On stability, the fast progress in North American wind energy technology is a constructive improvement. Extra initiatives and extra connections to the grid will result in extra dependable vitality methods and networks in addition to electrical energy generated by a extra numerous set of inputs.
There’s, nonetheless, a draw back to this progress. Grid operators are seeing a spike in potential initiatives looking for to connect with the facility grid – a pattern that’s anticipated to proceed as extra builders pursue offshore wind initiatives. This fast improve within the variety of grid interconnection purposes has negatively affected the power of vitality corporations and grid operators to plan effectively and successfully.
Though various offtake is an choice for wind builders, in lots of areas the power-to-x particulars and, notably, leasing and allowing points regarding co-locating services usually are not but established. Accordingly, for a lot of builders, grid connection seems to be a extra engaging choice from each timing and planning views.
To handle the state of affairs, operators equivalent to Midcontinent Impartial System Operator (MISO) are rethinking the interconnection software course of. These modifications may have important impacts on, and have to be considered by, corporations exploring the wind vitality area and people within the early planning phases of a challenge.
An approval system below pressure
An examination of current publicly disclosed knowledge can make clear grid operators’ considerations and motivations. In 2022, for instance, MISO acquired 956 generator interconnection queue submissions (earlier than the deadline closed on September 15 final 12 months) for initiatives anticipated to ship greater than 170 GW. Nearly all of these purposes (by whole gigawatts) concerned wind, photo voltaic and hybrid initiatives, with pure fuel and storage initiatives accounting for the majority of the remaining submissions. MISO has famous that it believes that software quantity will proceed to rise within the close to time period, overlaying greater than 200 GW of technology functionality.
MISO additionally stories that 70% to 80% of initiatives in its interconnection software queue don’t get constructed. That is the results of a number of forces, together with present tariffs that incentivize speculative initiatives to enter the queue even with a small monetary dedication. The present course of additionally consists of penalty-free withdrawal provisions that permit refunds of a good portion of cash invested.
To make sure, interconnection purposes can add credibility to in any other case speculative initiatives and improve builders’ potential to safe seed cash. Sadly, a challenge’s acceptance into the queue is just not in and of itself a superb measure of the challenge’s viability.
Given the prolonged software assessment and approval course of – each submission acquired by MISO have to be rigorously studied, which takes time and assets – builders are incentivized to submit purposes early and infrequently, whether or not the initiatives are viable or speculative.                                                             Â
Resizing the doorway for wind vitality initiatives
On account of this deluge of purposes, MISO introduced on June 20 that will probably be growing and implementing plenty of modifications to its software and queue course of, with the intent of removing speculative initiatives. A month later, and following interviews with stakeholders from a number of sectors, MISO’s Planning Advisory Committee introduced a package deal of queue reforms.
Amongst different proposals, these reforms embody the next:
- a rise in M2, M3, and M4 milestone funds;
- improved web site management necessities for the purpose of interconnection;
- decreased availability of withdrawal and modifications to withdrawal provisions (together with an escalating automated penalty); and
- automated caps on queue dimension and the variety of megawatts that anyone developer can submit in future cycles.
These modifications are anticipated to lead to a extra dependable analysis course of, fewer requests in a queue cycle (resulting in quicker determinations), higher alignment between the examine assumptions in present requests and an precise future dispatch, a discount in withdrawals, and the choice to make use of withdrawal penalties to decrease the prices of initiatives that truly shall be constructed.
Potential dangers
Like everybody, grid operators don’t work in an ideal world. MISO acknowledges that strengthening the necessities to enter and exit the queue may impede future technology improvement. And better milestone funds and penalties for withdrawal would possibly negatively have an effect on the power of smaller builders to acquire and retain funding to pursue viable initiatives.
Regulatory points can even come into play. The Federal Power Regulatory Fee’s lately launched Order No. 2023 adopts a last rule concerning enhancements to generator interconnection procedures and agreements to handle interconnection queue backlogs, enhance certainty, and stop undue discrimination for brand new applied sciences. MISO is reviewing the order to find out how to reply to these directives and making ready its compliance submitting, which is due 90 days after the order’s publication within the Federal Register.
Most instantly, MISO’s proposed modifications will have an effect on initiatives within the planning levels and push again the 2023 software deadline. New guidelines governing technical necessities, web site management, and prices (amongst different points) will impose further hurdles.
Regardless of the potential challenges, there may be hope that these reforms will finally streamline and make extra predictable this essential course of.
Lauren Mastio and Stephen Miller are members of the offshore wind initiative at Jones Walker LLP. Mastio might be reached at lmastio@jonesalker.com, and Miller might be reached at smiller@joneswalker.com.
