Flexible interconnection service could sharply reduce the time and cost it takes to bring power supplies online, according to a first-of-its-kind study being discussed today at a Federal Energy Regulatory Commission workshop focused on potential improvements to the generator interconnection process.
“This [study] offers a very clear, quantitative analysis on the potential benefits of flexible interconnection service that just hasn't been available to date,” Tyler Norris, one of the report’s authors, said in an interview.
The analysis, included in Norris’ testimony at the FERC workshop, was based on an interconnection study Duke Energy Progress performed to see what network upgrades would be needed to bring online about 1.9 GW of solar and solar+storage in North Carolina and South Carolina that were offered in response to a resource solicitation.
Duke’s study, released in April, found the solar projects would cause overloads on 36 transmission elements and needed $290 million in network upgrades, or $156/kW, which would take 4.5 years to install on average. Duke required the solar generator interconnection requests to be fully deliverable as a “network resource interconnection service,” or NRIS.
However, if the solar projects were studied using less stringent “energy resource interconnection service,” or ERIS, which assumes they can be curtailed to manage congestion, they would cause overloads on only nine transmission elements and require $82 million, or $44/kW, in network upgrades, according to a power flow simulation.
The restudy of the Duke interconnection study was more conservative than the energy-only interconnection study approach used by the Electric Reliability Council of Texas, according to Norris, a doctoral student at Duke University and former vice president of development at Cypress Creek Renewables. Under ERCOT’s “connect and manage” interconnection approach, the grid operator doesn’t require network upgrades for bringing generators online.
The main reason an interconnection customer would apply for NRIS, which typically requires higher network upgrade costs, is to be eligible for capacity payments, Norris said.
However, Duke and a growing number of jurisdictions give solar zero or limited capacity value, he said, noting that “effective load carrying capability” values for solar are falling. The PJM Interconnection gave tracking solar a 13% ELCC value for its next capacity auction, down from 50% for the current delivery year. The lower the ELCC value, the lower a resources’ per-MW capacity payment.
“Over time and in more markets, as solar penetration grows, you'll see ELCCs decline, and therefore you're likely to see more demand for flexible interconnection service as the value of NRIS-related network upgrades declines,” Norris said.
Capacity can be a key part of the revenue stack of resources like battery storage, but it contributes less revenue to a solar project because of the “significant derating” from ELCC methodologies used in many markets, according to comments for the FERC workshop filed by Liz Delaney, vice president of utility-scale policy and business development at New Leaf Energy.
Because of declining ELCCs, New Leaf, a solar and battery storage developer, estimates the net present value of the lifetime capacity revenues of a generic 100-MW solar project are about $3 million in New York and $12 million in the Midcontinent Independent System Operator footprint, Delaney said.
“Neither project’s expected capacity revenues are large enough to make ‘purchasing’ NRIS a smart economic decision,” Delaney said.
New Leaf called for aligning ERIS studies and methodologies across markets with ERCOT’s connect and manage approach.
“The ‘connect and manage’ study approach, in theory, enables faster interconnection of new resources by managing resulting grid bottlenecks with economic curtailment and using congestion pricing to identify issues that will then be addressed in a regional transmission planning process,” Delaney said.
