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Improving Interconnection Processes with Online Application Processing Systems
October 2017 by Zachary Peterson and Emerson Reiter, National Renewable Energy Laboratory (NREL)
Distributed solar photovoltaics (DPV) have seen substantial growth over the past few years and are poised to become a significant part of the future generation mix in the United States. As many electric utilities have already discovered, robust interconnection processes are key to the rapid integration of this growing resource.
DPV and other distributed energy resources (DERs) add complexity to the electric grid and can result in positive or negative impacts depending on various factors, such as the project's location and local distribution system characteristics. Thorough interconnection processes ensure that these additions to the grid have no negative safety, reliability, or power-quality impacts. Interconnection review and approval processes are crucial to the continued stability of the grid but are also ripe for improvement in many areas of the country.
Processing DER interconnection applications requires time and resources from utilities, customers, and local permitting authorities. Past research by the National Renewable Energy Laboratory (NREL) has demonstrated that utilities sometimes struggle to meet the regulatory timelines specified for interconnection application processing1. Streamlining and improving interconnection processes can benefit all parties by reducing the financial and time commitments involved. In this case study, we look at how utilities are implementing online application processing systems to improve the interconnection process. In addition, we look at what factors led utilities to make the transition to an online application system.
Current Interconnection Application Processing Methods
Utilities throughout the United States process interconnection applications in various ways. The most basic method for processing an application relies on hard-copy paper application forms. In many cases, such documents must be requested from the local utility by mail, phone, fax, or in-person visit. To complete the form, the applicant must put pen to paper to record the required information. Once the paper application is complete, he or she must then submit it to the utility in person, by fax, mail, or by scanning and emailing the document. On the utility side, the applications must be collected, tracked, and processed individually by staff, with paper records of the applications typically being stored for future reference. This process can be tedious and susceptible to time-consuming setbacks—for instance, if an application is submitted with incomplete information or if the application is lost during utility evaluation.
Technology has helped many utilities move forward from these methods. Some utilities now make their application forms readily available online and format them as electronically fillable PDFs or Microsoft Word documents. These advances provide customers with easy access to the documents and allow them to complete the forms digitally. The formatted documents help guide applicants through the forms, clearly identifying what information is needed. These applications can be submitted through traditional means (e.g., mail) or through email. Although these improvements can help reduce the number of incomplete applications and time commitment, utility employees are still required to manually organize, track, and process each application.
Online application processing systems have arisen as the latest advancement for processing interconnection applications. These systems allow customers to fully complete and submit applications through an online web portal. These online portals provide users with easy access to necessary forms and walk users through the application process step-by-step, prompting for required information as needed. These systems ensure that applications are fully completed before submission and they automate the tracking process as well. Communications can also be handled directly by these systems, automating emailed status updates to applicants and allowing real-time application tracking by the applicant. The most advanced implementations combine and integrate these online portals with the utility's existing asset management and other data systems. This integration can help to further automate the review process and, in some cases, can even be used to assist with screening and initial engineering reviews of projects.
State of Adoption
Over the past few years, online application processing systems have been gaining popularity among utilities. These systems provide a solution for reducing the time and resources needed to process increasing numbers of interconnection applications. A report produced by the Smart Electric Power Association (SEPA) in October 2014 found that 17% of surveyed utilities had transitioned to using an online application system2. This report found that utilities that had made this switch were able to process applications twice as fast as their peers, with 50% of online-implementing utilities processing applications in less than two weeks.
The move toward online processing has not been limited solely to large investor-owned utilities (IOUs). The growth in net energy metering (NEM) policies across the country has spurred utilities, both large and small, to improve application processes. Although NEM interconnection applications are only one segment of DER application requests, they typically represent a significant portion of total interconnection application volume for utilities.
To learn more about the state of adoption of online application portals, we sought to compare the interconnection processing practices of several utilities in areas with active DPV markets using data from the Energy Information Administration (EIA). First, we identified the 20 utilities with the highest NEM capacity per customer (kWNEM PV/customer) as of March 2017, using NEM capacity figures and utility customer counts from EIA Form 861. This metric was used because it best indicates the size of the interconnection processing challenge (as kWNEM PV) as compared to the size and resources of the particular utility (as the size of its customer base). Next, by visiting the distributed generation portions of each utility's website, we determined what type of application process each utility uses and categorized them into four types: online portals, fillable electronic forms submitted by email, fillable electronic forms submitted by mail, and static or paper forms submitted by mail or email. The results of the analysis are shown below in Figure 2.
