Can allowing curtailment speed up DER growth?
Distributed energy resources (DER) are rapidly becoming an essential part of the 21st-century grid. Last year Wood Mackenzie Power & Renewables forecast that in the United States, DER investments between 2020 and 2025 would exceed $110 billion, and total DER capacity would reach 387 gigawatts by mid-decade. Solar installations and electric vehicle infrastructure are expected to be big contributors to this growth.
But while the integration of non-emitting DER can help utilities achieve aggressive decarbonization goals, it can also increase grid congestion and present other challenges to grid reliability—including the need for expensive grid upgrades.
EPRI researchers are looking at how the process of connecting DER to the grid, known as interconnection, can be enhanced to integrate DER into grid operations and planning more quickly and cost-effectively while supporting reliability and power quality.
Historically, DER interconnections use fixed capacity agreements between DER owners and utilities. These require the grid always to absorb the total DER output exported, regardless of grid conditions. The downside to this approach is that as DER penetrations rise, their output could exceed a feeder’s hosting capacity, potentially leading to adverse grid impacts such as poor power quality, voltage fluctuations, and thermal overloads.
As a result, distribution grid operators conservatively consider DER interconnection requests by assuming worst-case grid conditions. The number of interconnections may be limited (or grid upgrades may be requested) to stay well below hosting capacity thresholds; this is sometimes referred to as maintaining ample headroom. While this approach supports grid reliability, it can also reduce the amount of DER connected to the grid, which can lower customer satisfaction and slow progress toward renewable energy targets.
As an alternative to fixed interconnection agreements, EPRI is investigating flexible agreements that enable grid operators to manage DER so that adverse grid impacts can be avoided and more DER can be more efficiently integrated into grid operations.
“Fixed capacity interconnection agreements can sometimes trigger expensive infrastructure upgrades, which can also slow down the integration of DER,” said Nadav Enbar, a program manager in EPRI’s DER integration program. “By defining rules for managing DER in certain circumstances to maintain grid reliability, flexible interconnection can allow for greater grid utilization and make it faster and cheaper to interconnect DER.”
While some utilities in Europe and Australia already use flexible interconnection, the approach is in its infancy in North America. Three EPRI white papers outline flexible interconnection principles. One examines rules for DER curtailment, another focuses on cost allocation mechanisms for grid upgrade costs and financial risk management, and a third examines the economic value of flexible interconnection.
The potential benefits of flexible interconnection include:
Reduced costs: By permitting DER curtailments in limited and precisely defined circumstances, flexible interconnection can help avoid expensive grid upgrades that might otherwise be needed to increase a feeder’s hosting capacity or add entirely new feeders.
Faster interconnection: While conventional interconnection may require studies and grid upgrades that take years to complete, flexible interconnection can defer or avoid these delays and serve as a temporary solution to add DER. “Let’s say a DER owner wants to get a project interconnected quickly but ultimately wants a fixed interconnection agreement,” said Enbar. “Flexible interconnection can be a way to start generating electricity on the grid while waiting for a grid upgrade to be completed.” Once the grid upgrade is complete, the flexible interconnection agreement would transition to a fixed agreement.
Increased network utilization and more renewable generation: Rapidly integrating non-emitting DER like rooftop solar using flexible interconnection can help achieve renewable energy policy objectives without making significant investments in grid infrastructure. Flexible interconnection can also help optimize the use of existing distribution grid assets by enabling more DER to be added to the grid than would be possible using fixed capacity agreements.
Rules of Curtailment
Grid operators benefit from flexible interconnection through the ability to limit DER output when there is a threat to reliability or power quality. For DER owners, it’s critical to have consistency and predictability about when curtailments take place and which DER are impacted. “The curtailment rules need to be clear,” said Enbar. “That includes the order in which distributed generators are curtailed and the degree to which they are curtailed.”
Most utilities are expected to use one of two approaches to curtailment rules:
- Last in, first-out (LIFO): DER that apply for interconnection first are curtailed last. According to Enbar, this approach gives developers more financial certainty but also makes it possible for them to game the rules by applying for interconnection long before they actually connect. This could be prevented by establishing a maximum period of time between interconnection application submission and grid connection or by basing the order of curtailment on connection dates.
- Pro-rata: In this approach, the grid operator curtails all DER in an area by the same proportion. For example, 10 DER could all have their output reduced by 10% to address a grid constraint. According to Enbar, this approach can potentially enable more DER to earn a viable financial return through power exports than the LIFO approach. The downside is that as DER penetration rises, the frequency of grid congestion and curtailments may grow, and DER owners may have less confidence in the financial viability of their projects. Possible solutions include limits on connected DER capacity or curtailment thresholds beyond which no additional DER can connect.
In another possible scenario, a group of DER owners with flexible interconnection agreements could decide to pay for a grid upgrade so that they can transition to fixed interconnection agreements without curtailments. However, this may lead to unfair allocation of grid upgrade costs if the upgrade enables other DER to interconnect without contributing to those costs.
In North America, these and other questions are beginning to gain traction as utilities start to consider flexible interconnection agreements and associated pilot programs. Enbar envisions flexible interconnection playing at least an intermediary role in helping to add DER to the grid.
“We’re not saying flexible interconnection should replace fixed capacity agreements,” he said. “But there are circumstances in which flexible interconnection can be a bridge before the economics of grid reinforcement becomes the least cost economic approach.”
EPRI is continuing to study flexible interconnection approaches in multiple ways. Current pursuits involve government as well as EPRI supplemental and base program research projects. For example, one initiative is developing a modeling methodology to assess flexibility over a wide range of system operating conditions. Another is exploring the technical and economic feasibility of actively managing solar resources to maximize energy production while minimizing the risk of violating system constraints. A third is quantifying the value of DER management systems for flexible DER interconnection.
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Artwork by David Foster