Impact on Renewable Energy Costs
Rising Costs and Delays
- Interconnection Costs: The costs associated with connecting renewable energy projects to the power grid have increased significantly. For both PJM and MISO, these costs have doubled in recent years, further impeding project development.
- Withdrawals Due to Cost: High interconnection costs cause many renewable energy projects to withdraw from interconnection queues. Projects that are withdrawn often face much higher costs than those that complete the process.
Concurrency and Competition
- Congested Queues: The rapid growth of renewable energy has led to congested interconnection queues, with over 3,000 GW of projects worldwide, including a substantial portion in the U.S. This congestion leads to longer wait times and increased costs.
- Speculative Requests: Speculative connection requests from projects not yet ready to proceed clog the queues, further increasing wait times and costs for projects that are ready to move forward.
Financial and Development Impacts
- Investment Limitations: The uncertainty and increased costs associated with interconnection queues have led investors to prefer “low-risk” projects that have already secured interconnection agreements. This limits investment in new renewable energy projects.
- Incentives and Solutions: The Investment Tax Credit (ITC) can help alleviate some interconnection costs by allowing its application to grid infrastructure and network upgrades. This can potentially enable more projects to proceed by mitigating the financial burden of high interconnection costs.
Overall, the backlogs and rising costs in interconnection queues pose significant challenges to achieving clean energy goals by increasing financial risk and delaying project implementation.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-interconnection-queues-impact-the-cost-of-developing-renewable-energy-projects/
