Is Solar Permitting Stacked against the Little Guy?

by James A. Bacon

The Van Kesteren family, owner of  Van Kesteren Farms in Accomack County, wants to build solar panels on 180 acres as a way to supplement the income from its farming operations. But the price tag for connecting to the regional grid is posing a major barrier.

The estimate for connecting to the Eastern Shore electric grid has increased from $3-4 million in March 2017 to $26.5 million today, according to an article in Energy News Network. The article focuses mainly on the Van Kesteren family’s thwarted ambitions, as made clear by the sub-head: “An Eastern Shore farming family is frustrated that its solar project is at the mercy of the local utility and grid operator.”

But the story illustrates a broader story regarding a critical and often overlooked aspect of solar-power economics: how some proposed locations for solar farms can be rendered uncompetitive by high interconnection costs.

Hog Island sheep

The Van Kesterens are fourth-generation farmers. Once they grew garden crops such as spinach. That business tapered off, however, and the family now leases 900 of its 2,200 acres to other farmers. But after seeing how solar panels and sheep coexist in a North Carolina farm, family members thought they could replicate the synergy in Accomack: Sheep eat the grass, saving on mowing expenses, and the animals can seek shade under the panels.

“It’s not rocket science,” said Dennis Nordstrom, a Kesteren in-law, about maintaining a flock of 200 or so heirloom Hog Island sheep. “We would have a paddock, fencing and a gate so we can let them in and out. What’s great about sheep is that they don’t go around gnawing on electrical wires.” The family set up a company, SunTec, to convert farmland into a solar farm, and filed for a permit in 2016. The initial interconnection cost estimate was encouraging, but the more recent, $26.5 million interconnection estimate is a deal killer.

“Our little project cannot afford that type of cost,” Nordstrom said. “It would have doubled our capital costs. … [The original] $4 million was a number we could handle. We understand the need to pay for a direct connection to the grid, but the system upgrade costs are crippling. … We felt like this is stacked against the little guy because utilities are not willing to invest in infrastructure.”

The prospects for developing solar energy on the Eastern Shore seemed bright in 2016 when Dominion Energy purchased an 80-megawatt, 300,000-panel solar facility to supply green energy for Amazon. Around the same time Hecate Energy LLC, an out-of-state company, received a permit to build a 20-megawatt solar farm in Northampton County. Dominion also purchased that project.

The Van Kesterens also filed for their permit in 2016. Since then, however, the estimated cost for them to connect to the grid has soared. Energy News Network provides this partial explanation from David Murray, a solar industry trade executive: “Solar developers in the mid-Atlantic region are at the mercy of the utility and PJM.” Transmission capacity varies so widely, he said, that developers usually have to seek multiple sites before locating one that meshes with utilities’ needs.

One issue is transmission-line “congestion” — when the flow of electricity overwhelms the capacity of the transmission line to carry it. PJM, which is in charge of planning the transmission lines extending from Virginia and the Mid-Atlantic to the Midwest, requires electric power generators to assume the cost of grid upgrades so as to mitigate the impact on electricity consumers. As it happens, the flow of power north from the Eastern Shore into Delaware is highly congested, creating a transmission bottleneck. How, precisely, that would affect PJM’s permitting of SunTec’s permit application is not clear from the article.

Nor does the article say what Dominion and Hecate paid for interconnection fees, or explain why the fees increased so dramatically over the course of three years. Dominion and Hecate might have been advantaged by the fact that they were “in line” first for the permits, and the grid could accommodate their electricity as their solar farms went live. As the third in line, the Van Kesterens might have encountered more “congestion,” which would have required more upgrades. But that’s pure conjecture on my part.

What is clear is that the economics of solar-farm siting are not well understood by the general public, journalists and bloggers covering the energy industry (including me), and perhaps even small-project developers themselves. Energy News Network quotes Nordstrom as saying the permitting process is so uncertain and lengthy that it would “give anyone pause as to whether to continue to invest in projects knowing that the results of earlier studies could be so wrong.”

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15 responses to “Is Solar Permitting Stacked against the Little Guy?”

  1. LarrytheG Avatar

    More than a few things not clear. Who was getting the 26.5 million and what would it be spent on?

