Wind and solar projects are saddled with paying at least 90% of transmission network upgrades that have become a significant hurdle for the integration of low-cost new renewable generation in two major US electric power markets, according to a new report.
Those projects “are essentially asked to shoulder the financial burden of adding new lanes to that electron highway, lanes that benefit everyone,” said Greg Wetstone, CEO of the American Council on Renewable Energy (Acore), which was among the sponsors of the study.
By failing to address such improvements in long-term planning processes by grid operators, “low-cost renewable resources we need to meet our climate goals are stuck in lengthy interconnection queues,” he said, adding this “flawed approach” is killing otherwise cost-effective projects.
Acore, with support from the Macro Grid Initiative, a programme it jointly sponsors with advocacy group Americans for a Clean Energy Grid, commissioned the study in collaboration with the American Clean Power Association (ACPA).
The study, Just & Reasonable? Transmission Upgrades Charged to Interconnecting Generators Are Delivering System-Wide Benefits, looked at the Southwest Power Pool (SPP) and Midcontinental Independent System Operator (MISO).
SPP, the number one wind market by installed capacity – 27.4GW as of 1 January, operates a grid and wholesale power market across 17 states from Montana to Texas. MISO, adjacent to the east and serving 15 states, is the number three wind market with 22.1GW. The two networks also handle a combined 653MW of utility solar.
At present, 95% of the 103GW of active generation interconnection queue requests comprise solar, wind and hybrid resources in SPP and 92% of 79GW in MISO.
“Renewable generation is expected to grow even more in the coming years as favourable economic and clean energy goals continue to drive demand,” wrote the authors of the study, consultancy ICF Resources.
In SPP, the entire cost of network upgrades is assigned directly to generators. In MISO, they are responsible for 90% of the cost for those 345kV and higher with 10% allocated regionally. For those below that threshold, generators pay 100%.
“The cost allocation fails to consider potential regional economic benefits from these network upgrades,” they wrote.
“Using very conservative assumptions, this study evaluated the economic benefits of a representative sample of network upgrade projects assigned through the MISO and SPP generator interconnection process over the last seven years.
“The results show that the network upgrades provide benefits to consumers that can exceed their allocated costs, resulting in an inconsistency between the payments and the benefits received,” the authors wrote, adding of the 12 network upgrades reviewed, ten provided positive benefits to consumers, with eight having benefits that exceeded 10% of the costs.
President Joe Biden’s administration has identified transmission as a critical impediment to its goal of decarbonising the US electric system by 2035.
An infrastructure bill awaiting approval by Congress would allocate about $2.5bn in federal funding for construction of new long-haul interstate power lines, disappointing renewables lobbies who noted that it is less than the cost of one 3GW project.