by Katherine Tweed
September 16, 2016

New York utility Central Hudson whittled its interconnection queue for solar projects down to about 760 megawatts from more than 880 megawatts earlier this year. But that's not because projects are coming on-line.

Rather, solar interconnection queues in New York, most of which fall between about 300 kilowatts and 2 megawatts in capacity, have ground nearly to a halt. (Small solar projects under 50 kilowatts can be fast-tracked and do not suffer the same delays as larger projects.)

Most of the projects were added to utility interconnection queues late last year to meet the deadline for New York’s community solar program. Today, only about five of the approximately 340, 2-megawatt community solar projects that sit in Central Hudson’s queue are going through technical review.

Before community solar projects entered the queue, only 6 percent of solar projects were abandoned in Central Hudson’s territory. But abandonment is expected to rise considerably, as the utility says there is no way that even half of the interconnection queue will get built on Central Hudson’s system with a peak load of about 1,000 megawatts.

“I think we saw some opportunistic developers just trying to hold a spot,” said Paul Haering, Central Hudson’s VP of engineering and system operations.

Central Hudson is not alone. There was a high of about 1.8 gigawatts of community solar in utility interconnection queues in New York this year. But even before the rush of community solar projects, the queues in New York had problems.

More projects were getting proposed than ever before, yet there were no clear timelines for when utilities and developers had to move through certain steps. Most utilities offered very little information to developers about where to economically site projects, meaning that interconnection costs could sometimes result in sticker shock long into the process. And since the barrier for entry was low, a lot of projects faced problems.

“The process of interconnection hasn’t been aligned with the projects that are coming up,” said Valessa Souter-Kline, policy coordinator at NYSEIA.

Sharing the blame

New York’s Reforming the Energy Vision is both the reason for, and the solution to, the interconnection problem. Supporting various incentives under the NY-Sun program, REV is designed to boost the share of clean, distributed energy and eventually get New York to the planned goal of getting half of its electricity from renewables.

The policies that support solar came before the interconnection rules were modified, and by the time they were updated, it was too late.

“I think there’s clearly lessons learned,” said PSC Chair Audrey Zibelman. The big lesson: understanding the volume of interest and properly managing it. “It’s very difficult to do that,” said Zibelman.

There are new rules under the Standard Interconnection Requirements that set clear timelines and standardize the process across utilities, but they were not finalized until March, when the interconnection queues were already out of control.

The glut of projects was also caused by worries about a cap on retail net metering, which was suspended last October until the commission puts in place new rules that determine the value of distributed energy.

Now some people are questioning whether developers are keeping their projects in the queue until the Value of LMP+D proceeding is complete. “It is creating uncertainties as to what opportunities people pursue,” acknowledged Zibelman.

But implementing a new tariff for solar projects will likely come in stages, so this may only apply to a handful of developers who are unsure of their economics. “If you’re not ready to build and finance a project,” said Mike Conway, director of grid integration at Borrego Solar, “then maybe you shouldn’t be throwing it into the interconnection queue in the first place.”

For those who are unclear on the economics of their project, there was no disincentive or barrier preventing them from getting a place in the queue. The application fee was one of the lowest in the nation, according to developers, and developers didn’t even need to prove they had the land rights. It could all be speculative.

“People could just carpet-bomb the interconnection queue,” said Conway. “A lot of stakeholders have some share of the blame.”

But now that all these projects are in there, they have to be dealt with. Utilities are working with developers to pull out projects that are never going to move forward, but that only clears up part of the problem. Borrego, for instance, has whittled its applications down to about 50 megawatts from 130 megawatts.

The real problem today is that there are two sets of rules. Projects submitted after March, for example, have to go through a technical review in a timely fashion under the new SIR. Everyone mostly agrees the new rules are great.

But, if a project has five other projects ahead of it on a feeder that were all submitted last year under the old rules, the utility must assume that all of those projects will get built, even though that will probably not happen.

The result is that the cost of the upgrades for the one project actually moving forward would be completely out of whack, as it would shoulder the cost upgrades on the grid for all of the projects before it.