    The article seems to imply that there is a finite limit to how many “interconnections” there can be at a given regional location… sorta like if you build one big solar farm in Spotsylvania or Culpeper that there is no room for anymore unless they “upgrade”.

    If that’s true – (and it may not be since its pure speculation) – then all these fears about “too much” solar are totally overblown.

    The idea of combining both agriculture WITH solar as opposed to solar REPLACING agriculture also need some further discussion because to this point the anti-solar folks have been portraying solar as destructive of farm land and it appears that’s not the case.

    1. Larry, the size of the proposed “injection” of power into the grid is the key. Every location on the grid is different. As I discuss a little below, it’s first come, first served as far as the existing injection capability into the grid is concerned. How much it’s going to cost to upgrade the grid to accommodate a new solar plant can vary from zero (really!) all the way to $ millions, depending on what is required. As you may have guessed, there is not much impact if the amount of solar power generated is less than the amount of local load served out of the same substation the plant connects to — because that power doesn’t even have to travel out on the transmission grid, it merely reduces what is already coming in from the grid. That’s why distributed solar can be added to the grid even when larger solar plants can’t be. Now if you’re in a lightly-populated rural area where the total load out of a substation is 4 megawatts and you want to add a 40 megawatt solar generator, you may have an expensive transmission problem to fix. Then again, if the total load out of a (much higher voltage) substation (like the one in Spotsylvania) is 1200 megawatts but the substation and incoming transmission can handle 2500 megawatts, maybe the grid can accommodate the full injection from a 500 megawatt solar plant without a hitch.

      I agree with you, solar and agriculture are compatible uses (assuming, of course, the grid can allow the solar connection). Solar power does not pollute the soil or the air, it requires little support infrastructure, you can plant right next to it. It’s not dangerous to neighbors, or noisy (except for the dc/ac inverter which can be sound-proofed); and it’s relatively easy to pull up the connector frames and remove everything if you want to revert the land back to agriculture. Solar provides a nice income stream to the farmer, one that is steady and predictable — whether the farmer builds the solar collectors and sells the power to the grid himself or he rents his land to a third party solar developer (usually it’s the latter); I’m told the rental price in Tidewater at a good location (i.e., with good grid access) runs somewhere around $800/acre/year which is pretty good compared to the alternatives. I’d rather keep the farms going, with solar in a few fields, than see them all sold off and built up as housing developments.

  2. vaconsumeradvocate Avatar

    Solar is not destructive to farm land. Solar means landowners get ongoing income and can later repurpose the land – neither of which happen with pipelines! Give me solar on my land in a heartbeat – but it’s not my choice to make. Dominion got to decide everything and ignore my interests in every way.

    The bottom line for Virginia is that the deck is stacked against non-utility entities and the smaller the business/family the harder it is to make any money from solar. Our system, designed by and for the utilities, disadvantages real renewable generation.

    Further, utilities have the majority influence at PJM so even though studies fully support more renewables, PJM doesn’t help the little entity provide renewables. Today there is a report out that Virginians would save almost $50 if there were more wind and solar. Problem is, stockholders wouldn’t make as much. The system is very complex.

  3. LarrytheG Avatar

    The thing is that in Spotsylvania – S-Power is building an approved 500-Megawatt (MWac) solar project on approximately 3,500 acres and there are other solar projects approved in Virginia so apparently PJM was okay with them.

    One does wonder how much the “interconnection” fee was for the S-Power project because they were able to proffers several million to the country and it was still profitable…

    Okay… so if I had a farm with it’s own substantial electricity needs why wouldn’t solar just for the farm not be worth it? Why would, for instance, a solar farm for a new residential development not be “worth” it? Why do they have to be hooked up to the grid to be “worth” it?

    1. I’m speculating here, but…. The A&N transmission line, geared to local needs, is probably low capacity. It doesn’t take much to stress the system. By contrast, I’m willing to wager, the Spotsylvania mega-solar farm is located in close proximity to a high-capacity transmission line — only modest upgrades required. Again, that’s just a guess.

      1. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        Either way and no matter what, solar is gonna cost somebody boatloads of money.

        Here’s a tickler from one of today’s Wattsupwiththat:

        “Understanding the Climate Movement Part 3: Follow the Money by Guest Blogger Dr Paul Rossiter.

