FERC hopes to act within months to ensure markets compensate flexibility: Glick

In the next couple months, the Federal Energy Regulatory Commission hopes to act to ensure power markets properly reward the flexible resources that will be needed during the energy transition, FERC Chairman Richard Glick said at a National Hydropower Association conference in Washington April 6.

"It is very important, as we get into a situation where we are going to be relying on a significantly greater amount of intermittent generation, that we have the flexibility in terms of our generation resources to address when the wind dies down and the sun stops shining," Glick said.

Because of the way organized power markets are structured right now, they have been focused on how to prevent older, less flexible baseload generation from retiring too quickly, Glick said. But markets have not fully considered the qualifications and characteristics of the assets that will be needed in the future, he said.

So FERC is looking at how markets could reward generating plants for the value they provide, and flexibility is a big part of that, he said. Hydropower plants, battery storage resources and pumped storage could be the types of flexible plants that could benefit from new market approaches, he said.

FERC has held several technical conferences to consider market reforms and the commission hopes to act on the issue in the next couple of months, he said.

Interconnection proposal

FERC also hopes to issue a proposed rulemaking soon to help clear the interconnection backlogs in many grid operators, Glick said. "It is extremely frustrating," he said. "In many parts of the country, we have interconnection queues that are getting longer by the day."

FERC is planning to issue a series of proposed rulemakings on transmission reform and one of those rulemakings will directly address interconnection reform, Glick explained. "I am hoping it is going to be significantly more ambitious than some of the measures that have been taken in the past," he said.

Wind, solar and storage account for 90% of the generation in interconnection queues and sometimes those projects face delays due to financing issues or transmission issues, Glick noted. But the interconnection process is far and away the biggest delay, he said. "If we don't figure that out, the rest of this transition to the clean energy future isn't going to happen," he said.

Hydro licensing deal

Regarding hydropower specifically, Glick said that there are a lot of fundamental issues with hydropower licensing that need to be addressed on a broader scale. With all the federal and state agencies involved, licenses often get into a "bureaucratic morass" with significant delays, he said.

Glick noted that the NHA, Native American tribes and conservation groups recently reached agreement on a set of recommendations to improve hydropower licensing.

Glick said he thought it was "astounding" that such a wide range of groups was able hammer out a deal that they could all agree to. While the proposal would still need to go through the legislative process in Congress, Glick said he is optimistic about its prospects.

Glick emphasized that hydropower can play a valuable role in integrating intermittent generation. "With climate change and the focus on zero-emissions resources, it's really hydro's time to shine, I think," he said.

Expedited permitting

Among other changes, licensing proposal recommends an expedited, two-year licensing process for certain projects at qualifying non-powered dams. This two-year process would help hydropower compete with renewables that can be developed much more quickly, Charles Sensiba, a partner with Troutman Pepper who helped craft the deal, said at the conference.

The deal also proposes a three-year licensing process for some closed-loop and off-stream pumped storage facilities. Licensing normally takes up to five years, and project construction usually takes another five years, said Cameron Schilling, vice president of market strategies and regulatory affairs at NHA. So the proposal would reduce the timeline from nine or 10 years down to seven years, he said.

While the process for pumped storage is longer than for the timeline for a typical wind and solar development, it still provides time for pumped storage to be built by 2030, which is an interim target date for some state climate goals, Schilling said.

Several utilities are currently considering new pumped storage projects. PacifiCorp included a 500 MW pumped storage project in Oregon in its 2021 integrated resource plan. The utility is also considering additional pumped hydro resources in Oregon, Wyoming, Utah, Idaho and Montana, according to a presentation for a public input meeting for the utility's 2023 IRP.