 Good afternoon. This is your host, Guillermo Salvatlliet, on Perspectives on Energy, and welcome to today's show. Today, we'll be discussing inverter-based resources and new NERC regulations. So, once again, I'm the Director of International Services for HSI, the Health and Safety Institute, Industrial Skills, and we recently covered this. He's not with us today. My colleague Jim Stanton and I covered this earlier this week with an earlier webinar, but definitely want to discuss what has happened with these changes. They've been coming for a while. It was some of the new standards that NERC is putting up where they've lowered the threshold for some of these renewable resources, namely solar or the wind. In the past, it's always been 75 megawatts or below. Usually, you see them running at 74.9 and they would build them to that spec or they would just limit their output to that spec. And really, all that was was to avoid, for example, compliance, violation, exposure risks. Now, we're going to discuss that today as far as when they make a business decision with the wrong perception of what that risk is. And we'll talk about what the kind of help that exists out there. We'll talk about what the steps are. We'll talk about there's no need to be afraid because it's not that hard and there's plenty of help available. Inverted-based resources for regulatory changes, but we'll talk about the efficient and cost-efficient strategies for these NERC compliance programs. I mean, we help quite a lot of clients doing that, but there are many others, one of the only ones actually do that. I've been working on NERC compliance for a very long time as well, my career. I mean, NERC standards have been around since after the 2003 blackout. But before that, they were called NERC policies. And yes, they had audits and audits, but they never really implemented those standards. They went from policies to standards. And yes, they had violation penalties where they could be as bad as a million dollars per infraction per day. But the truth is for these smaller generator owners, generator operators, have never really seen that kind of violation and much less seen that kind of penalty imposed on a generator. So just why again, I emphasize, it's not as bad as people first think, and it's terrible when they make a business decision just limiting their output, merely for the idea that they have the risk is just too great. That just tells me that they don't have a full understanding of what their risk is, or they have zero understanding of what their, what their compliance requirements are, or whether they'll be able to meet them or not. So hopefully there's many ways to do that. All right, so standards, right? Is it risk, routine, or both, right? And one of the things we need to look at it is when the most important thing, and I'll skip down to the bottom, right, is preparation is key, right? So you have a lot of advanced warning, right, before any standard becomes effective. And how they apply to these inverter-based resources, well, you know, for example, the ones that are applicable to each standard, right, they're well, it's good news is that now there's enough of you out there on the grid that you're creating, at times, a reliability risk. So that sounds bad, but at the same time, it tells me that you have saturated the market full of generator operators that now NERC has his answer for. Granted, the more entities they have to keep tabs on, and they have to follow up and look to see that your filing compliance, the longer it'll be before you actually get called up to do that. But at the same time, it's understanding what your obligations are as these standards become applicable to you, right? So mind you, NERC has been around since right after that 2003 blackout. So they've been around for a while. And they normally apply to larger utilities, co-ops, that sort of thing. And then usually entities that had facilities a hundred KV or above or 75 megawatts or higher. Well, now this is all changed, right? When it comes to these, these types of renewable resources. So the threshold's gone a lot lower. And so as a voltage, so now you're going to find yourself right in the situation where you are now subject to standards. If you already have an existing asset, now it's, now it's going to wrap it. These standards will now involve you. So how do you manage this, right? Cost and effectiveness, right? As I said earlier, preparation is key, right? And a lot of that involves having all your documentation, which I think for the most part, you already do. At some point or another, you had to do interconnection agreement with your local transmission or transmission operator or the balancing area. You probably have to do a lot of submit. Well, do carry out and submit a lot of system studies. You have to submit, for example, all of your line impedances, all of your protection settings. I mean, you do have equipment in your, that's going to protect your side of the asset, right? You already have relaying and sort of protection that you have in place to protect your asset. So in a lot of cases, these already meet compliance anyway. And if not, there's a possibility, right? You can change that to fit these new right through capability requirements. And if not, if you are stuck with something you bought before these things changed, all you have to do is make a declaration that, hey, I don't have the ability to make settings that allow for a right through. But, and that's fine too, right? So these are just examples, right? The other thing is I'm making sure you have documentation and you're making sure you have, are your evidence and audits, for example, don't need to be as scary. So here's what you don't want to do in, when it comes to these like compliance requirements and resources, right? You don't want to limit your facility in order to avoid these standards. If you have a facility that's rated 80 megawatts and I've seen entities that will run it at 74.9 because they didn't want to, they were willing to forego those extra five, six megawatts of sales revenue just to avoid this perceived risk compliance, right? So these wrong approaches, right? It's, and I understand they're making a business decision based on risk perception, but in reality, that perception is probably incorrect, right? The other thing is, for example, your OEMs and all your EPC contractors, right? So when you install these sites, you're going to have contractors that do all of the facility ratings for your conductors. You're going to have protection and control contractors that are going to install and test all of your relays. You're going to have an engineering firm that's