Getting started – the interconnection process
During a typical installation of any distributed energy resource throughout the U.S., an interconnection application (detailing specifications of the systems being installed) must be submitted to the local utility. This applies to both large-scale and residential facilities, including solar power systems (which are classified as generators). The utility uses this information to verify that quality standards and interconnection requirements are met, to ensure proper operation of the resource on the power grid. This engineering review process also guarantees that the generator will be able to synchronize in frequency, total harmonic distortion (THD), and voltage with applicable grid standards.
After the application is submitted by the installer, the utility provides data on the interconnection point and assigns it to the developer. However, if the system being installed exceeds the capacity of the electrical infrastructure (transformers, power cables, protection devices), then the power utility must identify any updates that are needed, along with the inherent costs involved. Once all of these aspects are evaluated, an interconnection agreement is signed between the two parties. Then, once the system is installed, the utility performs an inspection and grants permission to operate.
The unique feature of energy storage: A bi-directional flow
Energy storage systems, however, are classified in a gray area: unlike grid-tied rooftop solar, they can act as both generators and loads (from a power grid point of view), therefore necessitating specific standards and requirements for grid interconnection.
While some utilities include energy storage systems as part of the generation criteria, others have classified them depending on their “net output.” This leaves room for ambiguity between utilities - even within the same state - and creates uncertainty for both installers and customers. Without a clear common ground, roadblocks may interfere with project financing, leading to delays and higher costs for developers and customers.
How does the lack of a common interconnection rule affect customers and installers?
The inherent nature of energy storage systems can occasionally become an issue during the interconnection process, especially in cases where it is not classified under “generator.” As stated in the IREC Charging Ahead Energy Storage Guide for Policymakers, classifying energy storage systems merely as a generating source implies that the maximum power output is available 24 hours a day. This assumption is false, since the system needs to charge (load) during low-rate periods, and only acts as a generator (discharging) during high electricity rate periods. Consequently, the utility may mandate upgrades to interconnect an energy storage system project, which can increase the cost of the installation. This results in an oversizing of the distribution connection, and a power capacity that is never actually used.
To address this problem, utilities must offer an opportunity for the customer to specify how and when they will operate their energy storage system (unrestricted, export only, import only, or no exchange). The utility can then use this information to address the operational constraints in the interconnection agreement. Solutions like this help balance reliability and safety concerns for the utility, while offering lower-cost options for customers, and encouraging the energy-efficient use of clean and resilient energy storage systems.
Due to the disparity in allocation costs for generators and loads, the load behavior period can become another source of conflict between installer and utility. With loads, some costs associated with interconnection are covered by the rate base. Conversely, the entire cost of interconnection for generators must be provided by the generator that wishes to interconnect. This creates a substantial difference in cost allocation that could hinder the development of installations, and negatively impact the sales that energy storage system installers can generate. Therefore, regulators must specify how these cost allocation rules will apply for energy storage systems, especially when grid-related upgrades are needed for the charging and discharging processes.
Addressing all of these issues, which can differ from one utility to the next, is time-consuming, problematic, and often costly for the installer. For customers, especially in the commercial sector, the lack of clarity and definition for their systems can result in added time and costs, as well. In the end, the overall storage industry suffers.
An alternative solution to interconnection issues: uniformity and acknowledgement
Energy storage customers and developers need a transparent process that is cost effective and time efficient. The only solution is to create common ground for all utilities related to energy storage systems by implementing statewide interconnection rules. California has long led the way as one of the few states with an energy storage incentive program, astorage procurement mandate, and statewide interconnection rules (Rule 21) established by the Public Utilities Commission. This program analyzes requests under a revised process to interconnect behind-the-meter and non-exporting systems.
California’s interconnection rules already classify energy storage systems under the definition of a generator, and specify that the system’s load aspect would not be treated differently from other load increases of regular appliances. Other states such as North Carolina, South Carolina, Minnesota, Iowa, Arizona, Nevada, and the District of Columbia have also taken similar measures to provide further clarity.
States can follow guidelines developed by the Interstate Renewable Energy Council (IREC), recently updated in the 2019 IREC Model Interconnection Procedures, to establish statewide interconnection rules applicable for all utilities. These rules specify and distinguish energy storage systems from generation or load categories. Only by following these patterns can we ensure that energy storage system installations continue to grow in the US.
Aric Saunders is the Executive Vice President of Sales and Marketing at Electriq Power, a Northern California-based supplier of a lithium-ion smart home energy storage solution.
Electriq Power | electriqpower.com