States continue to lead the way for clean energy: Maryland and Minnesota make strides for customer-driven distributed energy resources

Although the Trump Administration’s announcement of the “Affordable Clean Energy” proposal made major headlines last week, raising concerns about the impacts on clean air, clean energy and climate change, state victories for clean energy continue unabated.

In fact, numerous states continue to forge full speed ahead on clean energy policy, and many have doubled down on their efforts. In addition to the California State Assembly’s passage of the ambitious 100% renewable energy by 2045 legislation, two other quiet regulatory victories recently hit the streets.

Within a week of each other, both Maryland and Minnesota adopted more nuanced regulatory reforms that will increase clean energy access for more consumers, while supporting clean energy jobs and investments. From the trenches, IREC offers a ground-level view of these two important state regulatory reform efforts.

On September 5^th, the Maryland Public Service Commission approved long-awaited interconnection reforms, as part of rulemaking 61, to improve the grid connection process for customers investing in and adopting Distributed Energy Resources (DERs). These revisions to outdated standards will make connecting renewable energy to the grid faster and more cost-effective, while also creating new pathways for energy storage to connect to the grid.

One thousand miles to the northwest, the Minnesota Public Utilities Commission joined a handful of states requiring utilities to implement a new, proactive planning paradigm—called Integrated Distribution Planning, or IDP—to prepare the grid for increasing penetrations of DERs and optimize their benefits. The August 30^th order from the Minnesota commission (in Docket 18-251 – In the Matter of Distribution System Planning for Xcel Energy) sets out a comprehensive IDP framework for the state’s largest utility, Xcel Energy (Xcel). It contains ambitious goals, including enabling greater customer engagement, empowerment, and options for energy services and optimizing the electricity grid assets and resources.

For both Maryland and Minnesota, these regulatory reforms represent a significant step forward in both state’s efforts to modernize the grid and encourage cleaner, low-carbon energy resources. In these and virtually all states, such in-the-weeds regulatory reforms rarely make headlines. But they are keeping the clean energy train on track across the country.

Details of Maryland’s Interconnection Improvements

Maryland’s interconnection reform efforts were initiated in September 2016, as part of Public Conference 44 (“PC 44”) – Transforming the Distribution System, which was a required condition to the Exelon/Pepco merger. The scope of PC 44 covers numerous topics, including rate design, electric vehicles, competitive markets, interconnection processes, energy storage and distribution system planning. IREC was engaged from the outset of the effort on interconnection, working with Maryland’s numerous utilities, the Center for Renewables Integration, SunRun, Pace Climate and Energy Center, and the Energy Storage Association (among others) to advance reforms to the state’s outdated interconnection standards.

Although there was not consensus on all issues among parties and the regulations didn’t go quite as far as IREC would have liked, we applaud Maryland for taking an important step forward to support more cost-effective processes for consumers. The following key changes to the rules will make it easier, more cost-effective, and more transparent for customers to connect clean energy to the grid. Specifically, the rules:

1. Add a new definition for energy storage devices, clarifying that energy storage devices are eligible to connect to the grid under the small generator interconnection rules. The commission declined to adopt additional language that would have clarified how and through what process energy storage projects will be evaluated in the interconnection process. These issues will be taken up further by the Working Group and determined in a phase II effort. Additional clarification surrounding energy storage will be key to ensuring Marylanders investing in energy storage do not run into costly and time-intensive delays connecting their projects to the grid.
2. Increase the Level 1 size limit from 10 to 20 kw, which will facilitate streamlined interconnection of smaller projects that are unlikely to cause any safety or reliability issues or require grid upgrades.
3. Remove the 10 MW limit on projects, such that any projects that fall within state jurisdiction connecting to the distribution system have a process through which they can be reviewed and studied.
4. Adopt “pre-application reports” for projects over 20 kw, which will enable customers to request a report from their utility that provides details on the state of the grid at the proposed point of interconnection. This preliminary information allows customers to get a sense early in the process – before they make a large investment of time and money – whether a given project is likely to integrate into the grid at that location, without triggering major upgrades.
5. Require the utilities to publish a public interconnection queue that enables customers to track the progress of interconnection projects.

