Utility Integration

Are distributed renewable energy projects the answer to interconnection woes?

Are distributed renewable energy projects the answer to interconnection woes?
Nexamp added energy storage to two existing community solar farms in the grid-constrained ISO New England market. The Clark Road community solar farm (pictured) has 7.1 MW of solar capacity and 3 MW/6.1 MWh of storage. (Courtesy: Nexamp)

Contributed by Joshua Schaff, Senior Managing Director, Origination at Leyline Renewable Capital

It’s no secret that renewable energy is the key to meeting climate change targets. The United States is committed to achieving 80% renewable energy generation by 2030, 100% zero-carbon energy by 2035, and a net-zero emissions economy by 2050. But while developer interest is high and the cost of renewables is lower than ever—rapidly outperforming fossil fuels—ongoing interconnection delays are slowing the clean energy transition. Over 2,050 GW of capacity are currently undergoing impact studies to connect to the grid, and renewables account for 94.4% of that total. Interconnection wait times averaged five years in 2022, compared to a decade ago when the lag between interconnection request and commercial operation was less than two years.

As many projects wait in line, still more withdraw from the queue without ever being built. Fewer than 25% of solar and wind projects successfully get through the interconnection bottleneck. Those that do make it through the delay face rising costs, some almost 400% higher than previous years. With transmission projects facing such challenges, how can renewable energy developers move forward?

SAVE THE DATE! The next edition of the GridTECH Connect Forum will be held in Orlando, Florida on February 26, 2024. We’re bringing together developers, utilities, and regulators to take on the critical issue of DER interconnection in the Southeast. Register to secure your seat today.

Microgrids

For some, distribution projects like microgrids may successfully circumvent the need to wait for interconnection.

At present, many microgrids in the United States are connected to and operate in conjunction with the larger grid; however, an increasing number of power plant developers are building without the intention of ever connecting. Microgrid systems produce power on-site or in close proximity to the customers they serve and can provide reliable, islanded power while avoiding the time and costs of interconnection and power delivery. For decades, microgrids have powered military bases, remote locations, ships, commercial facilities, and communities across the globe. Nowadays, microgrids are more readily enabled by distributed energy resources like solar, as the means of generation can be sited anywhere from parking lots to neighborhoods.

Nevertheless, no technology comes without challenges. Even avoiding the interconnection expenses and the costs of building new transmission infrastructure, microgrid developers face significant upfront investment. They are also far more complex and customized due to all of the equipment and tools needed for the project. A renewables-based microgrid will require energy storage options. While storage options are growing more scalable and offering greater duration, they still present challenges with respect to issues such as fire safety and recycling. With the right policies and market mechanisms in place, however, microgrids could prove to be an effective tool amidst the transmission backlog.

GO DEEPER: Rhode Island PUC Commissioner Abigail Anthony, National Grid distributed generation ombudsperson Michael Porcaro, and Convergent Energy and Power regulatory affairs manager Emma Marshall-Torres joined Episode 56 of the Factor This! podcast to discuss the challenges, and opportunities, facing DER interconnection in the Northeast.

Electric cooperatives

Electric cooperatives (co-ops) are privately owned, not-for-profit companies serving 42 million people in communities across the United States. Unlike large electric utilities, these co-ops are owned by the members in their service area and enjoy a more autonomous, flexible operation. These organizations are key players in the clean energy transition, and 95% of the co-ops represented by the National Rural Electric Cooperative Association (NRECA) utilize renewable energy resources. New analyses show that co-ops are poised to particularly benefit from renewable energy and will see costs decrease by 15-20% over the next decade. Incentives such as those in the Inflation Reduction Act (IRA) make co-op service areas—often largely rural communities—an ideal target for renewable energy developers.

Developers seeking shorter interconnection wait times and lower costs may find that a cooperative grid proves a willing and interested partner for distributed resources. Though co-op interconnection still involves a queue, the utilities’ community focus and smaller service geography—median around 13,000 customers— typically yield overall shorter wait times. 

Community solar

Community Energy developed the 100 MW Amazon Solar Farm in Virginia.

Community solar/shared solar allows community stakeholders access to renewable energy from a shared local array. Community solar projects are not immune to interconnection challenges, often facing the same heightened fees and queue backlogs as utility-scale arrays. However, when considering development, location matters. Solar developers seeking more rapid action may find success pairing community solar with co-op and municipal utility service areas. Over the past several years, cooperatives and municipal utilities have found that shared solar projects streamline residents’ ability to buy clean power at an affordable cost. 

New policies and market reforms also show potential to drive community solar development in the coming years and shuffle such projects more rapidly through interconnection queues. Adders such as the IRA’s extended investment tax credits (ITC) are expected to help grow the community solar market by 118 percent in the next five years. Nearly half of U.S. states now have community solar policies. Developers can be optimistic that up-and-coming regulations and legislation will continue to drive the community solar market and remove red tape that leaves shared projects stuck in the backlog.

Hope for the future?

While the Federal Energy Regulatory Commission recently issued a new rule to help speed the interconnection process, more reforms are still needed across the board to address interconnection challenges. In the meantime, developers must think creatively to capitalize on options that may alleviate the delay.