Flexible interconnection with curtailed output can benefit everyone, analyst says

Duke Energy Progress has announced network upgrade costs of $470 million to interconnect about 1.9 GW of solar and solar-plus-storage projects in North Carolina and South Carolina that were proposed in response to its 2023 resource solicitation, with an average lead time until interconnection of 4.5 years.

A “significant” portion of the identified upgrades could be avoided “with minimal or zero impact to reliability” if a more flexible interconnection service that provided for occasional curtailment of solar generation could be used, said Tyler Norris, a Duke University Ph.D. candidate and former Cypress Creek Renewables executive, at a meeting of the Southeastern Association of Regulatory Utility Commissioners.

Under flexible interconnection, a project would be required to curtail its output when transmission is congested.

Norris said North Carolina does not currently allow flexible interconnection for state-jurisdictional projects. Yet he said flexible interconnection would yield benefits for solar developers, ratepayers, and utility staff.

Speed of interconnection is one benefit. Norris noted that Texas, where the grid operator ERCOT allows a form of flexible interconnection, has quickly added solar in recent years. Although North Carolina ranked second in utility-scale solar deployment in 2019, Texas “sort of blew past us, they blew past Florida, and now they’ve surpassed California as well.”

ERCOT’s approach to flexible interconnection, known as “connect and manage,” suits the grid operator’s energy-only electricity market, Norris has previously written, and could be adapted for use elsewhere in the U.S. where electricity markets have a capacity market alongside an energy market.

Norris said the Duke utility’s expected network upgrade costs for the 1.9 GW of projects follow an approval by the North Carolina Utilities Commission for about $600 million in network upgrades “which was precisely intended to integrate more utility-scale solar and solar-plus-storage.”

North Carolina does not permit flexible interconnection, Norris said. So the utility’s cost study did not consider the “ability to curtail those resources in real time during peaks” as a way to avoid the upgrades. Many large network upgrades that are allocated to projects in interconnection studies “may be triggered due to rare or even extremely rare contingencies,” he said.

“This isn’t to pick on Duke by any means,” he said. “I think they’re doing a great job on a lot of fronts.”

Norris plans to work with team members at Duke University to analyze the network upgrade costs for the 1.9 GW of solar and solar-plus-storage projects under a scenario in which energy-only interconnection was allowed.

Avoiding network upgrade costs through flexible interconnection would ultimately help ratepayers, Norris said. “All these costs end up going to the ratepayers. We assign them to the projects, but either it shows up for the ratepayers in the form of a higher power purchasing agreement (PPA) price, or in the form of going directly into the rate base.”

Flexible interconnection could reduce the burden on a utility too, Norris said. “We already have a lot of other transmission and network upgrades going on for other reasons,” he said, and “layering more and more” upgrades for particular projects puts “more burden on already strained utility construction teams and planning teams.”

More generally, Norris said that “we’ve already invested a huge amount” in the existing transmission network, and that “if we can get more generators on the system that don’t require more and more network upgrades, we’re making more efficient use of that expenditure we’ve already made.”

Norris noted that in the U.S. Department of Energy’s recent interconnection roadmap, “one of the key themes that came out of it was offering fast track and more flexible interconnection options as a priority solution.”

Norris expects that a Federal Energy Regulatory Commission interconnection workshop set for September 10-11 will address issues related to flexible interconnection.