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Legal Alert: FERC Expands SGIA and SGIP to Cover Energy Storage

November 25, 2013

On Friday, the Federal Energy Regulatory Commission (FERC) revised its standardized Small Generator Interconnection Agreements (SGIA) and Procedures (SGIP). The changes are intended to make the interconnection of small generators (20 MW or smaller) greener and more efficient.

Notably, the revisions adopted in Friday’s Order No. 792 expand the scope of the SGIA and SGIP to include energy storage devices. When FERC originally adopted the SGIA and SGIP in 2006, FERC simply did not consider energy storage. Now, seven years and light years of energy storage technology later, FERC states, “The time is ripe to promulgate such changes in light of the increased penetration of small generator resources, the continued focus by states and others on the development of distributed resources, and the need for this Commission to have its regulations and policies ensure just and reasonable rates, terms and conditions of service.” While energy storage projects such as batteries and flywheels have been interconnecting with the grid for some time now, the industry has demanded that FERC finally acknowledge that “Small Generating Facilities” include storage devices and consider specific rules for interconnecting storage devices. FERC’s Order No. 792 is a welcome development for the energy storage industry.

In Friday’s Order, FERC accepted the revised definition of Small Generation Facility in the SGIA, as partly suggested by the Energy Storage Association: “The Interconnection Customer’s device for the production and/or storage for later injection of electricity identified in the Interconnection Request, but shall not include the Interconnection Customer’s Interconnection Facilities.” [emphasis added]

FERC addressed how to calculate a storage provider’s capacity. FERC determined that the Transmission Provider should generally assume the maximum capacity that the storage device is capable of injecting when deciding whether a device may be interconnected under the SGIP and/or whether it qualifies for the SGIP’s “Fast Track” processing. If the device is a combined resource (combining storage with generation, such as using storage to firm a variable energy resource), the capacity should be the same as the capacity specified on the interconnection request, even if it is less than the maximum capacity that the device is capable of injecting.

FERC’s Order is a significant step for the energy storage industry. It clarifies that energy storage devices, like other Small Generating Facilities, will receive rates, terms and conditions for interconnection with public utilities that are just and reasonable and not unduly discriminatory.

If you have any questions about this Legal Alert, please feel free to contact the attorneys listed under "related people/contributors" above, or the Sutherland attorney with whom you regularly work.

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