Transect Team
The 2024 Clean Power Event gathered over 8,000 industry leaders and stakeholders from the wind, solar, storage, hydrogen, and transmission industries to share insights and overcome hurdles. While much learning was gained from the event, transmission and interconnection were the highlights of the conversation.
Earlier this year, we discussed the crucial role of transmission lines in expanding clean energy infrastructure – and we learned at Clean Power that there is still much more work to be done.
3 Key Takeaways for Renewable Developers on Transmission and Interconnection
1. There is Still a Need for Expanded Transmission Infrastructure
Demand for renewable energy projects from utilities and corporate off-takers has been climbing for years and will likely continue years into the future. However, as every energy developer is painfully aware, the primary obstacle to growth is a lack of transmission capacity.
Nevertheless, the construction of new high-voltage lines has decreased since its peak in 2013, indicating a critical need for renewed investment and strategic planning. Although the Inflation Reduction Act (IRA) made billions of dollars available for transmission build-out, it's still not enough. Any transmission projects that started today will likely not be operational for several years.
Projections suggest that capacity needs to increase by nearly 60% by 2035 to meet rising demand, even with conservative estimates. Unfortunately, the construction of new transmission lines is falling behind as projections for load growth outpace expectations. This is especially evident for larger regional and interregional transmission lines, often facing permitting processes lasting over a decade.
2. Diversity in Transmission Projects
While most transmission projects are "multi-value," offering multiple benefits, they are often categorized by their single primary benefit. Here are the types of transmission projects:
- Reliability Projects: Improve infrastructure to enhance grid resilience during peak demand and severe weather, preventing disruptions.
- Economic Projects: Transporting affordable renewable energy to high-demand zones aims to increase transmission capacity in congested areas, improve delivery efficiency, and reduce costs.
- Policy-Driven Initiatives: Essential for meeting state renewable energy goals, these projects develop infrastructure to integrate renewable energy into the bulk electric system, with costs typically allocated to customers in the mandated state or regionally if they provide significant reliability and economic benefits.
- Network Upgrades: Expanding or improving existing infrastructure to accommodate new generation sources, such as constructing substations or reinforcing transmission lines, is crucial for integrating new renewable energy projects into the grid.
3. Navigating Clogged Interconnection Queues
The lengthy and complex interconnection process is a significant bottleneck for renewable energy integration.
As of April 2024, over 2.2 TW of capacity was stuck in interconnection queues awaiting studies that can take years to complete. This capacity is approximately 1.7 times the size of the current U.S. grid-scale generation fleet. Renewables, boosted by the Inflation Reduction Act 2022, account for more than 94% of this queue.
The average wait time between entering the queue and commissioning has increased in several Independent System Operators (ISOs) or Regional Transmission Organizations (RTOs) regions. Six regions — SPP, NYISO, WECC, CAISO, ERCOT, and SERC now average four years from queue entry to commercial operations.
So what happens after a developer submits a project into the queue?
Study Phases: The System Impact Study (SIS) is the first step in evaluating a new interconnection; if the SIS results are favorable, most ISOs/RTOs require additional studies, which may include a feasibility Study and a Facilities Study.
These studies collectively form a study phase to thoroughly analyze the interconnection's feasibility and requirements. If the system is already near capacity, the study phase might reveal that the proposed interconnection could overload specific grid segments, leading to reliability issues such as voltage instability or thermal overloads.
Upgrade Requirements: Based on the System Impact Study findings, the Transmission System Operator (TSO) may determine that upgrades to the transmission infrastructure are necessary to accommodate the new interconnection.
These upgrades could involve reinforcing existing lines, adding new transmission capacity, or installing additional equipment such as transformers or capacitors. In this scenario, cost and timeline implications for these upgrades would need to be considered, which could delay the interconnection process.
Typically, the developer requesting the interconnection bears the cost of these upgrades. This can significantly increase the project's overall cost, impacting its economic viability and potentially leading to project cancellation.
Submitting a permit for interconnection in an area with constrained transmission capacity is complex and costly. However, the primary issue is risk. The SIS is expensive, and investing in it for a project unlikely to have capacity or reasonable upgrade costs poses a significant financial risk.
Queue Position and Priority: In some jurisdictions, the interconnection process operates on a "\first-come, first-served basis. If the transmission capacity is constrained, developers may find themselves in a queue for interconnection permits. Projects that require less capacity or that can mitigate their impact on the grid may be prioritized over those that require significant upgrades.
So, What Does All This Mean for Renewable Energy Developers?
The long wait times and high costs associated with new transmission lines and upgrades present significant barriers to deploying renewable energy. To combat these factors, renewable energy developers must implement innovative strategies and collaborate closely with stakeholders to effectively navigate these challenges.
Another proactive approach is to leverage a site assessment platform such as Transect, which enables quick access to transmission capacity at nearby substations. This allows developers to make informed decisions on utility-scale site selection, helping them get into the queue faster and more confidently.
Keys to streamlining renewable energy projects and navigating complexity:
- Understand Site Capacity Fast: Quickly assess transmission capacity and voltage at nearby substations.
- Strategic Site Selection: Identify parcels with available capacity to enter the queue faster and with confidence.
Looking Ahead: Investing in a Resilient Energy Future
The 2024 Clean Power Event underscored the critical need to address transmission and interconnection challenges for effectively integrating renewable energy sources. A stable, reliable, cost-effective electricity supply is fundamental to advancing clean energy goals.
As we strive to meet growing demands and incorporate new renewable sources, developers can expedite their projects by accessing accurate information on existing infrastructure and understanding their project's grid impact. Being proactive enables quicker identification of suitable sites for large-scale utility projects.
Ready to get insights into transmission capacity and substation voltages near your project? Explore Transect’s latest feature on Transmission Interconnection Capacity today.