The 20 utilities with the highest NEM PV penetration represent several different regions and a variety of sizes; four of the utilities have more than 1 million customers, whereas five have fewer than 100,000 customers. Of the top 20 utilities, 7 utilities (35%) had deployed an online application processing system.
For the 13 utilities that do not use an online system, the interconnection processes vary in complexity. National Grid (MA), Kauai Island Utility Cooperative (HI), Fitchburg Gas & Electric Light Co., (MA), Western Massachusetts Electric Company (MA), and Imperial Irrigation District (CA) all have processes requiring manual processing of static forms. The remaining utilities, Maui Electric Co. Ltd. (HI), Hawaiian Electric Co. Inc. (HI), Hawaii Electric Light Co. Inc. (HI), Arizona Public Service Co (AZ), Trico Electric Cooperative Inc. (AZ), Jersey Central Power & Light Co. (NJ), Delmarva Power (MD), and Modesto Irrigation District (CA) provide applications as formatted, electronically fillable documents.
The sample of utilities profiled is small relative to the pool of utilities that are reporting NEM data (324 utilities are plotted in Figure 2). However, we note that among the top 20 utilities, those with larger customer bases are more likely to have implemented an online portal, with the smallest utilities most likely relying on static forms.
Utilities that have implemented online application processing systems have chosen one of two possible tracks to do so. In some cases, the utility chooses to develop an online system in-house, whereas others chose to purchase an off-the-shelf product.
Online Systems Built In-House
San Diego Gas & Electric (SDG&E) was one of the pioneers in transitioning to an online application system. In 2011, the year it decided to implement an online system, SDG&E served about 1.3 million customers and generated $2.4 billion in revenue. Located in southern California, this IOU serves one of the most active DPV markets in the country. By the end of 2011, high application volumes had raised both the cost of processing an interconnection application and the time needed to authorize a DPV project to unreasonable levels. At that point in time, no off-the-shelf software solutions existed for use by SDG&E, so the company decided to create an online system in-house. After significant development effort, SDG&E's Distribution Interconnection Information System (DIIS) was launched in February 2013.
DIIS serves as a single destination for all stakeholders in the interconnection process, including customers, city/county inspectors, and SDG&E staff. The online portal allows these parties to submit, track, and manage applications remotely in real time. Users are provided step-by-step instructions to simplify the application and can receive automated updates as the application moves through the interconnection process. In addition, DIIS allows for remote reprogramming of smart meters once an application is processed, thus reducing utility labor expenses and truck rolls as compared to in-the-field updates.
SDG&E dedicated 12 full-time employees to complete the project, totaling 18,000 people-hours and a $2.1 million initial investment. A cost-benefit analysis conducted by SDG&E found that the project had a payback period of one year and delivered roughly $10 million in cumulative savings to the utility in its first four years. Between February 2013 and April 2014, SDG&E had updated DIIS over 13 times to improve its functionality.
|Net Energy Metering Application Process||1,090,000||13,100 applications processed|
|Net Energy Metering FastTrack Process||100,500||1,763 FastTrack applications processed|
|Remote Meter Configuration (RMC)||1,145,970||10,710 successful meter program change-outs|
|Total Savings||2,336,470||Savings in first year|
Prior to starting the project, SDG&E's staff was able to process about 475 applications per month. With the implementation of DIIS, this number increased to 1,226 applications per month in 20144. Despite the rapid increase in applications—the number of NEM applications more than doubled from 2012 to 20144—the project reduced the average application processing time to about five days.
