Right on queue: New operating agreement to lower solar interconnection costs

solar energy handshake agreement

Interconnection costs and delays have presented barriers to solar and energy storage project deployment. Now, a new study proposes operational agreements to reduce those barriers.

Solar PV deployment is key to many state clean energy and decarbonization goals. As a clean and cost-competitive energy resource, solar is also very popular among utility customers. However, utility interconnection costs can present a hidden barrier, causing solar projects to be delayed or even withdrawn.

For example, 900 MWs of proposed distributed solar projects were delayed for months in Massachusetts due to utility cluster studies, leading the Massachusetts Department of Public Utilities to launch an investigation of utility upper management.

Capacity in interconnection queues as of the end of 2021. Source: https://emp.lbl.gov/queues

This may be an extreme example, but it is not an isolated one; a recent report from Lawrence Berkeley National Laboratory found that solar PV accounts for the largest share of generation capacity in interconnection queues, and that solar and battery storage are by far the fastest growing resources in these queues — yet, most of this proposed capacity will never be built.

During the 2000-2016 time period, for example, only 23 percent of the projects entering interconnection queues have subsequently been built. These completion percentages are declining and are lower for solar and wind than for other resources.

What’s preventing projects from reaching completion?

One problem, from the viewpoint of utilities and grid operators, is that solar PV, while it may have many excellent qualities, is not dispatchable, and this lack of control over the resource can present a risk of grid violations (such as over-production at times when the grid is congested). Grid upgrades can mitigate or avoid these violations, but the cost of such upgrades can run into the millions, and the costs typically fall upon the project proposer, resulting in projects becoming uneconomic.

Battery advocates argue that adding battery storage can make renewables more dispatchable, but if grid operators don’t control the batteries, this does little to reduce perceived risks. In fact, many utilities view storage as adding to the problem because it increases the overall capacity behind the interconnection point.

Solving the problem

To solve this problem, a team comprising the Rhode Island Office of Energy Resources, National Grid RI, National Renewable Energy Lab, Lawrence Berkeley National Lab, Rocky Mountain Institute and Clean Energy States Alliance has come up with a conceptual model for a new kind of agreement between large-scale solar + storage developers and utilities.

The purpose of this Operating Envelope Agreement (OEA) is to memorialize a mutually agreeable set of technical operating requirements for a solar + storage system (an “Operating Envelope”) that limits risk to neighboring customers and the utility’s electric infrastructure, while providing certainty to both the utility and the solar + storage system owner/operator.

The OEA is intended to benefit all parties. From the utility’s perspective, it reduces risk without the need for line or substation upgrades. From the perspective of the system owner, the OEA can unlock revenue while preserving the owner’s control over the solar + storage system and providing the certainty required for project financing. From a state policy perspective, the OEA can enable the scale-up of renewable energy deployment needed to meet state decarbonization and renewable energy goals.

If successfully implemented, this innovative model agreement will enable deployment of larger solar + storage projects, while reducing interconnection times and increasing system reliability.

This analysis was conducted as part of the Solar Energy Innovation Network (SEIN), a collaborative research effort led by the National Renewable Energy Laboratory and funded by the U.S. Department of Energy’s Solar Energy Technologies Office.

The project produced two final reports, available at:

CESA has also produced a webinar on the study, which can be viewed in CESA’s webinar archives right here.

Todd Olinsky-Paul is senior project director at Clean Energy States Alliance (CESA) and Clean Energy Group (CEG). He directs the Energy Storage and Technology Advancement Partnership (ESTAP) project, which aims to accelerate large scale electrical energy storage deployment through collaborative efforts with state energy agencies, US DOE Office of Electricity and Sandia National Laboratories. Olinsky-Paul also works on CEG’s Resilient Power project in the areas of solar + storage for critical infrastructure energy resiliency, distributed energy storage policy and economics and is the CEG/CESA lead for state energy storage policy support.

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