Dive Brief:

• Generator interconnection costs are rapidly rising in the Midcontinent Independent System Operator region, driven by the need for network upgrades beyond the interconnecting substation, a new study from Lawrence Berkeley National Laboratory concludes.
• Projects that are active in the interconnection queue “have estimated costs that have more than tripled just over the last four years,” researchers concluded. Those costs have risen from $48/kW in 2018 to $156/kW in 2019-2021, they said.
• The potential interconnection costs for clean energy technologies have been higher than those for natural gas projects, the report found. Wind projects completing the MISO interconnection study process last year saw costs top $250/kW, “nearly four times the historical average,” according to the report.

Dive Insight:

MISO had more than 160 GW in its interconnection queue at the end of 2021, dominated by 112 GW of solar and 22 GW of wind, according to Berkeley Lab. The grid operator recently opened its energy and operating reserve markets to storage resources, and now expects more such projects to begin applying to interconnect.

High costs, however, continue to disincentivize project development.

Historically, most projects in MISO’s interconnection queue have ultimately withdrawn their applications, “often in response to high interconnection costs,” researchers said. Less than a quarter of projects requesting interconnection between 2000 and 2016 achieved commercial operation by the end of 2021, their data show.

The study considers data from more than 900 projects evaluated in interconnection studies from 2001 to 2021, which represents a fraction of projects requesting interconnection over that period. 

“Interconnection costs have grown, driven by network upgrade expenses,” researchers found. And “broader network upgrade costs,” including backbone network upgrades and voltage upgrades, “are the primary driver of recent cost increases.”

According to the report, projects that have completed all interconnection studies have seen average costs almost double in recent years, to more than $100/kW, while projects still navigating the process have seen costs rise even more.

High costs are a likely reason for projects which withdraw from the queue, researchers added. For withdrawn projects, costs have hit an average of $452/kW.