Key Players in Transmission Interconnection: Understanding FERC, NERC, and ISOs/RTOs

From 2000 to 2010 the U.S. power grid saw a steady but modest flow of new transmission interconnection requests, averaging between 500 to 1,000 annually. Fast forward to today, and the picture has dramatically changed. With the clean energy boom of the last ten years, yearly interconnection requests have soared to 2,500–3,000 — a staggering 300-500% increase — according to the U.S. Department of Energy. 

Here to help us break down some of the key players involved in interconnecting solar PV to transmission systems is Tim Taylor. Tim is the instructor of the Electric Transmission and Solar PV Interconnection Bundle, a 2-course series where he breaks down the complex landscape of utility transmission systems and the process for interconnecting solar PV to those systems.

Hey, everyone. Tim Taylor here. Interconnection of renewables to transmission systems is not a simple task. It takes years to get a project through the application step, the different technical studies that are in the study process, and then through the final construction and commissioning work. There are a number of different transmission organizations involved, not to mention a bit of an alphabet soup, as to what those organizations are called. 

Let’s take a quick look at some of the primary organizations involved in the renewables interconnection to transmission. Come on.

The first organization I want to mention is FERC – headquartered in Washington, D.C. – FERC stands for Federal Energy Regulatory Commission, and it does just what its name says. It regulates rates and services for electric transmission in interstate commerce. Now, this includes RTOs and ISOs, which we’ll get to in just a minute, but also other organizations that are not part of an RTO and ISO, who also have interstate transmission, and that could be investor owned utilities (IOUs) and government agencies.

FERC not only regulates the transmission infrastructure itself, but also electric wholesale power sales in interstate commerce. Now, a primary mechanism by which FERC regulates interstate transmission is through the issuing of orders. Over the years, it has issued a lot of orders that restructured the electric power industry, and it is still actively doing so.

One of the latest was FERC Order 2023, which overhauled the interconnection process – very important to renewables. This was issued in July of 2023, and then it was affirmed and clarified in March 2024 with FERC order 2023-A.  

Now you may be saying, well, Tim, that’s all well and good about FERC, but what about this other organization that I hear about called NERC? 

NERC, the North American Electric Reliability Corporation, it’s headquartered in Atlanta, Georgia. It was created in response to the Northeast blackout of 1965,  just two years after I was born and probably decades before some of you were born. NERC covers the U.S. and Canada, and thus its name includes North American and not national. It is a nonprofit, nongovernmental corporation, thus its name includes corporation and not commission. 

NERC establishes and enforces reliability standards. The key word there being reliability for the bulk power and electric system. That is its whole mission. Given that renewables and inverter-based resources are relatively new and their behavior on the grid is still being understood, NERC is very active in developing reliability guidelines and standards around renewables.

If you are a developer or owner, it’s best to know these standards because NERC can take enforcement actions, including monetary penalties, sanctions, and mitigation actions. 

The last types of organizations I’d like to mention are the ISOs and RTOs. ISO meaning Independent System Operator, RTO meaning a Regional Transmission Operator. For most purposes, these two types of organizations are the same with very minor differences. There are 7 ISO/RTOs in the U.S., plus there are two more in Canada that are not shown here. 

The purpose of ISO/RTOs are regional electric grid operation, monitoring and management, and competitive wholesale market administration. They run the markets and they ensure nondiscriminatory access to the transmission grid – both by customers and suppliers.  Other responsibilities include dispatch to keep the supply and demand in balance, and regional planning and reliability. 

ISO/RTOs cover about two thirds of the electric customers in the U.S.. The other one third is covered by other transmission organizations not part of an ISO/RTO, and these include different investor owned utilities and government agencies. The areas not served by ISO/RTOs include the northwest and the southeast in the United States.  

That’s all I’ve got for today. If you want to know more about electric transmission and interconnection of solar PV to transmission, I’ve got two courses on HeatSpring that you can go to by clicking on the QR code here. HeatSpring is a wonderful resource for anyone that’s involved in the clean energy business and has a whole range of courses that you can take.

Thanks for watching!