California making it easier to connect renewables to grid

In a move that could have national implications, the California Independent System Operator (California ISO) has filed with its regulator for approval of a new financing model to make it easier for clean energy companies to connect to the grid.

The ISO wants the Federal Energy Regulatory Commission (FERC) to approve a financing plan that would lower the up-front costs required today from energy producers for transmission lines.

If the new payment mechanism is approved and implemented, it would be a first-of-its-kind removal of a huge financial barrier that has hindered development of wind, solar, geothermal and other renewable energy resources across the country, the ISO said.

Unlike natural gas-fired power plants that can usually be built relatively close to existing high-voltage facilities, renewable generation is often built in remote areas. "Wind turbines, large solar power plants and geothermal resources all need to be built close to their natural fuel sources," said California ISO President and CEO Yakout Mansour.

"We don’t have a choice as to where these natural resources are located," said Rich Ferguson research director for the Center for Energy Efficiency and Renewable Technologies. "If we’re going to use these assets to offset less environmentally friendly types of power generation, we need to be able to build the transmission lines that reach those remote locations."

Currently, [ed.: pun intended!] transmission lines that connect one new generator to the grid, known as "gen ties", are paid for by the generation project developer. The transmission investment is recovered via the California ISO’s Transmission Access Charge (TAC).

However, this model is not a good fit for remotely-located, renewable generation. For example, an individual generation development company may not be able to pay, on its own, for a long-distance, high-capacity, high-voltage line needed to deliver power from their project.

"Renewable companies are typically smaller companies, and they have a hard time raising the financing to build these lines," Stephanie McCorkle, director of communications for the California ISO, told the Cleantech Group.

"We've seen some of these transmission lines being built piecemeal fashion, and that's not economical or efficient, or, in some cases, aesthetically pleasing."

The California ISO proposal calls for the initial costs of multi-user resource trunkline transmission projects to be paid by the transmission owners and recouped through the TAC. As generators connect to the new trunkline they will pay a pro-rated share of the costs based on their generating capacity.

"Under this arrangement, the utilities will pay the up front cost of the transmission lines. Then the generators [i.e. the renewable energy companies] will pay the utilities back," said McCorkle.

Under this method, renewable generation developers would begin paying their fair share for efficiently sized transmission after their generation begins operating, as opposed to shouldering the costs up front.

"In Southern California, there's thousands of megawatts of wind waiting to be built if it could only be connected to the grid," said McCorkle.

FERC is expected to take a few months to decide on California's request. The ISO said it hopes for a "warm reception", given that most of the other U.S. states are following its lead and are also very interested in FERC's decision.

The California ISO is a not-for-profit public benefit corporation charged with managing the flow of electricity along California’s open-market wholesale power grid.  

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