Pacific Gas and Electric (PG&E) is another utility that chose to create an online application processing system in-house. PG&E is also a large IOU in California, with more than 4.9 million customers and $11.7 billion in revenue in 2012. Similar to SDG&E, large volumes of interconnection applications in the early 2010s led to high costs and extended timelines for application processing. With application volumes projected to continue rising, PG&E feared that it would be unable to meet the California Public Utilities Commission's mandate for interconnection timelines. Beginning in 2012, PG&E reformed its entire interconnection process, which included transitioning to an online application processing system. This online system was launched for NEM systems of less than 30 kW toward the end of 2014.
The online system allows users to complete, submit, and track applications. Traditionally, application information would be received through multiple channels (i.e., email, mail, and fax); now, however, the system provides a central point for submitting information. In addition, the system facilitates communications between PG&E staff and customers by providing email templates for status updates and electronic signature functionality. These features help reduce the amount of time and effort required of PG&E staff to organize and coordinate incoming applications. To increase the value of the online system, PG&E integrated it with other data systems associated with the interconnection process. By doing so, the information from these systems was used to further automate steps in the interconnection process; for instance, eligible rate schedules can be auto-populated based on the customer's account type, and built-in error checking is used to improve application accuracy.
When this initiative began, NEM systems smaller than 30 kW made up the largest share of interconnection applications processed by PG&E and were steadily increasing in volume. As such, the initial version of the online tool was purpose-built to address NEM applications, with plans to expand the system for more complex applications in the future. Using this phased approach, PG&E was able to realize the greatest business value right away, while gathering lessons to improve upon the initial system before extending it to more complicated project applications. By evolving the system over time and integrating back-end data from other systems, the tool has been able to deliver ever-more-complex capabilities. For example, the initial engineering review of interconnection applications was eventually automated so that only those projects that might cause negative grid impacts would be flagged for human engineering review.
By 2014, PG&E had connected more DPV than any other utility in the United States6. The volume of monthly NEM interconnection applications doubled from early 2012 to the end of 20147 and continued to rise afterwards. Even so, by the end of 2015, PG&E was processing 95% of all NEM applications of <30 kW within three days. Over this same period, the company reduced the average processing cost per application by nearly 80% from the end of 2012 to August 2015 (see Table 2) and realized total cost savings of $25.8 million. In these three years, PG&E recovered its $1.5 million initial investment 16 times over in terms of reduced labor costs alone; the additional, but unquantified, benefits of improved customer relations and regulatory compliance would increase this figure even more.
Although the initial in-house system deployment was a success, in 2016 PG&E decided to transition to an off-the-shelf solution to expand its system to accommodate more complex applications. The speed at which an off-the-shelf solution could be updated in accordance with regulatory requirements was a major factor for this decision. PG&E worked with GridUnity to develop the new platform, which was deployed in phases. While it took SDG&E over a year to develop DIIS, GridUnity automated PG&E’s second-generation online system in four months. The legacy in-house system is expected to be fully retired by 2020.8
Off-the-shelf products provide a software platform that helps program administrators (e.g., utility staff) streamline interconnection processes and automate application processing. The platforms can coordinate communications, actions, and workflows, all tailored to the needs of program administrators. Customers, contractors, and utility staff all access these central systems to move the project from start to finish. These platforms frequently have the functionality to integrate with the utility’s existing operations systems, as well as other third-party systems. In doing so, they can enable a two-way flow of information between systems traditionally operating in silos. This system integration improves the functionality of the platforms, allowing for actions such as verifying or pre-populating application information when specific customer input is provided. The GridUnity® platform and PowerClerk® are two prominent off-the-shelf solutions used by many utilities. Both projects were developed with support from the U.S. Department of Energy’s SunShot Initiative Incubator program and are highlighted as case studies below.
GridUnity applies a system of systems approach to standardize and automate interconnection processes, as well as streamlining new service and energy efficiency incentive programs, while providing a central location for all stakeholders to interact with the interconnection application. GridUnity is an end-to-end online solution to apply, pay, track, approve, and manage all DER interconnections through their complete lifecycles within a utility-branded user experience. Rules- based automation of technical and supplemental screening allows utilities to rapidly process applications and identify those requiring detailed impact studies. GridUnity reports that utilities with the highest interconnection volumes have reduced processing time from weeks to less than 24 hours.