going to actually do a thought study a lot of your equipment, right? So that's just a switch chart. On the actual generating facility, right? On the inverter, there's going to be settings in there that is already, is for the most, for the most part, right? A lot of them are going back five, six years, they have the capability to do what they call write through, whether it's a frequency excursion, voltage excursion, or even being able to write through a certain fault that's happening far off in your system, right? So these are the things that you need to understand, right? To be able to set that up. And it's not hard to do, right? So in a lot of cases, all of these expects that were given to you upon commissioning usually are, they have a lot of value, don't lose those, of course, but, you know, that those are the things that you probably already submitted anyway to your, to your RTO or your TOP or all, or your balancing authority, the entities you were, you were connecting to in your interconnection agreement, right? Okay. So the other thing, you don't want to try and figure it out later. If you're going to become online, you're a new facility, right? And you're now coming online during this period that you are now experiencing the fact that you're now subject to all these standards. Don't in your rush to meet that deadline to come online and separate those megawatts to then decide, no, we'll find all that compliance evidence later. No, you need to think about that before you energize everything. And the reason being is that it's easier to delay a project and make sure you have everything in place rather than finding out during an audit, right? That, because one thing the auditors don't like is, is to know that you made it the deliberate decision to ignore compliance just to make, just to like make revenue. So they are more willing to probably, in my experience, probably, like, let it slide with a warning if you just had an oversight, as opposed to then finding out that you decided to, to forego the compliance process just to be on schedule for something. So that's definitely not, not a thing to do, right? When it comes to compliance. So don't try and figure it out later. Get that figure out ahead of time before you're commissioned or energized for the first time, right? Again, my second bullet, when's the facilities have been running before focusing on reliability considerations? No, that's, that again, that's something you don't want to do. You want to have that already managed and looked at way ahead of, way ahead of energization, right? Usually in the very beginning stages, right? I've actually like scoping this out, doing some of the engineering studies. When you have your settings, when you're testing these relays, that you're going to need to, for example, run, run this, the site or whether it's a switch hard, or it's the inverter based resource protection, right? There's settings that go into that are specific requirements on writing out of disturbance, whether it's a frequency excursion and voltage, or writing out during, during an issue with a line fault. So, right? So they're not that bad, but at the same time, you have to make sure those settings are in there and tested and you have evidence of those tests that they were successful. So the way ahead of energization, right? What's next? Assume your viable resource status contributes less reliability than other technologies. So here's the thing, right? Maybe five, six years ago, that may have been true, but right now there are so many renewable resources and so much variability that you are impacting the grid in such a way that NERC is now definitely looking at what's happening, that they have to change their, they have to expand their scope of standards and applicability, which now includes these inverter based resources. So, yeah, you're, the good news is there's a lot of you now. So, take that to her. What's next? Keeping reliability considerations a side item to be addressed when the time is available. No, once again, compliance is important and planning is key. You don't want to do this at the, as an afterthought or then try and catch up later because believe me, you're going to have problems. Whenever you try and do this after the fact, you end up not finding evidence, which is a bad thing because, and then the auditor will know that you just didn't do this up front. And you're better off, you're better off getting all this ready ahead of time before you try and go back and buy out what we've got and just don't ever, ever try and create evidence or write at the station saying, I hereby declare a test that doesn't comply it because it's going to be an issue. So, again, most of the contractors that you hire to actually commission all these sites are going to be pretty well versed on providing documentation and carrying out testing that is according to these NERC standards, PRC-5, PRC-25, FRCA. All these standards are really, really important and they're often violated. But again, these contractors are really, really pretty well versed on this and if not, then you need to find different contracts. What else? Be able to integrate reliability considerations into the routine process. So, part of that is the, they're the operations, right? And you're operating procedures in your, in the way you conduct business, in the way you operate this molecular asset, right? Reliability is a crucial aspect and the reason that these standards are in place is because they want to ensure reliability. They want to make sure that your asset along with thousands of other assets out there are not going to cause a major system disturbance that will eventually to a blackout, which means you will be able to produce revenue anyway if you're blacked out. So, that's the other thing that they want to make sure that you don't do. So, do not fail to integrate reliability considerations, right? So, and again, that is something that you can implement, integrate, right? With your procedures. And when you write a procedure correctly, it doesn't have to be that long, you already can bake in compliance already in there. So, you want to make sure your operating procedures are compliant. You don't want to try and create a compliance procedure that you're going to force your operating personnel to try and use. So, remember, operating procedures should be compliant, not try a compliance-friendly procedure to kind of retrofit it to make it friendly to operators. All right. So, here's the thing, right? Now that these standards apply to you, right? Being a registered entity, right? The good news is that now you have the ability to be able to vote on some of these standards. You