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.”
