Distributed Energy Resource Saturation: Page 3 of 7

These time lines impact system owners by delaying their ability to realize returns on their investment. Without these returns, loan terms are subject to higher rates and the financial viability of a project drops significantly. As a result, many owners choose to walk away from projects rather than wait out a substation upgrade, which has a crippling financial impact on the solar industry in California and severely slows down DER interconnection.

Amanda Johnson is the utility interconnection manager at JKB Energy, a solar integration firm specializing in commercial and agricultural solar projects in California’s Central Valley. Johnson has firsthand experience with interconnection delays. “Many of our customers are subject to substation upgrade requirements when building solar projects that are close to the upper end of the 1 MW limit for a NEM or NEMA project,” she says, “despite the fact that these customers pull the same amount of energy from the grid throughout the year.” Whenever this happens, interconnection time lines increase to allow for the necessary engineering reviews and equipment upgrades.

According to Brad Heavner, CALSEIA’s policy director: “Trend lines for large and small systems have been moving in opposite directions. While the California IOUs have done a great job of automating the interconnection process for standard rooftop systems, new roadblocks keep emerging for large systems. We used to hear complaints about 4-month delays turning into 9-month delays, but we are now hearing about 2-year delays.”

Part of what makes these scenarios so commonplace is an outdated way of approaching distribution network design and upgrades. Utilities can no longer stop at the transmission level in envisioning the utility grid as a network. For elevated levels of DER penetration to become sustainable, the network platform mentality must percolate down to the distribution level.

Infrastructure upgrades. Think of the transmission system as a freeway designed for one-way traffic flow, where substations are off-ramps to the smaller feeder roads that represent the distribution system. With the rise of DER generation on these distribution circuits, traffic suddenly wants to flow backward onto the freeway. This two-way traffic flow disrupts the system, causing congestion as well as reliability and safety concerns. To mitigate these problems, the system operator must begin an extensive infrastructure upgrade process to convert each of these off-ramps into combination on- and off-ramps. The process is costly and time consuming; we have all experienced how freeway upgrades tend to make traffic worse before it gets better.

This is analogous to the interconnection challenges in California today, with one big traffic jam of DER generation projects all trying to get on the same freeway at the same time. This situation leads to frustrated customers and impatient solar companies. It is unfair, however, to place the blame for the problem on the IOUs. Increased participation in the NEMA tariff program has resulted in an ever-increasing number of applications to interconnect. Compounding the problem, the amount of DER generation simply overwhelms the existing distribution system. When I asked CALSEIA’s Heavner which specific area seems to be the most congested, he responded: “California.”

Fresno County, a major hub in PG&E’s utility system, is a good case study for this phenomenon. As shown in Figure 2, Fresno County is a hotbed for nonresidential solar interconnections. The rate of interconnection for nonresidential NEM projects in Fresno County has grown more than 250% since 2014. Current interconnection processes cannot keep pace with the upgrades required to interconnect these projects in a relatively short time frame. This is simply a case of too much solar, too soon.

While California’s environmental and energy policies envision integrating more than 15 GW of DER generation into the state’s electric power system, these projections may underestimate the grid transformation that is under way. Because of the scale and the capital-intensive nature of the grid investment required to meet these goals, stakeholders must plan and invest wisely. The More Than Smart report elaborates: “As distribution infrastructure is largely depreciated over several decades, investments in this decade may need to be useful to 2040. The implication for California is that the current annual utility distribution investment of nearly $6 billion is effectively a 25-plus year bet on a future [that] will likely be quite different than we can imagine today.”

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