Tech Insights

Planning for Power: FERC Orders Prep for Future Demand

June 04, 2024 by Jake Hertz

U.S. grid operators have lacked long-term transmission planning, but the Federal Energy Regulatory Commission is mandating it.  

A reliable power grid is essential for modern civilization, but achieving it requires significant strategic planning. Grid managers need to plan and account for key issues such as long-term energy demand forecasting, maintaining stability during extreme weather, and upgrading infrastructure cost-effectively.

The Federal Energy Regulatory Commission’s (FERC) rule has mandated long-term planning for regional transmission facilities in the U.S. FERC’s mandate has far-reaching implications for multiple stakeholders.

 

Power lines.

Power lines. Image used courtesy of Pexels

 

Exploring Grid Challenges

Power grids are typically divided into distribution systems (medium and low voltage), overseen by distribution system operators (DSOs), and transmission systems (extra-high and high voltage), managed by transmission system operators (TSOs). With modern energy systems becoming increasingly renewable and decentralized, each grid part and its operators have distinct roles involving various stakeholders and policy processes.

 

TSOs vs. DSOs.

TSOs vs. DSOs. Image used courtesy of the authors

 

In the U.S., policies favoring decarbonization and competitive renewable resources have reshaped the generation landscape. For example, over 100 GW of wind and solar capacity were added between 2017 and 2022, with a record-breaking 32 GW of solar in 2023 alone. 

Meanwhile, increasing electrification in buildings and transportation adds pressure to grid networks. Climate-related risks like wildfires and severe storms further strain infrastructure. For instance, Minnesota anticipates a 75% rise in extreme heat days in the next decade. To confound the issue, power line losses escalate with rising temperatures, leading to a capacity reduction of up to 7% below standard design ratings when temperatures surpass 100°F. 

These challenges, compounded by concerns over affordability, aging infrastructure, and inflation, prompt grid planners to rethink processes to ensure safe, reliable, and affordable power while facilitating the energy transition.

 

From Reactive to Proactive

In response to the increasing complexities facing the nation's energy infrastructure, the FERC has issued a mandate requiring long-term grid planning for a 20-year horizon across the United States. This move marks a significant departure from previous practices, where grid operators often focused on short-term planning. 

FERC's Order No. 1920 outlines specific requirements for transmission providers in the lower 47 states (excluding Texas, which has a separate grid) to conduct proactive planning for regional transmission facilities, ensuring their reliability over the long term. As renewable sources grow rapidly and transportation and other sectors continue to electrify, grid demand is expected to surge in the coming decades. FERC recognized the need for strategic, forward-looking planning to meet this growing demand and ensure grid resilience.

 

Video used courtesy of FERC

 

Under Order No. 1920, transmission providers are tasked with assessing future transmission needs and identifying cost-effective solutions. This included anticipating changes in electricity consumption patterns, integrating new technologies, and accommodating the evolving energy landscape. 

By adopting a long-term planning horizon, grid operators could better prepare for future challenges and opportunities, ensuring the reliability and efficiency of the nation's electricity grid for years to come. It also expands states' roles in planning and funding, addressing customer benefit-based payment. Operators must produce a 20-year regional transmission plan every five years and consider grid-enhancing technologies. 

Cost allocation involves stakeholder engagement and state agreements. Enhanced transparency, "right-sizing" of facilities, and interregional coordination are prioritized. Order No. 1920 takes effect 60 days after publication, with compliance filings due within 10 to 12 months for most requirements.

 

Powering the Future

Industry stakeholders have expressed widespread support for FERC's decision. They view it as a critical step towards modernizing the grid and enhancing its resilience. With the implementation of proactive grid planning, the U.S. is poised to lead the way in building a sustainable and robust energy infrastructure. As the energy landscape evolves, FERC's mandate signals a new era of strategic planning and collaboration in the energy sector, paving the way for a more resilient and adaptive grid infrastructure.