By Rory Sweeney

Generation developers and transmission operators squared off Friday at a FERC technical conference on interconnection procedures, with developers voicing frustration about delays and a lack of clarity in the processes.

Transmission operators pushed back, arguing that high numbers of interconnection requests in small geographical areas create congestion and delay their ability to efficiently review projects.

The conference was prompted by the American Wind Energy Association, which requested that FERC make regulatory and policy changes to interconnection procedures that it argued are outdated, “unduly discriminatory and unreasonable” (RM16-12, RM15-21).

Paul Kelly, director of federal regulatory policy for Northern Indiana Public Service Co., spoke on behalf of MISO transmission owners. He said that risk should be balanced between developers and owners.

“There’s a difference between improving a process and driving efficiencies versus shifting risks onto different parties,” he said. “There are inherent risks for certain business activities, and there can’t be a guaranteed insurance policy.”

Alan McBride, director of transmission strategy and services at ISO-NE, gave Maine as an example of a small region that has experienced a large number of requests. “The problem we do have is in a specific part of the system that is already at its performance limits, we have a significant number of interconnection requests, pretty much exclusively for renewable interconnection,” he said.

The situation is further complicated, transmission operators explained, when projects drop out during the review process, causing a restudy and reshuffling of the queue.

Location, Location, Location

Developers defended their concentration of requests, saying wind farms’ profitability is dependent on location.

“It matters tremendously in terms of the overall cost per unit of production,” said Dean Gosselin, NextEra Energy’s vice president of business management. “The more windy it is, the lower the cost. Price matters in the marketplace, so clustering usually happens because of that.”

Transmission operators were unified in assuring that they are working on solutions to the delays, but they argued that “speculative” projects are clogging the queue. Developers said all projects can be viable until they’ve gone through studies and received accurate information about the cost and timing of the interconnection.

Omar Martino, director of transmission for EDF Renewable Energy, argued that a 12-month target for completion of studies would solve the issue. He said interconnection customers crowd into the queue “because they understand they will not be able to do anything for the next five to six years.”

Rick Vail, PacifiCorp’s vice president of transmission, said one of the biggest concerns is the time and effort needed to restudy when higher-queue projects drop out.

“A majority of the generation in our system is hundreds, if not many hundreds, of miles away from a load center. So you certainly have different areas where you have transmission constraints, but those also continue to be the areas where developers are requesting to connect to the system,” he said. “A lot of the requests we get seem to [be] a fishing expedition of trying to determine where in the transmission system is the most appropriate place to attach generators.”

Tim Aliff, MISO’s director of reliability planning, said “one size does not fit all for the interconnection queue process,” pointing out, for example, that each of the states in MISO has its own renewable portfolio, which requires flexibility with interconnection requests.

Developer Requests

Developers said more transparency would help them determine the viability of their projects before they apply.

“Better access to cases, both economic cases and the transmissions cases. Better understanding of assumptions, more accurate assumptions in cases. Pretty much any information that can help us make a better decision,” said Jennifer Ayers-Brasher, director of transmission and market analysis for E.ON Climate & Renewables NA. “We feel there should be more commonality across the board.”

They also requested a limit on the number of performance markers projects must meet to stay in the queue. “Introducing more milestones introduces more uncertainty,” Martino said. “Introducing more uncertainty introduces the likelihood of a cascading effect with the cost estimates and schedules because projects affect each other.”

Steven Naumann, Exelon’s vice president of transmission and NERC policy, took a holistic perspective on congestion, saying the entire process needs to be overhauled to forecast and address issues in advance. “There needs to be a serious look at how congestion is dealt with in the interconnection process up front. That is a coordination issue.”

He called for processes to handle risk-inclined developers who don’t want to pay for upgrades that aren’t mandatory even if it affects the reliability of the interconnection. “You’ve got to deal with this fundamental … disconnect between the ‘I will take my chances’ and the big energy market, which doesn’t recognize ‘I will take my chances.’ … This is not an incremental fix. This is something major that has to be set up upfront and done right and thought about how it’s going to be done.”

