by Emma Foehringer Merchant
June 15, 2020

Forty-eight states in the U.S. now have some type of interconnection guidelines for solar systems. More than 30 have required standards, according to the Database of State Incentives for Renewables and Efficiency, a tracker maintained by the North Carolina Clean Energy Center.

There is some overlap in those regulations. But in practice, developers in the U.S. must wade through a tangle of different standards to get projects running. With the significant increase in the volume of distributed solar projects in recent years, utilities must also devote more and more time to processing applications that may be incomplete or coming in at a clip that staff can’t keep up with.

Over time, that leads to longer application cycles, which builds to higher costs, which means fewer projects overall.

These types of “soft costs” — or costs tied to customer acquisition or the design, engineering and interconnection of solar installations, rather than the equipment itself — have long been a formidable barrier for reducing overall solar prices in the U.S.

Interconnection becomes even more difficult when you add storage to the equation, as is becoming the norm for more developers. While the majority of states have solar interconnection guidelines, only a handful have storage-specific rules.

“In many states, if you propose a system with solar-plus-storage, the rules about how to interconnect to the grid are not at all clear,” said Larry Sherwood, president and CEO at the Interstate Renewable Energy Council. “That just creates a lot of uncertainty for developers, which increases costs and may scare them away from certain markets.”

Last year, IREC published its latest recommendations on interconnection procedures, which it has updated periodically since 2009 as a guide for utilities and policymakers. But the group is now going further: With a $1.3 million award from the Department of Energy’s Solar Technologies Office, IREC will work over the next three years on a toolkit to guide interconnection policies for distributed solar and storage. The group will then use those tools to educate and train utilities and state regulators.

Kristen Ardani, a solar program lead at the National Renewable Energy Laboratory who is not involved in the project, said she sees a “huge opportunity” for soft-cost reduction based on the work.

Ongoing solar-interconnection issues

Interconnecting to a utility grid first requires that solar or storage developers submit an application. In some jurisdictions, it’s easier to enter the interconnection queue; applications may or may not have requirements such as a deposit or proof of site control. Next comes an engineering review and perhaps more extensive screening studies. Between all of these steps, there is plenty of waiting.  

After an application is approved — a process that can range from days to months depending on the utility territory and project — a utility usually requires a site visit before finally interconnecting an installation. During the coronavirus pandemic, that has slowed some projects further due to limits on in-person inspections.  

Experts say it’s in the interest of both utilities and developers to streamline the process. NREL’s Ardani breaks the streamlining issue into two general categories: data transparency and sharing, which allows utilities and developers to both know what’s required; and standardization that builds overall process efficiency.

Currently, state guidelines and standards generally apply only to investor-owned utilities, and each one may implement them differently.

It's a challenge for developers to "navigate that process on a case-by-case basis, depending on the system and the utility,” said Ardani.

A standardized application plus more data from utilities could help developers work through hurdles, said Kathi Czahar, interconnection utility specialist at Duke Energy-owned REC Solar.

"Applications are varied, [ranging from] one page to...in excess of 30 pages," Czahar told Greentech Media. 

Ardani points to a case study NREL conducted in 2016 on the interconnection practices of California utility Pacific Gas & Electric, which as of that year had interconnected more distributed solar systems than any other utility in the country. By moving its form online, simplifying requirements and automating its application, PG&E was able to keep interconnection application approvals to a handful of days even as applications increased from 4,000 in 2004 to about 40,000 ten years later.

More recently, National Grid completed a two-phase “cluster study” of distributed solar projects in its territory. While developers have criticized communication around the study and its timeline, the utility was eventually able to clear hundreds of megawatts of distributed solar projects for interconnection without requiring them to pay system upgrade costs. By studying those projects at the same time, National Grid said it was able to more quickly and efficiently assess grid impacts of a huge influx of projects related to the Solar Massachusetts Renewable Target program.

The already-complicated picture of distributed solar interconnection becomes more so with the addition of storage. Though some utilities, including PG&E, have made significant commitments to building out storage, the technology is still new for many. That can lead to a grab-bag of procedures, with developers left to navigate the uncertainty.  

“With storage, since there aren’t specific storage-related interconnection rules in many states, you’re at the whim of whoever is approving the project and how they interpret that storage fits in with the current interconnection rules,” said IREC’s Sherwood.

No one-size-fits-all solution

The solar industry has spent years outlining the problems, and it's tackled a few of them.

IREC’s recent work on interconnection has centered around how the U.S. can load increasing percentages of renewables onto the electric grid, in service of broader climate and clean energy targets, said Sherwood. Incorporating storage into that vision is especially integral to meeting those targets.

“Storage and smart inverters are two really important tools to be able to connect more and more clean energy,” he told GTM.

The group will use the money from DOE to build its toolkit over the next two years, with training and education to follow. IREC plans to disseminate the toolkit to utilities and regulators “in at least 35 states.”

Sherwood said the organization has begun initial meetings with stakeholders including the Electric Power Research Institute, the Solar Energy Industries Association, the Energy Storage Association and utilities PacifiCorp and the New Hampshire Electric Cooperative. Those groups, along with IREC, will contribute a total of $300,000 to the project.

Partners will focus on the process issues Ardani describes as well as the technical complexities of interconnection.

The Institute of Electrical and Electronics Engineers published updates to its standards on interconnecting distributed energy resources in 2018. States are still incorporating them into their own procedures. In creating its tools, the IREC-led group will have to consider what can be a confusing “jigsaw of requirements” the industry must follow, said Nadav Enbar, senior project manager for EPRI’s integration of distributed renewables program.

“This will help put a flag in the ground for explaining and articulating clearly what jurisdictions, regulators and others can do to help enable the interconnection of energy storage and solar-plus-storage in a way that takes full advantage of the technology’s capabilities,” said Enbar.

Utilities and developers have gained significant knowledge in recent years on how storage and advanced inverters can work within an electric system while ensuring reliability — the biggest priority for utilities.

Because the technology is so new, work can be done to build consensus on how to treat distributed storage when it comes to interconnection and how to approach the process more transparently and efficiently, said Chris Schroeder, the vice president of strategic solutions at the Smart Electric Power Alliance, a trade group with corporate, utility and regulatory members. SEPA is not involved in the project but works on interconnection issues on a broader scale.

But Schroeder cautioned that any guidance will have to toe the line between specificity and flexibility to allow for the variable approaches used by utilities. “I don’t know if at the end there is a one-size-fits-all [solution] for everyone,” said Schroeder.

Both Schroeder and Ardani, however, recognized an opportunity in IREC's project to bring many stakeholders together to update interconnection procedures.

The goal is to “come to a set of shared understandings and practices — win-wins, if you will — that can go a long way to meeting the utility’s concerns around grid safety and reliability, while also enabling the solar market to flourish and grow,” said Ardani.