Interconnection, the process of connecting clean energy projects to the grid, is one of the key elements of a successful transition away from fossil fuels — so why do utilities make it so hard?
Private utilities can use their government-granted monopoly over the electric grid to make interconnection complicated and expensive for any clean energy project they don’t own. Often, they pour their outsized monopoly power and profits into evading and rigging the rules to further stifle competition and favor their own business.
Gaming the System
One reason we can’t get transmission infrastructure built to connect large scale solar and wind projects to the grid is that utilities have gamed the planning system to favor their own interests. Ari Peskoe, Director of the Electricity Law Initiative at the Harvard Law School (Environmental and Energy Law program), covers this in his work on the “utility transmission syndicate.”
In the Local Energy Rules podcast interview, Ari explains how the federal government, through the Federal Energy Regulatory Commission (FERC), has tried numerous orders and directives to expand transmission capacity to capture new clean energy sources. As Ari put it, “What [FERC is] trying to do is counteract the incentives and abilities of utilities to act uncompetitively… The problem is utility control and utility interest in maintaining the status quo. Utilities aren’t, for the most part, inherently against clean energy, but they want to deploy it at the pace and scale that will benefit them.”
Fixes for FERC
In the podcast, Ari offers a few suggestions for how FERC could improve competition and diminish the power of incumbent utilities and transmission companies to slow expansion.
- Transmission planning should be done by a fully independent entity, free of utility influence. All utilities should be required to join these transmission associations.
- Greater information transparency should be required in the utility and transmission planning processes (mandating detailed hosting capacity analysis would be a good start).
- In emergency situations (or other circumstances for non-competitive planning), utilities must do more to prove that their plans are reasonable.
Non-Compete Laws
One way utilities have persisted despite the efforts of FERC is by using their armies of state lobbyists to win non-compete laws. These so-called “right of first refusal” laws were pushed by utilities after FERC banned the practice of letting utilities own any transmission line crossing their existing service territory. In my discussion with Chris Villarreal of Plugged In Strategies, he explains why this undercuts competition and new transmission. Eleven states have “right of first refusal” laws (including Minnesota and Texas). Repealing those laws would encourage competitive development of new transmission to serve clean energy needs, whether or not it benefits the incumbent monopoly utility.
Non-Transmission Transmission Capacity
The good news is that we can actually build renewable energy that expands transmission capacity if it interconnects to the grid and serves local energy needs, like these innovative wind-solar hybrid projects by Dan Juhl and other local developers. Dan’s innovation was to combine about 1 megawatt of solar with a single, 3 megawatt wind turbine (and sometimes battery storage). The combination has much more consistent electricity production than a single technology power plant, but it also can plug into existing capacity in the lower-voltage power lines of the electricity distribution system. By being close to and serving local demand, these projects free up more capacity on the high-voltage transmission system. (We can also expand transmission capacity without new lines by deploying “grid enhancing technologies.”
Community Scale Power Faces Utility Monopoly Power Problems
As great as Dan’s solar-wind hybrid projects are, they still get stalled by incumbent utilities. Threatened by competition from community-scale power generation, utilities game the federal competition law, PURPA, to avoid paying a fair price or signing a contract to buy their power. Governing explains how utilities can mess with clean energy project developers to deny them access by making it nearly impossible to get a contract to sell power.
Small Scale Also Suffers From Monopoly Barriers
Utilities also make it hard to interconnect power generation even at the local level. Private utilities’ control over how their competitors connect to the grid results in widely varying costs and timelines for interconnection of rooftop and community solar (and storage) projects. In ILSR’s 2021 Solar Developer Survey, “One solar developer noted that while the required interconnection timeline was under six months, approvals actually took 2-7 years. Another said, “[The interconnection process] is definitely the biggest place where [utilities engage in] just blatant contractual noncompliance.” In our 2022 analysis of available interconnection data, we found widely varying times to get a standard rooftop solar project connected to the grid.
A Big Fix for Local Solar
One pending fix would be to collect better data on the interconnection process. The Solar Energy Industries Association, the Institute for Local Self-Reliance, and others have requested that the federal Energy Information Administration collect standardized data from distribution utilities, as discussed in this interview with Justin Baca from SEIA and David Gahl from the Solar and Storage Industries Institute.
Improving the Rules
States can substantially improve the speed of clean energy adoption by adopting model interconnection rules. While getting fair access relies on often-lacking enforcement, states can set a floor for interconnection performance by utilities. Unfortunately, 13 states get an F grade on their interconnection rules, according to the latest Freeing the Grid report from the Interstate Renewable Energy Council.
Addressing the Root Cause
Advocates and developers have looked at ways to expedite permitting and approval processes for new transmission (and distribution interconnection), but we’d be better served by targeting the common barrier: for-profit ownership (investor-owned utilities) of a common carrier (the grid). As long as utilities have conflicting interests (a profit motive that comes from owning new power plants, poles, and wires), they will continue to delay or divert clean energy that they don’t control. We got free long distance calling once the federal government broke up the AT&T monopoly on telephone wires. Who knows what grid access benefits might come from breaking up the utility monopoly on electric wires?
Photo from Mike_fleming via Flickr
This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Energy Democracy weekly update. Also check out the Local Energy Rules podcast!