Balancing Accuracy and Speed

Throughout the conference, developers pushed for both greater accuracy in estimates and faster delivery of results. MISO’s Aliff said the situation is a tradeoff: Transmission operators can’t provide the requested level of accuracy until later phases of the study, but they can’t start the studies earlier because they don’t know which projects will drop out. He said he wasn’t aware of any projects that withdrew because the process was taking too long.

At CAISO, it’s a two-phase process that takes two years, said Stephen Rutty, the ISO’s director of grid assets.

NextEra’s Gosselin said developers need to know about the overloaded transmission elements that need to be upgraded. “We have a saying in our world of development, which is ‘time kills all projects.’ The longer it takes, the more unlikely it is the project will be valid and go to fruition,” he said.

ISO-NE’s McBride said preparing construction estimates is a time-consuming process. “It takes weeks, if not months. [It] involves site surveys and getting bids from equipment suppliers and those kinds of endeavors.”

“One of the responsibilities as a transmission provider is to make sure we’re not passing on some of the costs to the connected generation, especially if it’s not required for load service,” Vail said.

At PJM, cost also plays into the timeliness of studies, explained David Egan, the RTO’s manager of interconnection projects. Egan said PJM found through its stakeholder process that generators preferred having upgrade costs “socialized” between all of the projects in the queue that caused it, not just leaving the last one to pay.

“The problem is that now you have to wait for the queue to close to be able to study everyone,” Egan said. “Where before, the smaller generators could have been moved along quicker … now you are bundled together. It is a clash of cost-sharing versus timeliness, at least on the smaller distributed generators.”

Connection Disputes

FERC staff asked about the prevalence of disputes between developers and transmission owners.

Kelly said the parties often work with the RTO, but he noted that there are dispute-resolution procedures available inside the interconnection processes.

Aliff said that MISO doesn’t see many disputes, but when they occur, the RTO plays an important role. “The fact that we don’t have a dog in the fight is a reason we should play a part,” he said. “We are making sure the reliability of the system is maintained. … If you start allowing individual interconnection customers to deviate from planning standards, you end up with a previous customer built to a level that a later customer did not build to … which could have a reliability impact down the road. Also, from an efficiency standpoint, building substations that have future ability to expand may be a cheaper alternative down the road for all other customers.”

That didn’t sit well with Gosselin, who described an incident in which NextEra and the transmission owner had different cost estimates because the owner expected the generator to prepare land for the owner’s potential future expansion. “There is a gap in expectations right there. … When we are building it, we are building it for us and only us and our future,” he said. “Ultimately, we resolved that piece of it fairly simply by saying we will option the rights for the land for them if want to expand in the future, and it’s their cost, not ours.”

Estimating Inconsistencies

Developers acknowledged that estimate overruns are rare but can be devastating when they happen.

“We have had several epic fails where the actual costs came in multiples of what the estimate was,” Gosselin said. “If we make a decision and that changes it significantly on subsequent restudies, we have either made a bad decision or we got lucky. Neither are good.”

“I have to say, they are rare, but they do happen,” Martino said. “On one particular occasion, we saw cost deviations of almost 100%.”

Energy Storage

In the final panel of the day, participants discussed energy storage.

“It’s a very creative market right now,” Rutty said. “Lots to look forward to.”

Transmission operators said they need a way to control how much power each resource is withdrawing to store or injecting into the grid. “What we would want is that they would install a power relay to limit the output,” Egan said. “The problem you have is, if you … exceed the thermal capabilities we’ve studied, you could cause damage.”

Developers urged regulators to look at storage differently and not try to wedge it into an existing group.

“Storage is very much its own asset class that touches just about every other asset class that hits the grid,” said John Fernandes, the director of policy and market development for RES Americas. “Let’s stop talking about storage as generation storage, storage as negative gen. I get it, but those are still dangerous semantics. … If we really want to be able to accommodate storage at a large scale five or 10 years from now, those rules need to start going into place now.”