important to distinguish between state and federal jurisdiction for solar array interconnections. If a solar array interconnects to the distribution grid with an electric utility exclusively making retail sales, it does not fall under FERC jurisdiction and is subject to state interconnection rules.
State Authority over Interconnection
States have the authority to create and implement interconnection policies for generation facilities that fall under state jurisdiction, including solar arrays connecting to the distribution grid.
Public utility commissions are often tasked with establishing rules for interconnection of new solar arrays to the distribution grid, but specific requirements are often left up to the individual interconnecting utility.
Some states allow smaller projects to qualify for an expedited interconnection process, while requiring larger projects to go through more comprehensive review, which often includes paying for an interconnection study. Some state interconnection rules only apply to net metered systems, and many state standards apply only to investor-owned utilities—not to municipal utilities or electric cooperatives. Where rules have not been established by law, the interconnecting utility is in charge of the interconnection process.
Any generator that proposes to connect to a local electric utility’s distribution system must comply with the utility’s tariff for interconnections and enter into an interconnection agreement.
Utilities may require the same interconnection procedures for small systems and large independent power production facilities, and charge for system studies, upgrades, and miscellaneous interconnection fees that greatly reduce the financial feasibility of smaller-scale solar arrays.
In the process of developing standard interconnection procedures, states may choose to adopt a standard interconnection agreement as well, in order to assure equal legal treatment of solar and other distributed renewable energy installations across different utility service territories in the same state.
A utility must ensure that interconnecting a new solar array to a distribution system does not negatively impact electric power quality or reliability for customers, like voltage deviations or violations of electrical safety limits. Hosting capacity refers to the aggregate solar capacity (and other distributed energy resource capacity) that can be interconnected to a distribution system without requiring system-infrastructure upgrades. When upgrades are required, the costs may be added onto the cost of the proposed solar development.
- FERC Order No. 2003, Standardization of Generator Interconnection Agreements and Procedures, 68 Fed. Reg. 49,846 (Aug. 19, 2003) (codified at 18 C.F.R. pt. 35). Since issuing Order 2003, FERC has revised the large generator interconnection procedures several times. The history of revisions and current rules can be found at https://www.ferc.gov/industries/electric/indus-act/gi/stnd-gen/LGIP-procedures.pdf
- FERC recently reformed procedures in Order 845. FERC Order No. 845, 163 FERC ¶ 61,043, Reform of Generator Interconnection Procedures and Agreements (April 19, 2018) (codified at 18 C.F.R. pt. 37).
- FERC Order No. 2006, Standardization of Small Generator Interconnection Agreements and Procedures, 68 Fed. Reg. 49,846 (May 12, 2005) (codified at 18 C.F.R. pt. 35).
- FERC Order No. 792, Small Generator Interconnection Agreements and Procedures (Nov. 22, 2013) (codified at 18 C.F.R. pt. 35). The small generator procedures were revised in several subsequent orders. This history of revisions and current rules can be found at https://www.ferc.gov/industries/electric/indus-act/gi/small-gen/sm-gen-procedures.pdf.
- Ilya Chernyakhovskiy, et al., U.S. Laws and Regulations for Renewable Energy Grid Interconnection, National Renewable Energy Laboratory, 2016, at 14 (https://www.nrel.gov/docs/fy16osti/66724.pdf)
- If a solar array is a wholesale power generation facility intended to be interconnected electrically to the transmission or distribution system operated by a local electric utility on behalf of the power region, the facility must enter into an interconnection agreement that has been approved by the Federal Energy Regulatory Commission (FERC) as part of a tariff filing of the utility or as part of the overall tariff documents approved by a regional transmission organization (RTO) or an independent system operator. These projects are outside the scope of this report.
- Fred Beck & Eric Martinot, Renewable Energy Policies and Barriers, Academic Press/Elsevier (2004), Science (http://biblioteca.cejamericas.org/bitstream/handle/2015/3308/Renewable_Energy_Policies_and_Barriers.pdf?sequence=1&isAllowed=y).
- McAllister, Richard, David Manning, Lori Bird, Michael Coddington, and Christina Volpi. 2019. New Approaches to Distributed PV Interconnection: Implementation Considerations for Addressing Emerging Issues. Golden, CO: National Renewable Energy Laboratory (https://www.nrel.gov/docs/fy19osti/72038.pdf).