(November 2008)Economic uncertainties are raising doubts over utility returns. Will regulators feel the need to consider broader economic effects when engaging in ratemaking? While...
The Queue Quandary
Why developers today are often kept waiting to get projects ok’d to connect to the grid.
the group, generators will limit their planned output artificially, or else accept “work-around” solutions that avoid any need for a required upgrade identified in an engineering study, rather than undertake the identified upgrade. The group adds, “the fact that the entire analysis can be upset by the decision of a single generator to withdraw, once it receives its cost estimate, makes the exercise wasteful and inefficient.”
Full agreement comes from Brightsource Energy, the West Coast solar developer, in the words of Joshua Bar-Lev, the company’s vice president for regulatory affairs.
Bar-Lev told FERC at the December conference that “the actual transmission upgrades needed to interconnect projects should be planned through a regional transmission planning process so there’s no difference between the developers and the utilities.”
Renewable project developers like to cite ERCOT and the state of Texas as an example of this idea.
In early October 2007, the Texas PUC issued an interim final order that designated five so-called CREZ areas (Competitive Renewable Energy Zones) in West Texas and the Texas Panhandle to help plan for new grid capacity to foster development of wind energy and other renewable resources to help the state achieve its mandates and goals for alternative energy. The order helps carry out the policy initiated in Senate Bill 20, enacted by the state legislature in its 2005 session. The Texas policy anticipated what the wind energy developers have been saying in FERC’s queue initiative — that the best way to interconnect new renewable gen projects to the grid is to start from the top down and use a full, region-wide assessment and planning of transmission requirements. First, one identifies and pinpoints renewable resource potential, then plans the new grid capacity required to support those resources. Only then do individual projects come forward with new interconnection requests, when the studies need only ratify the grid capacity assessments already built in to the process.
California now has chosen to emulate the Texas CREZ model. Under California’s recently formed Renewable Energy Transmission Initiative (known as RETI, see www.energy.ca.gov/reti), the state’s Energy Commission and PUC eventually will designate CREZ-like areas. (See Comments of AWEA, including Appendix on state and regional initiatives to develop transmission for renewable energy, FERC Docket No. AD08-2, filed Jan. 10, 2008.)
Meanwhile, FERC already has approved a recent move by the California ISO to expand and refine its existing LCRIF tariff, first sanctioned in April 2007, and designed to provide financial incentives for the construction of new grid facilities to help develop and deliver renewable resources. (See Docket No. ER08-140, order issued Dec. 21, 2007, 121 FERC ¶61,286.)
The program allows CAISO PTOs (participating transmission owners) to boost their transmission revenue requirements and rates to pay for grid upgrades for so-called Location-Constrained Renewable Interconnection Facilities, rather than force upfront funding for all such upgrade costs on renewable project developers.
No CREZ-like initiative appears underway in the Midwest, however, where FERC’s basic LGIA process still holds sway, with its apparently duplicative and inefficient grid planning methods.
Of that regime, with its problematic interconnection queue, Bar-Lev says: