New Approaches to Distributed Photovoltaic Interconnection: Addressing Emerging Issues

The NREL technical report, New Approaches to Distributed Photovoltaic (PV) Interconnection: Addressing Emerging Issues, highlights the important features of interconnection that call for regulators' attention.

Technical Report

New Approaches to Distributed PV Interconnection: Addressing Emerging Issues (McAllister et al. 2019)
This is a summary document based on the report that describes the emerging issues and various approaches being explored by the states to address these issues as distributed resources continue to grow.

Declining costs have led to rapid adoption of PV and distributed energy resources (DERs), which now require regulators to develop innovative policies and explore new approaches in evaluating almost all aspects of grid interconnection.

Topics Covered

This report examines the issues in each of the following areas to facilitate the sharing of lessons learned and best practices across jurisdictions:

  • Cost certainty
  • Cost allocation
  • Storage interconnection
  • Hosting capacity analysis
  • Locational value
  • Advanced inverters
  • Process automation.

Key Takeaways

Cost Certainty

Many states have expressed concern over cost certainty policies of interconnection. The current uncertainty poses the challenge for customers to assess the economic viability of a project. States are exploring multiple variants of cost envelope and fixed costs strategies. A fundamental challenge is the inevitable tradeoff between utilities’ difficulty in estimating costs accurately and customers’ cost uncertainty.

However, hosting capacity maps and site visits can provide useful information to determine the need for upgrades and refine cost estimates. A standardized cost guide (as provided by California IOUs) can provide reasonable estimates of costs and help somewhat reduce uncertainty. Tracking the variance (Minnesota PUC) to resolve dispute between developer and utility can also help ensure that the actual costs do not diverge excessively from the estimated costs.

Cost Allocation

Along with improving cost certainty, it is imperative for regulators to develop fair and equitable cost allocation plans. The “cost causer pays” principle may not be an equitable approach because of the “free rider” problem. Till date, states are evaluating multiple alternatives with varied risk factors. However, best practice guidelines for cost allocation has yet to be developed. The report discusses pros and cons of group allocation strategies, reimbursement approach, and utility approaches such as line extension policies and transmission upgrades cost allocation. Additionally, in order to mitigate repayment risks, delay in processing and reallocating costs, regulators need to design a mechanism wherein projects have no incentive to drop out of group allocations.

Storage Interconnection

As storage and PV coupled with storage is increasingly deployed, regulators’ guidance is required to develop clear methods to review interconnection requests and standardize the process through state interconnection rules. As storage can act as load and generator, their impact evaluation could be complex. Some states are addressing this by restricted system operation, incentivized charging behavior, and qualifying non-exporting systems for expedited review process. Further, certain states recognize the possibility of inadvertent export from non-exporting systems in their interconnection rules. Where PV received NEM compensation, regulators need to develop a mechanism to provide credits only for the PV generated electricity exported to the grid.

Hosting Capacity Analysis

Many states and utilities have realized that Hosting Capacity Analysis (HCA) can significantly help in addressing multiple issues in the interconnection processes. It must be noted that hosting capacity can be performed at various spatial levels (substation, feeder, and local nodes) depending on the intended use. The Interstate Renewable Energy Council outlines several HCA best practices including defining use cases, model validation, and transparency and consistency across regions. Regulators need to also keep in mind the current and expected level of DER penetration, cost consideration, and data security while expending efforts to perform HCA.

Locational Value

As DER penetration increases, locational value can play a significant role in strategically driving new DERs deployment in preferred locations through tariffs, procurement process, and targeted community programs or simply defer grid upgrades at distribution and transmission levels. California is performing locational net benefit analysis, where distribution system infrastructure upgrades can be deferred by deploying DERs if net benefit is derived. This is a better guide to DER deployment than HCA. New York, on the other hand, is incorporating the locational benefits to NEM tariff computation. Quantification of locational value is still in its nascent stage, but the methods continue to be refined.

Advanced Inverters

DER interconnection is mostly governed by the IEEE Standard 1547 in most jurisdictions. With the revised standard IEEE 1547-2018 published, regulators updating to this revision need to ensure the deployment of advanced inverters (with capabilities that could enhance grid reliability by addressing the issues related to high DER penetration) in order to be compliant with the revised standard. This also means that the components need to be compliant with the UL 1741 product certification standard. In addition, the report describes the status of various jurisdictions in evaluating the benefits of advanced inverters and the outlay of replacement or retrofitting.

Process Automation

This report provides an overview of the process improvements in terms of automating interconnection request applications in order to streamline the process across multiple utilities. For smaller utilities where it does not make financial sense to automate the process, alternate methods such as fillable PDF application, email submissions, and electronic payment might help in managing the data as well as expedite the review process.