Four Challenges with Connecting Renewables to the Electricity Grid
CommercialJul 10, 2023
Achieving federal 100 percent clean electricity goals by 2035 will require nationwide electric generation to triple compared to 2020 levels. Overall, the power and infrastructure demanded by electricity customers over the next 12 years represent billions of dollars in potential spending. To meet this rising demand, energy suppliers, developers, and utilities are rushing to build and sell renewable assets and renewable energy.
However, despite customers’ and industry groups’ enthusiasm for renewable energy, such projects are plagued with problems. The costs and delays that dominate the renewable energy development process and the topics discussed below present constant challenges to the rapid expansion of the United States’ green energy future.
#1: The Interconnection Process
Notably, the nation’s transmission “interconnection queue” serves as a major roadblock to plugging renewable energy into the grid. Utilities and regional transmission organizations (RTOs) require projects to undergo many technical studies before connecting to the transmission grid. Every applicant must wait their turn for evaluation and study, which often requires investment and heavy scrutiny of the project’s engineering, design, and technical work to receive final approval from the utility or RTO.
A typical energy project constructed in 2022 experienced a 5-year wait between the initial transmission interconnection request and commercial operation, nearly triple the 22-month waiting period for projects constructed between 2007 and 2014. For new solar energy projects in the United States, the proposed timeline for completion is 36 percent longer and depending on geographic location, incurs 1.5 times greater expenses compared to projects proposed or completed between 2010 and 2015. This issue is further exacerbated by actual completion times lagging years behind proposed timelines.
Additional factors that complicate wait times are the type and size, location, and the surrounding energy infrastructure that would support the project. As a result of these factors, only 21 percent of projects that entered an interconnection queue between 2000 and 2017 had been built by 2022.
#2: The Nation’s Existing Grid Infrastructure
With the number of renewable projects sitting in an interconnection queue skyrocketing in 2022 (a 40 percent increase year-over-year) and even more joining the queue in 2023, providing the transmission lines necessary to deliver the energy from these projects is proving to be challenging for utilities and RTOs.
The availability and age of the nation’s transmission infrastructure present severe constraints to renewable energy projects trying to connect to the grid. The costliness and demand on utilities and RTOs to upgrade transmission lines cannot be overstated. According to some estimates, upgrading and expanding the electricity grid to support future demand could cost more than $1 trillion.
#3: The Federal and State Approval Process
In addition to the enormous costs of transmission upgrades and expansions, the approval process to undertake such improvements is also very complicated. Depending on the location and size of proposed transmission upgrades, a developer may be required to undergo an intense permitting process. For transmission projects that cross state lines or span federal lands, developers must apply to the Federal Energy Regulatory Commission, with the potential for review from multiple federal groups. State legislatures or public utility commissions may also need to be involved. Overall, receiving approval for transmission projects can take between eight and 15 years.
Each state also requires different permits and compliance measures before the start of construction or commercial operation for renewable energy projects. Rules and regulations around such projects are constantly changing as well. For example, in Ohio, state law now requires the Ohio Power Siting Board to consider the public interest of any proposed projects. Local input is highly important for renewable energy construction; however, some developers have claimed that local opinions on their projects have increased the risks associated with new renewables.
Overall, the evolving, complicated, and sometimes inefficient nature of transmission and renewable energy approval processes has impeded many developers and greatly impacted progress toward achieving a clean energy grid by 2035.
#4: Persisting Supply Chain Issues
Inflation, increased demand for raw materials, decreased production during the COVID-19 pandemic, labor shortages, shipping backlogs, federal import tariff investigations, and limited availability of necessary rare earth minerals have contributed to the persisting supply chain issues that resulted in a three-month delay for roughly one-third of solar capacity expected in 2021, and even longer delays for 8 percent of projects scheduled for 2022. Each of these supply chain impacts have forced developers and buyers to absorb more risk, raise prices, and delay project timelines, thus presenting an additional layer of challenges to bringing renewable energy projects online.
Long interconnection queues, limited and aging transmission infrastructure, inefficient approval processes, and volatile supply chains have served as roadblocks to the construction and connection of renewable energy projects to the domestic electricity grid. Securing the nation’s clean energy future will require improving these elements of the renewable energy development process.
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