Dive Brief:
- Improvements are needed to energy storage interconnection processes that fail to capture the “unique operational attributes” of storage assets and cause “undue burdens” that render many projects uneconomical, according to a Wednesday webinar hosted by the Clean Energy States Alliance.
- States and grid operators can look to effective policy and process reforms like accounting for storage systems’ grid export capacity and controls on inadvertent exports, basing interconnection fees on system capacity and moving to annual cluster studies, panelists said. Automating and digitizing interconnection application and study processes would also reduce projects’ time in the queue, panelists said.
- Last year’s FERC Order 2023, which requires cluster studies and imposes stricter readiness requirements on project developers, should mitigate some energy storage interconnection issues, but “[its] impact is yet to be seen,” said panelist Imre Gyuk, director of energy storage research at the DOE Office of Electricity.
Dive Insight:
Energy storage system development is accelerating in the United States thanks to falling battery costs, but “the growing [interconnection] backlog has become a bottleneck” that threatens decarbonization initiatives, Gyuk said. Storage interconnection requests have swelled by 540 GW since the Aug. 2022 passage of the Inflation Reduction Act, he added.
Most proposed storage projects never get built due to long interconnection delays and high grid upgrade costs, said moderator Todd Olinsky-Paul, senior project director at CESA. Interconnection costs for storage projects in the PJM Interconnection queue averaged $335/kW from 2017-2022, compared with $24/kW for natural gas, $135/kW for onshore wind and $253/kW for solar during the same period, according to a webinar slide.
In an email to Utility Dive, PJM Senior Manager for External Communications Jeff Shields pushed back on the comparison. “There is almost as much work needed to study a 10 MW battery versus a 1,000 MW gas plant when it comes to system impacts and stability, so it is not surprising that the costs would appear higher for storage on a per-MW basis,” he said.
Data from PJM and a separate Massachusetts case study show that completed projects tend to have lower actual costs per kW than withdrawn projects’ projected per-kW costs, Olinsky-Paul said. This is because withdrawals often occur after the grid operator asks the developer to pay for extensive grid upgrades, which often makes proposed projects uneconomical, he added.
“If the [margins] for your project are good but not phenomenal and it turns out you’re going to have to pay a lot to get it connected … it may completely kill the economics of your project,” Olinsky-Paul said.
Many storage interconnection requests are speculative or intended to gather information about grid status in different locations, said panelist Diane Baldwin, project manager for renewables integration and energy storage at Pacific Northwest National Laboratory. Some storage developers submit “five, eight [or more]” applications when they only intend to develop one project, she said.
Baldwin pointed to policy and process reforms under investigation by DOE’s Interconnection Innovation Exchange, such as:
- Increasing the amount and quality of data collected during the interconnection study process;
- Implementing more flexible study processes that “acknowledge you can allow a lot more nameplate [capacity] ... on the system if [storage assets] agree to curtail for a limited number of hours per year”;
- Proactively planning grid upgrades rather than waiting to respond to interconnection applications; and
- Shifting to flat per-kW upgrade pricing or other equitable cost-allocation models while ensuring utility customers aren’t disproportionately saddled with upgrade costs.
Grid operators should also look to automate and digitize nontechnical or rote aspects of application processing, Baldwin added.
“Believe it or not, [it] is still the case in some parts of the country” that grid operators require paper interconnection applications, she said.
Developers and grid operators both need to overcome resource and information constraints that can delay interconnection studies, said panelist Charlie Vartanian, technical advisor to Sandia and Pacific Northwest national laboratories.
Grid operators should pursue automation to surmount “a lack of trained people to run [interconnection studies],” while developers should include enough detail about proposed systems with their initial applications, Vartanian said. Recalling his experience “in the early days of wind and PV interconnection,” Vartanian said the “number one issue on the utility side was the developer not turning over the level of detail needed to run a study.”
“I would hate to see that happen to energy storage,” Vartanian said, citing the need for “validated models” for storage systems’ grid impacts.
