A Long Wait: Renewable Project Development in the US

A recent report by the Lawrence Berkeley National Laboratory (Berkeley Lab) revealed some interesting data on the interconnection queues of power plants in the United States. The report showed that a surprisingly small number of projects in the queues reached commercial operation, posing questions about the efficacy of the process and a call for a reform of the interconnection queue.

Let's take a look at some of the key data points in the report, with a particular focus on the solar project development, and the implications for the future of the renewable sector and nationwide sustainability and climate commitments in the US.

“Interconnection queue” is essentially a queue of energy projects submitted by project developers seeking interconnection to the grid. All projects are reviewed by the incumbent utilities and regional grid operators (ISOs). The study process is designed to estimate the cost and the timeframe for the required upgrades to interconnect the projects in the queue by assigning commensurate costs to the interconnecting project (owner). A project sponsor typically has an opportunity to withdraw the interconnection application if the study results are unfavorable.

The Berkeley Lab found that less than 24% of projects in the queues reached commercial operation with project completion rates even lower for wind at 19% and solar at 16%. What’s more, the length of time the projects are waiting in the queues before being built was up to 3.5 years.

Despite the low completion rates, the data provided a useful insight into the trends we are seeing in the proposed power plants. In particular, the rapid increase in the number of solar proposals entering the interconnection queues indicates a growing commercial interest. Wind and gas, on the other hand, are both decreasing.

There is also a growing interest in energy storage projects which have seen a dramatic increase over the last 5 years. The data show that 34% of all of the storage proposals in the queues are hybrid solar and storage.

Source: https://eta-publications.lbl.gov/sites/default/files/queued_up_may_2021.pdf 

Additionally, the distribution across regions shows a fairly consistent solar, as well as solar and storage capacity, with only 3 regions having more wind (West (non-ISO), NYISO and ISO-NE):

Source: https://eta-publications.lbl.gov/sites/default/files/queued_up_may_2021.pdf 

However, while this may be good news for solar in terms of interest and proposed investment, the staggeringly low number of projects reaching COD and the backlog of those still waiting in the queue is problematic for several reasons.

First, slowing the adoption of new and improved power sources potentially increases costs for both domestic and commercial electrical supplies. One study by the Americans for a Clean Energy Grid showed that a more comprehensive approach to building transmission to connect remote power resources to electricity load centers could decrease the average electric bill rate by more than one-third in some areas.

Second, the lower-cost proposed projects are often in rural areas so have the potential to improve economic development, not only seeing benefits from having a better supply, but also through job creation and local investment.

Third, the low rate of completion and a large backlog of solar and wind projects are prolonging the exposure to the harmful effects of fossil fuels. This, unfortunately, affects the most vulnerable and socially excluded communities.

Finally, many Fortune 500 companies have made bold commitments to reduce pollution and scale up their transition to renewable energy. However, without the necessary infrastructure that these projects would provide, they may have difficulty meeting their climate targets.

This had led to many questioning the process and a call to the Federal Energy Regulatory Commission (FERC) to reform the interconnection queue process.

"A robust transmission system simply cannot be planned and paid for one interconnection at a time; rather we need a holistic, long-range planning process that optimizes transmission spending to meet economic, reliability, public policy, and interconnection goals, and spreads the costs of upgrading the grid to all beneficiaries." (Amy Farrell, Senior Vice President for Government and Public Affairs for the American Clean Power Association, 2021).

The report from the Berkley Lab shows that the demand and the capacity for solar energy across the United States are at a tipping point. However, the rate at which renewable energy projects are built is dependent upon a process that needs vast improvement.

Interconnection queues require a type of reform that both speeds up approvals and prioritizes renewables. Should this reform happen quickly, it has the potential to have a big impact on the country's climate goals as well as aiding economic development in some of the areas that need it the most.