        Following my earlier two essays that looked at the new grand narrative of the green/left and the corruption of the cause, I now turn to the main engine driving the climate movement from day to day: the money. I became quite despondent while putting this together as I started […]”

        More more stomach churning details see:

      2. LarrytheG Avatar

        It sounds a little like each transmission line has a certain capacity and once it is maxed – nothing more can be added to it unless there is additional equipment or addition lines, etc.

        that would make sense but it also means when those lines are built originally there is some kind of design estimate to allow future “growth” because it’s not only new generation to hook up but how much power is being currently delivered to existing demand.

        1. How much extra capacity is planned is an economic judgment call. It’s somewhat similar to judging how much of an addition to build for an existing growing business: do you build a big addition then let it sit there mostly empty for years until you grow into it; or do you build in smaller increments? Individually the small increments add up to more cost, but the total spent may be less taking into account the time value of money.

          You mention simply “demand” but there is both demand for delivery (to retail customers) and demand for injection (by generators). An important point, still hotly debated: how much independent-generator interconnection capacity should be be built into expansions of the transmission grid? Or to put it another way, are generation developers (independent or not) “customers” whom the utility and grid operator should (and legally must) plan the grid to accommodate, the same as retail consumers? PJM and FERC say, “Yes, new generators are customers too” despite the fact that some transmission owners who also compete in the grid markets as generation owners wish it weren’t so. PJM insists that the transmission owners take the generator interconnection “queues” across the grid into account in planning grid improvements. Protecting independent generators’ right to market entry is one reason FERC created the “independent system operators” (ISOs) of the grid.

    2. Larry, you ask, “Why do they have to be hooked up to the grid to be “worth” it?” As you know very well, somebody has to pay for the infrastructure that comprises the grid. Since solar doesn’t produce power in the evening when most homes have their maximum consumption, the grid, which has to be sized to take care of the maximum load, cannot be significantly reduced in size simply because there is solar generation on it. (If we had really cheap, long-lasting batteries that would change, but we don’t yet.) So, the cost of all that infrastructure has to be reflected in the consumer’s electric bill. If the customer wants to go “off the grid” entirely, that choice is available, of course; but he will end up paying more by a long shot ($$ plus the hassle) for the batteries, back up gas-powered generator, etc. for night-time use than his share of the cost of the grid.

      “Net metering” gives a break to the consumer who has his own solar cells behind-the-meter, but to the extent he doesn’t pay his fair share of the cost of the grid (which he uses like everyone else in the evening and at night), other electric customers are paying that cost and subsidizing him, and I think that’s quite unfair to them (which is why I think “net metering” is bad policy, except perhaps as a way to promote distributed solar to get it started).

  4. J. Abbate Avatar
    J. Abbate

    As I am involved in developing solar energy generation in my community in Buckingham, I can confirm Jame’s point that the ease and cost of connecting a large solar field to the grid depends on whether the field is “in close proximity to a high-capacity transmission line”. We are looking at a similar situation here in Buckingham in collaboration with our co-op utility and solar builder. At least one of our potential solar field sites is close to a high-capacity line, but we have a number of technical and regulatory issues to resolve yet for our project to become viable.

    Cost is quite reasonable for residential or business investment in solar if you have a home or building sited correctly for solar. Your monthly cost of electricity may wash with the cost of investing in a solar array, so that your monthly cost may remain the same, while it moves from simply paying for a cost of energy to a monthly investment in your solar system that can by paid back within 6-10 years, leaving you with free clean energy and a working asset for up to 40-50 years. We have invested in two solar arrays (one roof mounted and one ground mounted) and they are generating enough electricity via net metering with our utility to defray some $1600 per month of our electric bill. Two nearby residents have installed home solar and are enjoying 0 cost or lowered cost on their monthly bills.

    Currently solar firms and interested businesses are busy working to lift some of the limitations on building solar, including building solar to sell power or just for covering one’s electric costs. As noted, we have some work to do to open the market for small business entry and wider generation of solar power in Virginia.

  5. LarrytheG Avatar

    solar needs to “compete” cost-effectively but solar also needs to be ALLOWED to compete.

    The terms of the electricity monopoly may need to be adjusted to compensate the utility for their additional costs to make electricity “available” when it is needed at sites that provide some of their own power but when we do that – we need to get back all the “kept” money from Dominion….that should have been returned.