have the ability, you have a saved, you have, there's value, for example, and being part of that registered valid body, right? The other thing is, you know, there's also value in your contribution as an entity, meaning a generator owner, a generator operator. So, you're going to have the ability to actually contribute to whether these standards are, so most of these standards go through like a process in which, you know, they several years, right, where they vote on it. And at that point, you have the ability to make changes or to even vote on some of these changes, right? So, remember, standards are part of normal operations, right? And part of that is, for example, cybersecurity is something that is very important, something that you're probably already doing, right? Cybersecurity is a threat to everyone. Some of them are a more juicy target than others. But as generator operators are out there more and more, there's going to be a definite risk. And one of the things that's the biggest risk of all, really, it's your cybersecurity, right? The other thing that's important, and it goes hand in hand to cybersecurity, is protection system operations, right? So, a lot of these relays are network connected. So, that's one of the things that also comes into play. So, again, understanding that type of like cybersecurity risk is something you're going to do anyway with business, right? So, it's a matter of like paying attention to how you do that, making sure that it's compliant and that you have evidence, right, that you did that. So, again, not that bad. The other interesting thing about this is that when everything is transparent, right? You're not going to have any, there should not be any surprises. You're going to know years ahead of time when there's a change or a standard, a requirement, a criteria, and they'll even give you the rationale behind why they're making those changes. And as a stakeholder, right, being part of the ballot body, you will have a chance to vote or write comments on some of these. So, that's another really great benefit of being a registered entity. So, you have a lot of like buy-in and you have input into how this happens. So, again, with NERC, there's nothing hit, right? Once you're registered entity, you get to see everything. Also, there's another resource, right? The North America Transmission Forum, which is made up of all your peers, all of your GOs and GOPs, and all of you help each other when it comes to dealing with NERC compliance. Nobody, there's no vendors and there's no NERC personnel allowed in that forum. So, it's just U.S. peers. Now, when I used to work on the utility side, I was a rep for my organization, right, my utility. And I got to have a lot of important information on there. I had peer reviews sometimes where the peers would come in and kind of like review what I was doing and get me ready for an audit or they would critique my process. So, again, it's another great asset to have, right? So, you're not alone in this and you can get a lot of help. Ultimately, there's entities like us, right? They can come in and help you with a complete anti-incompliance service or there's others that can help you with advising here and there when it comes to NERC. Next slide, please. So, bearable burden, right? So, here's the thing we talked about. As a registered entity, right, this is not that bad. Evidence documentation, you're going to be able to, it's just, when they ask me how many hours a month it takes, once you got it up and running and you have your compliance program up and running with your facilities, right, or your assets, or you have your system, from what we've seen, it's about eight to 12 hours a month, maybe six to eight hours a month on your ongoing compliance duties. And that's really, it's about making sure that you have your compliance documentation or your evidence properly stored, labeled and ready. Also, keeping an eye, looking ahead, looking forward on that compliance landscape, right? And you get notifications all the time that we're saying, hey, there's a meeting this month regarding, you know, this new standard that may come into a five, three years from now. So, you get plenty of that information. The other thing is, of course, being ready, right? Being ready for audits. Ideally, if an audit is announced, you're going to have maybe eight to 10 months, you know, or six months at the worst to be ready for that audit date. If you run your compliance program correctly, an audit can happen tomorrow and it shouldn't matter because you have everything up to date, all of your compliance evidence is up to date. And they gave you usually an audit period of like maybe 18 months to a year, meaning from this day looking back, right? So, ideally, you should have had that all that ready. And so, a good compliance program, you'll be updating everything basically from a day-to-day basis. So, an audit could, you could have a spot check today and you'll be fully compliant if you did your job right. The other interesting thing as well is that there's a form called the reliability standards audit worksheet. So, in our soft. So, whenever you have an audit, usually on a standard, a standard has a whole bunch of requirements. In an audit, they may audit you with just one or two of those requirements in that standard. So, it's not, it's not going to be the whole standard either, right? So, this R-soft basically tells you the requirement, right? It tells you, it asks you to explain your narrative of how you comply. So, you explain yourself. And then it asks for, you know, evidence, whether it's your procedures, your evidence, documentation, examples, pictures, for example, or that sort of thing. One thing to keep in mind though is just that, hey, as standards change, right, within a three-year period, you have a standard that changes version. Well, it's up to you to keep up with that version up to that date. Or if you update a procedure, you made a significant change, well, that piece of evidence now has to make sure, you got to make sure that evidence, you know, you show both versions and they fall within that compliance period. Not a hard thing to do if you're spending your eight hours, 12 hours a month looking, just looking at compliance, right? So, all right, next slide, please. So, again, there's different things to make sure, right? So, you have day one compliance documentation. That's when you're finally, you know, you've done all this work in preparation to the day that you energize that device, right? And you're in service. You want to make sure that on day one, you've got everything ready to go, right, documentation and scope. So, you have your