Additionally, GridUnity offers automated hosting capacity analysis and advanced distribution planning services through its various platform engines. The engines utilize machine learning, advanced analytics, and contextual visualizations to aid utilities in improving business operations. The system’s integration, combined with its machine learning algorithms, has the potential to identify and streamline operational bottlenecks or fix system errors.
PowerClerk, developed by Clean Power Research (CPR), allows application workflow design, testing, and modifications to be performed directly by energy program administrators, rather than requiring extensive development by CPR or in-house information technology teams; this feature enables utilities to rapidly configure PowerClerk to meet the unique needs of each energy program. The data collected by PowerClerk can be combined with GIS data to facilitate creation of mapping tools to display DPV penetrations. In New York, two projects are underway (as of fall 2017) to integrate PowerClerk with distribution planning applications to facilitate the NY Reforming the Energy Vision (REV) technical screening process.
Utilities, both large and small, have adopted PowerClerk—from the City of Colton (CA), with close to 19,000 customers, to Duke Energy Carolinas, with 2.5 million customers.9 Southern California Edison adopted PowerClerk in 2015 after overwhelming numbers of NEM applications pushed the average approval time for an interconnection request to 73 days.10 With the assistance of PowerClerk and other internal changes, Southern California Edison reduced the average turn-around time to roughly three days by the end of 2015, despite the number of NEM applications continuing to increase each year, averaging 4,300 new NEM systems per month in 2016.
Drivers for Adoption
There are a number of drivers leading utilities to seek an off-the-shelf online application system. In an interview, CPR suggested the primary driver they have seen is increased DPV application volumes, which can overwhelm the utility staff responsible for processing the applications. This growth in applications often results in increasingly longer processing times. Although having an extended timeline for the occasional project is not a major concern, consistent lengthening of project approval timelines can lead to customer complaints and even regulatory consequences. Online systems provide an effective solution for shrinking these timelines by reducing the per-application labor burden on utility staff.
To analyze the relationship between application volume and online system adoption, we considered the NEM application volumes experienced by utilities that adopted PowerClerk in the six months leading up to the deployment of their portal. Reusing the EIA NEM data described above, we considered both absolute monthly increases in NEM systems (in which SCE was the clear leader) and increases normalized by utility size, as additional NEM systems/month for every 1,000 utility customers. The latter analysis placed Orange and Rockland (NY) as the most active utility; in the 6 months prior to deployment, the utility added more than one new NEM system a month for every 1,000 customers in its territory.
The general results show that although application volumes (and particularly, volume burdens relative to resources) may have been a motivating factor for some utilities, it was not the main driver for all utilities. Nor does there seem to be a “threshold” application volume level below which utilities might not have seen sufficient value to adopt such a system. Instead, the diversity of deployments shows that business value can be created in a variety of state contexts.
Regulatory pressure may be an alternative driver for utilities. For example, utilities subject to New York’s REV process are required to implement an online application process. In addition, as DER penetration increases, many utilities are realizing the need to create a system of record for DER data to be used for planning and operational activities.11 Finally, some utilities have pursued online systems as a proactive means to provide better customer service.12 By getting ahead of the issue, they hope to offer consistent levels of speed and responsiveness as DER penetration levels rise.
Off-the-shelf software solutions provide several benefits. By choosing an off-the-shelf product, organizations do not need the in-house IT expertise required to create such a system. In addition, they do not have to expend resources on regular maintenance and updates for the system. Best practices identified by the service providers can be shared for the benefit of all users. For example, CPR developed a new ePayment processing feature for Duke Energy but could make this feature available to all of its other utility customers.13 Time to deployment is often a critical factor for IT projects and off-the-shelf products can be deployed faster than novel solutions. The deployment timelines are dependent on the number of services the utility chooses to deploy, with the critical path often related to IT security procedures on the utility’s end.8
Trends in the Industry
Online application systems stand out as a significant improvement over manual processes for interconnection application processing. These systems have proven their value in reducing utility operational costs and time requirements, as well as maintaining customer satisfaction. Looking at these examples, many factors can impact if and when a utility chooses to implement an online application processing system. Long processing timelines caused by high application volumes are the most notable factor. However, quantifying the exact application-volume "tipping point" for a utility is difficult to do. The amount of applications that causes excessive timelines can vary depending on the resources the utility has at its disposal. For instance, a small utility with limited resources may incur long processing times at a much lower number of applications than a mid-sized or large utility. As a result, they may find it necessary to improve their interconnection process sooner than a larger utility would.
Identifying an acceptable processing timeline can be difficult as well. In some cases, this timeline is mandated by the regulator; but in other cases, the utility is left to determine this timeline internally. In the latter case, customer satisfaction plays a large role; if processing timelines reach an unreasonable level, the utility is likely to receive customer complaints. These customer complaints, if not addressed, may even lead to regulatory action. As more utilities apply technology to improve application processes, the average timelines for the industry are likely to shrink. Utilities still relying on manual processes and static forms in the years to come may find themselves falling short of industry best practices and benchmarks.
Even without regulatory pressure or extensive application timelines, some utilities have made the transition simply as a proactive measure to ensure that customer satisfaction is maintained. By doing so, they are better positioned to build positive relationships and trust with the customers. As the role of DERs in the electric grid continues to increase, these relationships will play an important role in the success of future utilities. Implementing an online system can act as a stepping stone for utilities seeking to move closer to the customer and improve operations through the use of the data.
Making a Change
Transitioning to an online system can be a lengthy process and require a large financial investment. Utilities that do not have the resources to fully transition to an automated online application process still have options. For instance, they can transition from using static or physical documents to using digital documents formatted for easy completion. Making these documents readily available online (rather than only by applicant request), together with clear information about the application process, will reduce the time that utility staff spends answering questions. Improvements such as these can be possible without significant financial investment or operational changes.
For those utilities that chose to implement an online system, making the choice of whether to develop a system in-house or to purchase an off-the-shelf product can also be difficult. Successful implementations have been seen for both approaches. Identifying the drivers for implementing the system and evaluating the resources available to do so are important first steps in making this choice. Similar to the approach used by PG&E, utilities can implement an online system in phases, and even transition to an off-the-shelf solution if needed. Off-the-shelf products such as Grid Unity and PowerClerk can allow for phased and customized implementations, which allows utility staff and customers some time to adjust to new processes, and lessons learned to be applied as they go. Ultimately, this transition can be a win-win for utilities and customers alike, and it can help the utility harness digital infrastructure to better maintain safety and serve customer needs.
This blog posted was revised in June 2018 to expand discussion of existing off-the-shelf online application systems.
1 A State-Level Comparison of Processes and Timelines for Distributed Photovoltaic Interconnection in the United States; Retrieved at: https://www.nrel.gov/docs/fy15osti/63556.pdf
2 Distributed Solar Interconnection Challenges and Best Practices; Retrieved from: http://www.growsolar.org/wp-content/uploads/2014/10/SEPA-Interconnection-Report-1014-email.pdf
3 More information related to SDG&E’s interconnection process reforms are discussed on the NREL webinar: Innovation in the Interconnection Application Process
4 Solar PV Market Update June 2014 Volume 10 : Q2 2014; Retrieved from: https://www.sdge.com/sites/default/files/documents/1508554296/EPRI%20DIIS%20Case%20Study.pdf
5 For an in-depth look at PG&E’s Interconnection reform, please see NREL’s 2015 report: Decreasing Soft Costs for Solar Photovoltaics by Improving the Interconnection Process: A Case Study of Pacific Gas and Electric
7 Distributed Generation Interconnection Collaborative (DGIC) “Innovation in the Interconnection Application Process;” Retrieved from: https://www.nrel.gov/dgic/assets/pdfs/2014-04-02_innovation-in-the-interconnection-application-process.pdf
10 Southern California Edison’s journey to same-day interconnection; Retrieved from: https://www.cleanpower.com/2016/sce-interconnection-journey-webinar/
11 Attention DER/PV interconnection teams: Your system planners are relying on you!; Retrieved from: https://www.cleanpower.com/2017/der-pv-teams-aid-system-planners/
13 How Duke Energy sped up payment processing by 90% with ePayments; Retrieved from: https://www.cleanpower.com/2017/epayments-speed-duke-payment-processing/