Report finds new solar projects — not grid operators — are paying for upgrades to transmission network
A new study by ICF Resources on behalf of the American Council on Renewable Energy (ACORE), published today on interconnection projects in the Midwest and Great Plains, finds that wind and solar projects are being asked to pay for the entirety of upgrades. of the transmission, even though the whole system benefits.
The analysis, “Just and reasonable? Transmission upgrades charged to interconnected generators deliver system-wide benefits”, targeting a representative sample of network upgrades in the Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP) regions. Even with conservative assumptions, the study found significant system-wide benefits in two-thirds of the upgrades evaluated, benefits other users of the shared system get at little to no cost. This result appears to conflict with current cost allocation principles.
“Regional power grids are like highway systems, they move power where it’s needed and keep electrons flowing to homes and businesses around the clock,” said ACORE President and CEO Gregory Wetstone. “Right now, new wind and solar projects are essentially being asked to carry the financial burden of adding new lanes to that electron highway, lanes that benefit everyone. Such improvements should rightly be addressed in long-term planning by grid operators like MISO and SPP, and failing to do so means that the cheap renewables we need to meet our climate goals will get stuck in long interconnection queues. This flawed approach to cost allocation of transmission network upgrades kills otherwise cost-effective projects, hurting consumers and jeopardizing our response to the climate crisis.”
“We need to plan the grid for the future, and transmission network upgrades identified in the generational interconnection process have become increasingly larger and more expensive, making the current approach to allocating their costs to individual generational developers is unreasonable and uneconomical,” he said. heather. Zichal, CEO of the American Clean Power Association. “This study makes clear that these transmission upgrades provide substantial, broad, regional economic benefits and that changes in regional transmission planning and cost allocation are needed to ensure that costs are spread across all beneficiaries. This will enable the grid to handle the rapid implementation of clean energy projects needed to meet our climate targets.”
The research, which was realized with the support of the Macro Grid Initiative and in partnership with the American Clean Power Association, comes at a time when the Federal Energy Regulatory Commission (FERC) is consider re-evaluating how regional transport organizations such as MISO and SPP allocate costs for new projects trying to connect to the grid. ICF worked closely with collaborators in both regions to develop the assumptions and modeling used in the report.
Under the FERC’s “beneficiary pays” principle, regional transmission organizations must ensure that transmission costs are at least “approximately in line with estimated benefits”. Under current rules, new generators in MISO pay 90% of the cost of significant upgrades (345 kilovolts and above), while others on the system pay 10%. In SPP, the new generation pays the total cost of any upgrades needed to connect, and other users of the system receive the resulting benefits for free.
As wind and solar prices have continued to fall rapidly and buyers from states and companies seek to meet their renewable energy standards and targets, demand for renewable generation interconnection has increased exponentially in both MISO and SPP. More than 150 GW of active solar, wind and hybrid sources are currently tied up in interconnection queues in both markets, while demand for renewable generation is expected to grow significantly in the coming years.
To download the new report, click here.
News item from ACORE