RE+ Tech Supp to POWER September 2023 - 32

EMPOWERING CLEAN ENERGY
POWER GRID
Interconnection Constraints Threaten
Success of Clean Energy Projects
P
ower projects are filled with risk.
One of the biggest risks today for
clean energy developers involves
interconnection constraints. And according
to Sarp Ozkan, vice president
of Commercial Product at Enverus, an
energy-specialized technology provider,
this could be a key risk for the foreseeable
future.
Before a power project can come
online, its interconnection with the
power grid must be studied by the grid
operator to identify transmission infrastructure
upgrades needed to accommodate
the project and allocate those
upgrade costs to developers. Most interconnection
queues have huge backlogs
and the review process can result
in years-long delays.
" In essence, projects are all queued up
with nowhere to go, " Ozkan told POWER.
" Our grid is too old and fragile to handle
the onslaught of renewables that it is
being asked to integrate into its generation
mix. Thus, most interconnection
agreements end up requiring significant,
and often economics-crushing,
grid upgrade requirements often after
years of arduous and costly feasibility
and study stages. "
IRA Amplifies Grid
Challenges
The Inflation Reduction Act (IRA) included
roughly $369 billion in incentives for
energy and climate-related programs.
Many power industry observers have
praised the bill for the effect it could
have on the clean energy transition. For
example, the Bipartisan Policy Center, a
not-for-profit organization that works
to bring Republicans and Democrats
together on issues, has said the clean
energy provisions in the IRA will " accelerate
the deployment of clean energy
technologies, reduce global emissions,
lower energy prices, help export American
innovation, strengthen [the U.S.]
economy, and build a reliable and affordable
energy sector. "
Among the provisions
contained
in the IRA are expansions and extensions
of several Production Tax Credits
(PTCs) and Investment Tax Credits
(ITCs). The thing that is notably missing
from the IRA, according to Ozkan, is
support for the revitalization and reimagining
of the grid. " Since the credits
target generation, the capital is
incentivized to shift evermore towards
renewable generation and storage, increasing
the strain on the queues and
the grid, " he said.
Ozkan said project queues are
bloated. " In ERCOT [Electric Reliability
Council of Texas], for example, all
you need is land control, a single-line
diagram, and $7,000 to enter the interconnection
queue. The low bar to entry
into queues has caused some of this
bloating, " he explained.
What eventually determines if a project
makes it to commercial operations,
however, is the ability to interconnect
with the grid. " Many developers do not
spend enough time understanding the
dynamics of grid congestion and available
transmission capacity in their siting
exercises. More thorough study of these
risks as a part of the siting process is key
to increasing the likelihood of eventual
project success, " Ozkan said.
PJM Study Confirms
Difficulties
A report published in May by the Natural
Resources Defense Council (NRDC),
an international nonprofit environmental
organization, substantiates
much of what Ozkan has said. NRDC
researchers focused specifically on
the situation in the PJM Interconnection,
the largest grid operator in the
U.S. PJM launched a stakeholder process
in 2020 to revamp its interconnection
queue, clear the backlog, and
prevent future delays. Stakeholders
agreed on a plan that was approved in
2023. Nonetheless, the NRDC study
found that even under ongoing reform
proposals, the pace of development
in PJM " will just barely provide enough
32 Supplement to POWER & RE+ 2023
renewable energy to meet aggregate
RPS [renewable portfolio standard]
demand through 2027; states with the
most ambitious RPS targets are likely
to lack adequate supply to meet their
demand starting before 2027. "
The NRDC's analysis purportedly
represents " the best-case scenario " in
several key ways. First, PJM's new approach
will not be rolled out until 2026,
which means PJM will likely be facing
an onslaught of IRA-incentivized new
renewable projects that could cause
delays beyond what the researchers
estimated. Second, current RPS data
represents only " the bare minimum of
renewable energy demand. " The report
says there is " a clear trend toward RPS
expansion and policy updates. " Third,
the long implementation timeline of
the queue reforms also prolongs investment
uncertainty
for renewable
developers, who are reportedly facing
skyrocketing costs already. " These
factors may lead to much-needed new
renewable generation being delayed,
not developed at all, or unable to take
advantage of new incentives under the
IRA, " the report says.
According to the report, there were
more than 202 GW of renewable energy
resources waiting in the PJM queue
as of September 2023. That accounted
for more than 95% of the total queue.
For context, there were only about
200 GW of clean energy resources
operating in the entire U.S. in 2021.
" There is little doubt that RPS targets
and broader policy goals will be constrained
by the speed and efficiency of
the interconnection queue. Moreover,
PJM Interconnection queue delays are
symptomatic of broader issues with
the antiquated systems for planning
generation and transmission in the region, "
the report says.
-Aaron Larson is POWER's executive
editor.
RE+ Tech Supp to POWER September 2023

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