Manufacturers and other large users of electricity fear that their own internal energy supplies will be siphoned off by grid operators to make up for drops in power output that come from more solar and wind being used on the grid.
Groups representing large energy consumers say policies by the federally overseen grid operators, the regional transmission organizations and independent system operators, and states are forcing them to take on the role of power plant instead of manufacturer.
One of the main drivers is the need to make up for the intermittent nature of renewables that don't produce energy when the sun isn't shining and the wind isn't blowing.
"We are concerned about the potential deterioration of grid reliability and power quality created in large part by the growing penetration of utility-scale solar and wind facilities," said John Hughes, president and CEO of the Electricity Consumers Resource Council, a trade group representing large energy users on federal electricity regulation and policy.
"This has led to efforts to force large manufacturers to take actions (often against their will) to support grid reliability. In other words, responsibility for grid reliability is being shifted from utilities (where it belongs) to utility customers," Hughes said in prepared remarks before a Federal Energy Regulatory Commission conference on reliability and grid threats last month.
Hughes said that the manufacturing processes of his group's members are optimized "not only to ensure least-cost production but also to mitigate important safety, reliability and environmental risks at the manufacturing site." Any "externally imposed requirements and constraints" could upset the "finely tuned balance" of the facilities and result in "significant cost and risk."
Many manufacturers have their own internal power plants that they use to keep operations humming, while also saving money by reducing the amount of electricity they buy from the commercial utility grid. One common form of industrial-based power plant is called combined heat and power, or CHP, which makes use of waste steam and heat to produce electricity or run industrial applications such as boilers.
Those behind-the-meter power supplies are sometimes tapped to feed into the grid when it is advantageous for a manufacturer, refinery or chemical plant to do so. But more often, the grid operators are calling upon the manufacturers to do much more.
"The organized markets want industrial CHP units to operate under the same rules as merchant power generators. That is a dog that doesn't hunt," Paul Cicio, president and CEO of the Industrial Energy Consumers of America, told the Washington Examiner.
Cicio shares the same concerns as Hughes for his group's membership, which includes some of the largest users of energy in the country, from large chemical and steel plants to the auto industry and even brewing companies.
"Industrials are not in the business of generating and selling power. We are in the business of producing manufactured products," Cicio said. "We would never be able to supply our internal demands for steam and power adequately — if we operated like a merchant power [plant]."
Merchant power plants are built to supply power in the markets overseen by the Federal Energy Regulatory Commission and the federally chartered regional transmission organizations and independent system operators that operate those markets. The markets essentially pay the power plant owners to be available as needed so that there is enough energy, or capacity, available to avoid a shortfall in electricity supplies.
Hughes noted that FERC's latest proposed rule on frequency response would force manufacturers deeper into the realm of a utility. Frequency response is an arcane reference to making sure the grid maintains the 60 hertz required to stave off a massive outage and a blackout.
"Unless manufacturing facilities are excluded, for example, adoption of FERC's recent [notice of proposed rulemaking] on Primary Frequency Response would continue the trend of growing challenges and burdens on manufacturing facilities," Hughes told FERC staff at the meeting late last month. "All customers — large and small — have a right to be served reliably, but utility and regulatory engineers and technicians often do not have a sufficient understanding or appreciation of manufacturing processes — especially steam or thermal driven processes — and therefore are not equipped to take manufacturers' specialized reliability needs into account."
He said the commission's reliability watchdog, the North American Electric Reliability Corporation, has been listening to the manufacturers' concerns and is seeking to address them through its standards design process.