Interconnection: 3 Things Renewable Developers Should Know
11 January, 2018 | Blog
If you’ve been hibernating for the last two years, you’re waking up to a shockingly different renewable price environment. In your mind, PPAs for wind energy under $40/MWh in North America were forecasted for 2030 and beyond. I understand your confusion.
If you want your renewable projects that are currently under development to stand a chance in this new era, you must master all aspects of your project development process and consider the interconnection aspects right from the origination. The key mindsets are: be frugal, be strategic and be shrewd.
Interconnection is now considered by developers’ community to be as important as resources, financing and social and environmental licensing.
Be frugal: Don’t throw your development budget down the drain
Make sure to include a high-level interconnection screening study in your first iteration of development. The last thing you want to do is commit a significant amount of your development budget to a fatally flawed project.
The recommendation is to consult an experienced power system expert first and involve a regulatory consultant only after a successful first screening. This way, you’re reducing the chances of costly mistakes (time and money), like starting your interconnection application process on the wrong transmission circuit or the wrong voltage level.
Be strategic : The right capacity in the right spot
In the context of a public RFP, you must obviously comply with the rules of a pre-set game. You may be tempted to install the largest possible capacity based on the land you’ve been able to secure so you can maximize the economy of scale. That’s a fair approach. However, the grid capacity may force you to go in a different direction, and network upgrade costs could compromise the viability of your project.
The suggested approach is to identify all interconnection options (transmission and distribution) and to assess each available capacity. Once done, you can compare projects within your portfolio and play your best card. If you have the latitude to do so, you can then decide to put forward other projects or loftier options from your initial case, knowing that you’re exceeding the available capacity in the area. This way, you have better control over your development portfolio and can take calculated risks during bids.
Be shrewd: Think like the utility
Let’s be fair and assume that utilities are generally not sharing a great deal of information on how they perceive your projects or their impact on the grid’s operations. We all know too well how frustrating it is to have all our communications channels with the utility cut off the minute an RFP is launched, leaving us with half–answered questions and only your instincts to rely on.
One way to gain more confidence and mitigate project risks is to call upon a power system expert with system planning experience. You may think it’s too early to do so and that it will cost a fortune. My answer is simple: a real power system expert will compare your interconnection options in no time, since his or her brain is conditioned to think like the utility.
So, being frugal, strategic and shrewd in this new era might not be so complicated after all…
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