Though explored in more depth in this Energy Central article, the issue of limiting the size of new generation facilities to stay under the threshold where registration with North American Electric Reliability Corp (NERC) as a Generator Owner and Operator is required is one we’ve touched on frequently. Such registration of course includes mandatory compliance with the NERC and Regional reliability standards applicable to the specific attributes of the facility.

Mandatory compliance with the reliability standards represents a risk to projects in two ways. One is the often repeated but never implemented financial impact of “one million dollars per day, per violation” sanction by the Federal Energy Regulatory Commission (FERC). That risk has been largely mitigated by the consideration of the impact of the violating entity on the reliability of the Bulk Electric System, (BES), customized Compliance Oversite Plans that consider the individual scope of operations, and features such as Self-Logging of potential violations and their subsequent mitigations. Financial risk of sanctions due to a violation of a reliability standard by a typical renewable energy producer is quite low.

The second risk is the Cost of Compliance with the applicable reliability standards. Tales of rogue auditors, demands for intricate evidence of compliance, and confusion about precise roles and responsibilities are common. However, a closer examination of applicable standards reveals the data and measures required for evidence of compliance are not much different than the processes and steps one would take to protect their investment anyway. We do have enough common experience at this point to form a good idea what passes for evidence and what does not. With the exception of a handful of standards outside the realm of normal operation, evidence of compliance is primarily a matter of good record-keeping.

Our advice is to take a hard look at what compliance entails and what it does not, before making a decision on limiting the size of a project to fly under the radar of NERC. That decision in itself is a risk to the value and viability of the project.