Each generator was also responsible for funding the full cost of upgrades to the transmission system needed to accommodate its facility. This mechanism was well suited to a relatively limited number of large, expensive conventional generators.
System buckles under weight of applications
As renewable generation has expanded, the system has buckled under the weight of applications from a multitude of smaller, largely renewable, projects, the bulk of which are never completed.
For example, PJM Interconnection, L.L.C., the independent grid operator in the mid-Atlantic region and a portion of the Midwest, has seen requests for generator interconnections triple over the past three years. There are now 2,700 projects (more than 250GW) in the queue, with generators facing multi-year delays to enter the network.
Moreover, the allocation of upgrade costs has become increasingly uncertain. Project developers often jockey to take advantage of available transmission system capacity, with those just behind them in the queue potentially saddled with the costs of large upgrades that benefit multiple parties.
Cost uncertainty causes developers to withdraw
The unpredictability of costs compounds the problem, with projects pulling out of the queue. This leads to re-studies for all lower-queued projects, a reallocation of costs and further withdrawals.
Another issue is that joining, and remaining in, the interconnection queue is relatively inexpensive, resulting in some developers submitting multiple speculative projects, some or all of which will never enter operation.
Several grid operators in the U.S. have already made changes to their respective interconnection processes by adopting a first-ready/first-served model and a cluster study process. Under this regime, all of the interconnection applications submitted within a certain period, referred to as a “cluster”, are studied as a group.
Transmission system upgrade costs are allocated among members of the cluster based on their proportional impact of the proposed interconnections on the system.