“If you build it, they will come.” What’s true for Iowa baseball is truer still for solar and wind. In most of the country, it’s now cheaper to build and operate new wind and solar for electricity generation than it is to build fossil-fueled generation. Yet, one of the biggest obstacles for developing new wind and solar is locating interconnection points that will not require costly upgrades. For anyone who has been developing renewable energy projects, you know all too well that the risk posed by interconnection costs is one of the single largest risks faced by any project. If the interconnection costs come back too high, then months or even years of work can come to a screeching halt and another project dies on the vine.
Some of this risk can be mitigated by using Utility Hosting Capacity Maps. Hosting Capacity Maps provide developers with useful data such as, hosting capacity on specific distribution lines, substations, and in some cases, how many energy-generating projects are already queued for a specific interconnection location. These maps can be incredibly helpful to developers looking for locations with a low interconnection cost. Unfortunately, in most markets, these maps are often inaccurate due to human error or outdated information, and they are only available in California, Nevada, Minnesota, New York, Maryland, New Jersey, Connecticut, and Colorado.
To make matters worse, utilities around the country have been using the interconnection process to delay projects. In September of 2019, Massachusetts regulators launched an investigation into National Grid, who had conducted a years-long cluster study that resulted in the delay of over 900MWs of solar projects. Thankfully, Massachusetts regulators took action, but this case suggests a bad faith example of monopoly utilities using the interconnection process to delay, impede, or block billions of dollars of private investment in renewable projects across the country.
In Minnesota, Xcel Energy has come under fire and has had to pay a $1M fine due to slow-walking interconnection applications across the state. An analysis by the Minnesota Solar Energy Industry Association concluded that at its current pace of processing applications, it would take over 260 years to process the backlog of requests.
These cases highlight the conflict of interest inherent in any monopoly being charged with managing the terms of competition with its own potential competitors. In fact, some utilities have done such a poor job maintaining their own inventory that their own engineers do not have the necessary information to conduct interconnection feasibility studies effectively. In these cases, sending maintenance personnel to figure out equipment ratings is the only way to obtain necessary information, adding further time and cost to an already drawn out and expensive process. Policymakers must acknowledge that their renewable energy goals will not be achievable so long as they rely on incumbent monopolies to manage them.
Independent Interconnection Commissions: If lawmakers and regulators are serious about addressing the climate crisis, then they should take definitive steps toward making the interconnection process easier, more predictable, and less expensive. The first, and most important step would be to create Independent Interconnection Commissions that oversee the interconnection process for all renewable energy projects seeking to connect to the grid. It doesn’t make sense to let utilities continue to control the interconnection process. Utilities have shown time and time again that if they control the interconnection process then they will abuse that power and delay or stall billions of dollars of private investment. That is tantamount to playing a baseball game and letting one of the coaches decide who is allowed to play on the other team. With this much influence over the outcome, no one is reasonably expecting a fair game. The renewable energy industry needs independent arbiters who can objectively oversee the interconnection process without fear of prolonged delays or unruly interconnection costs. Lawmakers could choose to create new commissions, or they could house the interconnection commissions within already existing public utility commissions and give them the power and adequate staff to oversee a smooth and impartial interconnection process.
Require and Regulate Hosting Capacity Maps: Hosting Capacity Maps should be required in all 50 states and across all utilities. Doing so will enable developers to proactively develop projects across the country without fear that they will be hit with unruly interconnection costs. Critical to this effort will be drafting laws and regulations that ensure that Hosting Capacity Maps are updated weekly. Maps should be updated and time-stamped with the latest feeder and substation capacity information as well as pending applications. There should also be a uniform minimum level of information so that maps from different utility areas can be easily compared. This increased transparency will eliminate unnecessary uncertainty and spur market growth. As part of this effort, it is also critical that standards for accuracy are developed and enforced, and a process is put in place to quickly correct any errors found within the maps. Independent Interconnection Commissions can and should be in charge of these Hosting Capacity Maps and they should be granted the authority and staff to support those efforts.
Identifying Strategic Locations for Renewables: Interconnection Commissions should conduct studies to determine what locations on the grid would most benefit from adding renewables and storage. Renewables can provide supplemental value by targeting strategic locations where the grid is congested or where there is an increased need to balance periods of peak demand. On-site solar and storage presents a unique opportunity to manage demand on congested circuits. Once those locations are determined, then utilities should be required to upgrade those portions of the grid to accommodate future renewable energy projects. If you build it, they will come. By proactively making these investments, utilities will create targeted locations where renewable energy projects will have better returns and attract developers seeking certainty in interconnection costs.
Markets cannot thrive in a constant state of uncertainty. To unleash the full market potential of renewable energy, it is imperative that policy makers take steps to create cost certainty and timing certainty during the interconnection process. The best way to do that will be to create Independent Interconnection Commissions, and publish reliable, up to date, Hosting Capacity Maps. Additionally, policy makers can create a more resilient and dynamic grid by proactively investing in grid upgrades across strategic locations. Taking these steps will eliminate uncertainty and spur billions of dollars in private investment in clean renewable energy. Once we have completed the transition to a clean energy economy, and we are all breathing easy, we can ask, “Is this Heaven?”
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