Preparing for NERC Registration and Compliance with New Inverter-Based Resource Rules
As a former manager of registration for the North American Electric Reliability Corporation (NERC) and president and CEO of Reliable Energy Advisors, I have written articles about the risks and challenges of NERC regulations. In my article “Your Audit Report May Be Worthless,” I warned of falling into the trap of thinking your organization has a strong compliance program because you passed an audit. Today, I am sounding the alarm about potentially hundreds of facilities being swept up into the NERC world where fines and penalties can be as high as $1 million per day per violation.
Recently, NERC unveiled updated rules for inverter-based resources (IBRs), which are reshaping the landscape for utilities and energy producers. These new standards aim to enhance grid reliability and security in light of the increasing integration of renewable energy sources, such as solar and wind, into the electric grid. For utilities that are not currently registered with NERC, these changes bring unique challenges and obligations. For entities that are currently registered and have additional facilities that will meet the new thresholds, additional documentation will be needed.
To ensure a smooth transition, non-registered entities must proactively prepare for NERC registration and adherence to NERC standards. This is no small feat, particularly for newcomers to NERC. In addition, unlike in the past where registration was a voluntary process and an entity could operate undetected by NERC without being registered, NERC has coordinated with reliability coordinators, and transmission operators to identify entities that meet this new threshold where NERC can then force register entities that meet the new threshold. Force registration is a process where NERC places an entity on NERC Compliance Registry (NCR) without the entity’s consent. The day an entity is on the NCR, they are responsible for following NERC reliability standards whether they agree or not. Escaping NERC registration will be unlikely.
Understanding IBR Rules
NERC’s updated rules focus on addressing the operational and cybersecurity challenges posed by IBRs. The new requirements emphasize performance validation, data sharing and cybersecurity. They are aimed at ensuring that IBRs can withstand and recover from disturbances without jeopardizing grid stability. The rules mandate detailed operational data submissions for effective grid planning and operations. The cybersecurity provisions are intended to strengthen the security framework to safeguard inverter-based systems against cyber threats.
These requirements reflect NERC’s commitment to integrating renewable energy resources while maintaining the reliability and resilience of the bulk electric system (BES).
Steps for Utilities
Registration based on the new framework starts in May 2025 and has a deadline of May 2026. For utilities not currently registered with NERC, the prospect of registration and compliance can be daunting. However, following a structured approach can streamline this transition.
First, you will want to access your applicability. Not all utilities are subject to NERC’s rules. Entities must determine whether their operations meet NERC’s criteria for registration. This includes evaluating the size, capacity, and operational impact of their resources on the BES. If you have a facility(ies) with a 20 MVA nameplate rating and connected at 60 Kv or higher, the countdown is on for you to register.
Secondly, utilities that are subject to these rules should conduct a gap analysis. A thorough gap analysis will identify areas where your operations diverge from NERC standards. This process involves reviewing the new IBR requirements; identifying which NERC standards apply to your organization; assessing current operational, cybersecurity, and data management practices; and identifying deficiencies and areas needing improvement.
The crucial third step in structuring your compliance approach is developing a compliance program. A robust compliance program is critical for meeting NERC standards. If after reading these steps and assessing your organization’s ability to implement the following components, consider outsourcing compliance duties to firms or other utilities that offer NERC managed servicers if your organization is not quite ready to run its own compliance program.
If your organization does not have compliance documents ready on day one of registration, you could be out of compliance. Key components of this will include developing a clear and comprehensive documentation of processes. This may include the need for a professional engineer for some of the technical standards and documentation. The development of compliance documents can also be outsourced.
Ensuring Compliance
The compliance staffing component also warrants consideration. Operating a compliance program effectively usually means that you need a compliance staff depending on the size of your fleet. In the training step, you make a plan to educate staff on NERC compliance obligations and the new IBR Rules. Finally, the monitoring step, in which your plan requires implementing tools for continuous monitoring and reporting of compliance metrics.
Another helpful step in developing a compliance plan is to bring in industry experts for engagement and collaboration purposes. NERC-registered utilities or consulting firms specializing in regulatory compliance or industry trade groups specializing in generation and renewable energy can be instrumental here. Their expertise can provide valuable insights into best practices and help navigate complex requirements.
To prepare for audits and registration, mock audits and readiness assessments are essential for ensuring compliance. These activities simulate NERC’s evaluation processes and allow utilities to address gaps before official audits. Often peer utilities or trade groups will do these assessments as well as consulting firms.
Getting some additional training on the topic is also useful. There is training on the subject of IBRs integration into NERC. The industry training company EUCI offers a course on the subject. NERC also has a page dedicated to the NERC IBR project.
Key Compliance Considerations
- Documentation: Maintain meticulous records of all compliance-related activities, including testing, training, and incident responses. Create a repository for each facility. Without evidence, it is nearly impossible to prove compliance.
- Technology Investments: Upgrade existing systems to meet performance and cybersecurity standards for IBRs.
- Stakeholder Engagement: Work closely with regulatory bodies, industry peers, and technology providers to ensure alignment with NERC expectations.
Conclusion
The new NERC rules for IBRs signify a pivotal moment for utilities, especially those not yet registered with NERC. By proactively assessing their readiness, addressing operational gaps, and implementing robust compliance programs, these entities can position themselves to meet NERC’s standards effectively. Early preparation not only ensures compliance but also fosters a more resilient and secure grid as renewable energy continues to grow in prominence.
As the energy industry evolves, adhering to NERC’s regulations is not merely a regulatory obligation — it is a critical step toward supporting a sustainable and reliable energy future. Did I mention not adhering to NERC’s regulations can result in fines and penalties up to $1 million a day per violation?
