Renewable project developers must request transmission service and capacity qualification for new resources in organized markets. With much interest in interconnecting renewables, the interconnection queues have large amounts of requests in the study phase leading to delays in interconnections.
On average, an interconnection request takes more than 500 days to be closed out. Even then, there are challenges with this queue process because if a developer or set of projects drop out after signing the interconnection agreement, the projects below them are stuck with the transmission network upgrades. This project dropouts are resulting in re-studies, and those network upgrades are not getting built. The industry and the federal regulator must address this problem sooner than later. Independent transmission companies are a possible solution to get projects out of this queue quandary.
Large or small (less than 20 MW) generator interconnection projects connecting to the transmission system managed by grid operators fall under the Federal Energy Regulatory Commission (FERC) jurisdiction.
A recent FERC Order 845 sheds light on the number of projects dropping out of the interconnection queue. At Southwest Power Pool (SPP), the grid operator based in Little Rock, Arkansas, most projects drop out due to the following 4 reasons:
- 1) submitting their project too close to the submission window close date,
- 2) inadequate demonstration of site control,
- 3) incomplete application, and
- 4) not sufficient financial securities and letters of credit.
Project dropout leads to re-studies
According to the SPP Order 845 metrics report, 25 projects have dropped out so far in 2020 after sitting in the interconnection queue for more than 900 days. The problem is even worse in the Carmel, Indiana based Midcontinent Independent System Operator (MISO) queue; almost 90 projects dropped out in the same period after spending, on average, 600 days in the queue. Long delays in interconnection studies and the possibility of high tabs for network upgrades are likely causes for MISO interconnection project dropouts.
This challenge is not going away any time soon because both MISO and SPP had received more than 50 GW of solar alone in new interconnection requests this year. This renewable project interest is the reason behind queue reforms at the grid operators leading to a “cluster” study, essentially grouping all the study requests and studying them together. But this new process is also not solving for speedier interconnections because interconnections are dependent on improvements to the transmission system, i.e., network upgrades. Once a higher queued project drops out, the lower project ends up with the tab for network upgrades.
To clear the backlog of network upgrades, we need steel in the ground
As a project management tool, throwing more grid interconnection engineers at the queue won’t work because the constraint is in the transmission system. Even throwing money at the queue in terms of fancier websites and better metrics won’t work, because someone must physically pour concrete and beef up the network.
For illustrative purposes, out of 800 projects in the SPP queue, there are 150 solar projects with individual interconnection capacity requested greater than 100 MW. The total solar capacity requested is approximately 35,000 MW. When we dig deeper into the points of interconnection, 50% of them are pointing to 345 kV substations and transmission lines. The total solar capacity requested at these 345 kV network points is 20,000 MW (57%). Hence it makes sense electrically to upgrade the 345 kV backbone system of the SPP transmission system, which would inject more than 20,000 MW of solar sitting in the queue to be studied. That is one way to clear the backlog of network upgrades.
FERC Order 1000 has a solution for the queue problem
The FERC order 845 started as a process for streamlining the surplus interconnection service for new generator interconnection requests. If an interconnection requested 100 MW of transmission service but was using up only 80 MW, the remaining 20 MW is surplus. Hence it made sense to open that 20 MW surplus for others in the interconnection queue who needed that.
For the network upgrade problem mentioned above, there is another FERC order that has a potential working solution. According to FERC Order 1000, 345 kV and above transmission projects are competitively bid in organized markets. But that involves the federal regulator to open the competitive transmission process for network upgrades discussed here for generator interconnections.
This competitive transmission process does include state and federal coordination because some states have a barrier called the Right of First Refusal (ROFR). In states like Minnesota (which is a MISO state) that have ROFR, the incumbent Transmission Owner (TO) has the right to build transmission even though there is a quote from an independent transmission company. Independent transmission companies have the expertise and capabilities to build new substations and transmission lines to clear the interconnection study backlog if allowed to do so.