    I would imagine if the Dems get control (and I do NOT think that is a preordained outcome) changes will be made … to better accommodate solar as well as deal with that kept money.

  6. Saw the article …not sure what to make of it. We are talking eastern shore Va, right? A remote small sliver of Virginia, that our Gov comes from, south of Annapolis down below scenic St Michaels, MD. The size of proposed solar field was not huge. Our state has been fairly slow on solar except the utility-scale and utility-owned.

  7. A few things were left unclear by that article in the newspaper, so let me elaborate on how this works.

    ““Solar developers in the mid-Atlantic region are at the mercy of the utility and PJM.”” Yes and no. There is a process at PJM which is as fair as they can make it; all generator owners regardless of size or financial backing have to follow the same rule: First come first served. That is, there’s a study done for each proposed-generator application to determine if there is enough transmission capacity at the proposed solar site to safely “inject” the proposed amount of power into the grid there; and applications are studied in the order received. So, if someone applies and there is sufficient transmission injection capacity, they get it at no charge; and someone applies a week later and there is no injection capacity left, they have to pay for the necessary upgrades (if they want to proceed). These applications are studied strictly in the order received at PJM.

    What sort of upgrades might be needed? Most commonly it’s the cost of installing additional breakers or larger transformers at the substation where the developer wants to interconnect (most solar installations, certainly the larger ones, have to interconnect at a substation where you can install all the necessary switches and breakers). Less commonly it’s the cost of upgrading the existing transmission line to a higher voltage, to the nearest higher-voltage substation which might be a few miles or many; or breaking a segment of transmission line to build a new substation near the proposed solar site (if the site is not near a substation it can cost a lot to build a private transmission line all the way to the nearest one). At many of the desirable locations there is a “queue” or wait list of applications by developers who find the necessary upgrades at this time are too expensive to proceed, for now, but are hoping that future transmission expansion driven by customer needs and reliability and congestion relief will create some new ‘free’ injection capacity as well. These queues, and the long range plans for transmission expansion, are all set out in public documents at PJM; any developer can see that, say, in six years there is going to be a big rebuild of the transmission and substations on the “X to Y Line.”

    While the utilities that own these lines do the actual construction work, they are required to coordinate their planning under PJM direction and the resulting coordinated transmission plan is maintained and enforced by PJM, and PJM processes all the applications by solar developers and others to connect to the grid at transmission voltages and maintains the queue of applications at each site, all pursuant to PJM’s tariff filed with the FERC. If the connection would be to the distribution system then the owner of that system (e.g., Dominion, or the local cooperative) runs a similar process as set out in its tariff filed with State regulators.

    A solar developer looks around for a place where the injection rights are cheap. A farm owner can’t move the farm; he may be lucky and be near a low-cost injection site, or he may be far away from one.

    You say, “As it happens, the flow of power north from the Eastern Shore into Delaware is highly congested, creating a transmission bottleneck.” This is a long range problem specific to Delmarva that has existed for years. What’s needed is much more transmission capacity in a loop from existing 500 kV lines north of the Wilmington area, south down the Peninsula to Salisbury and Cambridge and east across the Bay (probably underwater) to the Washington area. You know how popular all that construction would be! Now of course nobody expects the proponent of a small solar farm in Accomack County to pick up any piece of that huge tab; but in the meanwhile, lots of potential solar development on the Eastern Shore remains stymied until the big bottlenecks can be removed.

    By the way, you mention that very large proposed solar plant in Spotsylvania; that one was going to connect to the grid at very high voltage, to the line that runs from North Anna to Quantico right past Fredericksburg. That part of the high voltage grid has injection capacity galore; although the developer would have had to pay to add very expensive transformers and interconnection breakers etc. at the substation, it made economic sense when that interconnection cost was spread over 3000 megawatts. Too bad NIMBY killed it.

    1. Acbar, thanks so much for this background. I suspected that a first-come-first-serve system was in place, but I wasn’t certain. Now I know, that’s exactly how it works. It sounds like the Van Kesteren’s problem is (1) they got in line behind Dominion and Hecate, and (2) they want to build a solar farm on their farm, unlike other solar developers who are willing to shop around for an opportune location to build a solar farm.

      1. Yes; it’s not a system “stacked against the little guy” — but hit-or-miss for the farmer who is stuck with his own location and may be late to the party.

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