Bizarre interconnection payment requirements stymie the growth of distributed energy resources (DERs) in many states. Clean energy advocates in Virginia say they may have a solution: a DER tariff.
Now awaiting action before the Virginia State Corporation Commission, the concept tries to resolve what’s known as the “last man standing” practice, which can heap massive costs on one developer. This happens when DER projects use up all of the hosting capacity at a location on a utility’s distribution grid, requiring physical upgrades to poles, wires, substations and software before any other projects can interconnect.
In Virginia and other states, the utility customarily charges all of the upgrade costs to the next project in line — the one that triggered the need — even though those that interconnected earlier caused the problem and those that interconnect later will benefit from the upgrade.
Under the Virginia DER tariff proposal, utilities would levy a small charge on all DER producers to cover the upgrade with the intent of keeping costs equitable and low for interconnection — an approach that has yet to be tried in other states.
“No one would be faced with a million-dollar interconnection requirement,” said Josephus Allmond, staff attorney at the Southern Environmental Law Center.
A DER tariff could be trued up regularly within a public rate proceeding, offering a transparent look at utility costs.
What about cluster studies?
Virginia state policy calls for enabling widespread use of rooftop solar, community solar storage and other DERs as part of an effort to produce 30% of Virginia’s electricity from renewable energy sources by 2030. To that end, the commission launched a series of discussions more than two years ago to deal with problems faced by DER developers.
Because the issues thwarting DERs are so complex, the commission is tackling them through multiple proceedings and studies.
In addition to looking at the DER tariff, the commission is exploring how to make the interconnection process quicker.
To that end, Dominion Energy is developing a pilot program to explore the use of cluster studies.
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Before gaining permission to interconnect, DER projects must undertake a study to determine their impact on the grid and others using it. Rather than each small DER project (under 3 MW) undertaking its own interconnection study, the Dominion plans to cluster projects into one study.
Cluster studies are used in other states with mixed results. One complaint among developers is that if one applicant drops out somewhere in the process, the study needs to be redone because it changes the group’s impact on the grid. To avoid this problem, Dominion plans to limit participation in a cluster study to one developer with multiple projects.
Who pays for dark fiber?
Another issue that has attracted a lot of concern in Virginia among DER developers involves what’s known as dark fiber or direct transfer trip (DTT). Dominion uses dark fiber as a safety measure to quickly isolate faults on its system. The utility has required that DER projects pay for its installation if the project triggers a certain load ratio on a circuit — a costly undertaking.
The Virginia Distributed Solar Alliance (VA-DSA), a group of solar developers and advocates for non-residential projects, filed an injunction last year calling for the commission to halt the practice.
The commission attempted to resolve the problem by allowing use of less expensive cellular equipment that provides the same safety measures. But VA-DSA filed another injunction in August, arguing that since then, Dominion has imposed “greater equipment requirements and costs than approved by the ruling, burdening net metering customers with excessive delays and costly studies.”
The group argued that the utility hasn’t proven that the equipment is needed for safety and the expense is causing “Virginia schools and local governments to abandon or sharply curtail their efforts to adopt DER as a means to save taxpayer money.”
For mid-size projects — such as solar on a school — costs can run as high as $450,000, said VA-DSA in an August filing to the commission.
The commission ruled against VA-DSA’s petition but continues to look at the issue in an ongoing docket.
What’s next for the DER tariff idea?
Advocates are waiting for the commission to establish a rulemaking on the DER tariff to flush out details and decide if the state should move forward on the idea. Allmond said he’s seen support from both DER developers and utilities.
“There’s going to be work and talking to the folks involved — the utilities and developers — and seeing how we can tweak it to really make it work for them,” Allmond said. “It would be very cool if Virginia was the first to enter that paradigm shift in how we’re treating these resources and how we’re allocating costs for interconnection upgrades.”
See related story, Unfair Charges to Distributed Energy Projects for Grid Modernization, about a different approach to solving the “last man standing” issue being pursued in Massachusetts.