contractor, you have all that information, that's the facility ratings, the relay testing, and all of that evidence that goes along with that, right? Interconnection requirements, everything's your operating procedures. Also, for example, all of your personnel training. It's another thing that's important. We'll talk about that a little bit more later. But having your personnel onsite that are going to be operating, that, for example, are going to be receiving calls from the TOP or the BA, well, they need to be trained, right, on how to properly communicate with your TOPs and BA. So, but that training is simple as another example, right? The other aspect here is include documented evidence, right? So, things that are, that see, things like voltage right through and frequency right through capabilities, that's PRC 024. And all these standards, right? For example, all of these you get from the OEM or from the equipment manufacturer, and you also get that from, it's verified through the contractor that did the relay testing. The settings, for example, engineering firm as well. So, all of that, you know, comes together, and before you energize it, they have to test all this. And once they do energize it, they got to go back and verify it. So, all this documentation, right, is an important thing to keep. So, that's one thing that you need to make sure you get on your contractors to have this documentation with them and they present it correctly. And you, you know, you withhold in the contract, you got to have a clause in there that, you know, part of that payment is withheld until, you know, you get that final documentation as correct and verified. And then they stay around for available for a good 30 days or two months until you get all this compliance evidence and spread away and properly document that is sorted, right? One of the things I've seen has been really, really bad is that we've had a couple of clients at some point that they had over 340 pages of prints, test records and all that, all scanned, you know, at one long PDF. And some of those documents were not OCR, meaning that they're not Optical Character Recognitions. You cannot do a control F or a control fine. And they weren't even properly, like, even on the margins, right? They were really bad scans. So, when you show that to your auditor, you know, it's going to present problems. So, again, not only must you ask for the right evidence, but the evidence has to be in the right format, right? Because they're really nice, legible, nice, nice files that is a property set up because that whole sticking all 300 pages into a scanner and then here you go as a PDF, it's the absolute worst way to do this. And then, of course, the interconnection study satisfies model requirements, right? So, again, that Mod2032, your interconnection requirements, right, on that agreement, before you connect anyway, you're going to have to have all these studies done. So, and then your interconnection agreement, right, the TOP, the RTO, the BA, all of those have those requirements that you have to adhere to. And for the most part, right, a lot of them also make sure that you're going to have that as evidence. So, make sure you have that properly carried out, which you're going to do anyway, right? So just, and most of them are already compliant. So just make sure you store that as well as that. Again, manufacturer data required. So again, they, like I said earlier, make sure you hold them accountable for all this compliance evidence. Like I said earlier, make sure that that's part of the contract. And then the other thing is negotiate a post commission timeframe, right? So you got to make sure that they are available for some time afterwards to make sure that they correct any issues, whether it's with the equipment or the documentation, because that is important evidence you need. You know, we have so many examples of, like only ever disappearing and offering no help to their client. Want to say, you know, commission that had given them all the evidence. So controls, right? A lot of that, it's just a matter of making sure everything in the compliance program. So when you set up your compliance program, there's a lot of different ways to capture all that evidence. Your procedures are controls. Training, of course, is important to make sure that you're within the compliance program. And then, of course, you want to test, right? That compliance evidence that's being captured correctly. Your procedures, for example, you're going to have either an operation procedure, it tends to be pretty short, or you have a training reference that explains more of a background as to why, right? What you don't ever want to do is you don't ever want to grab like the NERC standard and then copy it verbatim as your procedure. That is the worst thing you can do. And I see entities do that. And that usually gets the otters rolling their eyes and, okay, show me your evidence now and see what you've got. And usually they find a problem with that. Just show me your procedure, how you really do it. And then maybe as an appendage, you can show, hey, this procedure is written to comply with this evidence here, right? So training, I said that already, right? So consistent training. So your personnel, whether it's your high level leadership, all the way down to your mechanics or anyone doing the control center of these sites, training is important to make sure they understand what your compliance burden is, what your responsibilities are, and whether it's cybersecurity, whether it's communications. Very important. There are certain requirements specific to communications. They have to do it with talking with control centers. So that, they have to be trained on a certified before they actually serve. And there's many ways to live with this training, right? So for us, whether it's computer-based, there's a webinar, micro-learning, so we have all this different availability, right? One of the things that we do is we also do audit prep. We get your subject matter experts ready for these audits. And the most important thing at the bottom is new hire, right? NERC 101. So make sure that they understand whether you're about to be a facility, it's about to become NERC compliant or you have a new person, new personnel that you want to get them ready. This training is really important. And of course, I have to retain evidence for that. And look at that. I think we made it to the end, just under 30 minutes. But again, we really, really condensed this. This presentation was a little longer when I had the other webinar. But if you have any questions, feel free to reach out to us. Thank you. And thank you for the show.