Distributed Energy Resource Saturation

What is causing interconnection delays for solar EPC firms in California and what can industry stakeholders do to fix the problem?

Thanks in large part to the recent influx of solar distributed energy resource (DER) generation, the California utility grid is becoming saturated much faster than anyone ever expected. Saturation in this context refers to the maximum solar capacity beyond which the electric power system becomes unstable, which varies circuit by circuit and also has holistic implications at the system level. Investor-owned utilities (IOUs) currently lack many of the data sets and analytical tools needed to properly assess the impact of DER saturation. As a result, many projects are languishing in a seemingly endless cycle of interconnection review studies and grid upgrades. In this article, I explore how we got here, illustrate some of the interconnection challenges and consider some potential remedies.

How Did We Get Here?

In spite of the recent rise of DER generation—which includes demand management as well as distributed energy storage and variable renewable resources—the basic architecture of California’s electric power system remains much the same today as it was 100 years ago: a relatively small number of centralized generation sources push power out to electric consumers across a vast long-distance network of high-voltage transmission lines and medium-voltage distribution lines.

Though this system has served California fine to date, it is not particularly well suited to meeting the state’s future needs, which are changing due to shifts in environmental and energy policies. More Than Smart is a nonprofit organization whose mission is to help policy makers and industry stakeholders transition to a 21st-century electric power system. The authors of its report “A Framework to Make the Distribution Grid More Open, Efficient and Resilient” (see Resources) note: “There is a recognition that California is at a crossroads with respect to the future role of the electric system generally and the distribution system specifically.”

Rise of virtual net metering. With the implementation of net energy metering (NEM) and California’s Rule 21, which details interconnection, operating and metering requirements for DER projects, the state’s IOUs enabled customers to generate renewable power for use in offsetting a specific load. The interconnection method used to apply for the NEM tariff was typically a line- or load-side tap, landing behind an existing meter. In general, this interconnection did not create a problem for the local utility system because the customers consumed most, if not all, of the generation at the source, and backfeed across the point of interconnection was minimal.

However, in 2014, the advent of net-energy metering aggregation (NEMA) changed the dynamic because it permitted load offset using virtual net metering. Generation customers can now create power anywhere on their property and export it directly back to the electric grid. The utility then nets that generation against their aggregated electrical consumption over one or more meters. The customer pays the difference or, in the instance of a surplus, receives a credit to offset future consumption.

On paper, this seems straightforward, and it has allowed customers to install larger solar projects to offset multiple meters. The problem this creates for IOUs is that, while the load is virtually offset, they must study a stand-alone generation system as an exporting facility. While the rules on how the utility compensates the customer differ from those for a traditional exporting facility, the overall impact on the utility distribution system is the same as if the facility were an export project.

In addition, the advent of NEMA promoted use of the NEM tariff on a much broader scale than previously anticipated. The benefits of net metering are no longer limited to small roof-mounted residential systems; the door is now open for much larger ground-mounted projects all the way up to 1 MWac to interconnect under the NEM tariff. As shown in Figure 1, the rate of nonresidential NEM interconnections across all IOUs has grown 246% since 2014.

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