The previous rules also didn't offer much information for developers. Now, developers can get a pre-application report with some basic information on the circuit they are considering, “and that’s a huge step to reduce speculative projects,” said Souter-Kline. But, for the earlier projects, it doesn’t help.

Fixing the mess

Given the size and complexity of the interconnection issues, few projects will actually move forward until the older projects can be removed or moved forward. A benefit of REV is that stakeholders are all at the table trying to work out a solution, and it has been relatively congenial.

“I’ve been impressed by the level of problem solving for the [solar] industry and for the utilities,” said Souter-Kline. “It’s been remarkable.”

There is a technical and policy working group, which brings together developers, regulators and utilities. There is also a policy working group, which also brings together various stakeholders to create a queue management proposal. 

The proposal will impose new rules on every project filed under the old Standard Interconnection Requirements (SIRs), and will likely include basic requirements such as land use authorization and timelines for both utilities and developers that look similar to the current SIRs.

Projects will also have to pay a portion of their interconnection costs upfront or be removed from the queue. But that proposal will have to go through a public comment period. A solution will likely not be applied before early 2017.

The technical working group has a lot of work to do. The utilities are working with regulators, developers, NREL and EPRI to understand what the technical challenges are. “A year ago, you couldn’t go to the state level and see that,” said Joe White, section manager for smart grid technology engineering at Orange & Rockland.

Borrego Solar's Conway said some utilities were being overly conservative about what technical upgrades were needed, even though some other states and labs like NREL have updated their technical requirements based on data from high levels of solar PV in other regions.

Overall, developers would like more information and more transparency on how the utilities are identifying interconnection costs. Some of those issues are being hammered out in the technical working group, but that is a longer-term effort that will take even more time to solve than cleaning up the interconnection queues.

While knowledge-sharing is happening through REV working groups, it is fair to ask why these working groups weren’t formed before the interconnection queue got out of control and why there wasn’t more knowledge-sharing with other states early on.

For example, there were plenty of lessons that could have been learned from Massachusetts, and at least one utility, National Grid, has distribution territories in both states. “National Grid in Massachusetts has among the most progressive standards for interconnection in the country,” said Conway.  “Those lessons didn’t get passed along to New York at all.”

Utilities try to get ahead

Although the state and utilities could have been more proactive about adopting best practices from other states, some progress is being made. Orange & Rockland, which is owned by Consolidated Edison, said it has spoken to utilities around the world to understand how interconnection processes have developed. For the first time, Orange & Rockland sent some people to Solar Power International to keep abreast of what’s happening in the industry.

The state regulators have also made some immediate changes. The regulator required that all utilities have an ombudsman to help manage the interconnection process and work most closely with developers.

The utilities had to develop red-zone maps, which identify areas where costs will be higher based on the current queue. Of course, since most projects in those queues will never get built, the red-zone maps are not necessarily an accurate projection of what costs may be for projects that move forward next year.

The utilities are also required to have online portals for applications this year, which will become more standardized and automated in the future. They're working together to understand what can be automated and will likely deliver more detail in their joint supplemental distribution system implementation plan in November. Some utilities are also trying to get creative about options for interconnection costs, such as approaching multiple developers for cost sharing.

There are many other initiatives under REV that will continue to influence and inform the size and functioning of the interconnection queues. In the long term, for example, the utilities have been tasked with developing hosting capacity analyses, as California utilities have done. There will also be far more debate about how to establish the cost of a grid connection, a debate that stretched out for years in California.

“I’m sorry we had this problem, but I’m glad we have this problem,” said Zibelman, “It means we have so much interest.”

That interest means revenue opportunities. At some point, the utilities will supposedly be able to earn money by helping developers site distributed energy projects. That should entice utilities to invest more quickly in technology that can deliver better results to developers. One proposed earning mechanism, for example, involves a set of criteria for vendor satisfaction. For those who provide better service to vendors, there will be money to be made.

Solar is just the beginning. “Energy storage isn’t far off,” said Orange & Rockland’s White. “There’s a lot coming at us, and we have to diversify. We’re trying to align our resources with the technology before it’s here.”