These revisions will be officially published on September 28^th and will go into effect on October 8^th. IREC looks forward to continued efforts with the Maryland commission, stakeholders and utilities to address additional issues in phase II, including additional provisions for energy storage, smart inverters, hosting capacity analyses, and possibly IDP.

Minnesota’s Ambitious Proactive Distribution Planning Requirements for Largest IOU, Xcel Energy

The Minnesota commission, in a separate proceeding, has already required Xcel to undertake hosting capacity analyses and publish those results annually. Going forward, Xcel must now develop DER growth scenarios and evaluate all distribution system projects expected to exceed $2 million in cost for their potential to be replaced by DERs as non-wire alternatives (NWAs). Xcel must put this information together into five- and ten-year investment plans to guide its grid modernization investments. The commission’s order requires Xcel to set out all this information in annual filings, together with detailed data on the state of the company’s distribution system and past financial investments. The order also sets the stage for similar planning efforts by three of the state’s smaller utilities, whose IDP frameworks are being developed in separate dockets.

As an active participant in the proceeding, working closely with non-profit Fresh Energy and other stakeholders, IREC is encouraged by the commission’s order. It incorporates several of IREC’s proposals to ensure that Xcel is integrating its hosting capacity analyses, DER forecasts, and NWA analyses to produce investment plans that will shift its planning paradigm.

The commission also adopted IREC’s proposal to require Xcel to provide detailed information on current and queued DER systems, including technology types and the costs associated with them, and to report past investments in distribution system upgrades by interconnection customers as well as by the utility. And it agreed to lower the threshold for NWA analyses from $5 million to $2 million to capture a broader range of projects, and clarified that the analyses should embrace Xcel’s entire budget cycle.

While the IDP framework is a significant step forward, the commission declined to adopt some important best practices and deferred additional improvements to other dockets or later IDP cycles. Namely:

1. The requirements for Xcel’s NWA analysis are light on detail and lack metrics to ensure that Xcel is rigorously evaluating projects to be deferred or avoided through the use of DER solutions.
2. The $2 million threshold may exclude from the analysis many of the capital projects that could be most easily replaced by DERs.
3. The commission deferred proposals to ensure that Xcel is effectively using its hosting capacity analysis for planning and to facilitate more efficient interconnection of DERs to the grid – this could limit the effective integration of the hosting capacity tool into the IDP.
4. The commission declined to require Xcel to release actual load and DER forecast data and to test its forecasts against actual system data.
5. The commission deferred proposals to give the IDP framework more clarity and teeth to ensure that Xcel is using its investment plans to prepare for and accommodate future DER growth and implementing the upgrades it identifies.

The extent to which the IDP requirements effectively move the state toward meeting its laudable goals will begin to become clear on November 1^st, when Xcel releases its first annual IDP report and investment plans.

Importantly, the commission’s order recognizes that IDP is an iterative process, and it leaves the door open for further improvements as the results of Xcel’s initial efforts come in. It ensures that stakeholders in Minnesota will continue to play an integral role in furthering this planning process, requiring annual stakeholder meetings and public comment periods.

Rules Matter . . . A Lot

Beyond the headline grabbing policies is a wide and deep realm of implementation, where the regulatory reform work happens. Indeed, detailed rules, standards, codes and processes are the building blocks of the country’s clean energy progress. IREC’s regulatory team works across the country to help states get the rules right, such that ambitious clean energy legislation and regulatory policy goals are successful and sustainable over the long term. We look forward to continuing our efforts in Maryland and Minnesota, as well as dozens of other states, as we work to keep the country’s clean energy markets thriving in the face of federal uncertainty.

Also contributing to this blog: Stephanie Safdi, fellow with Shute Mihaly & Weinberger, LLP, attorneys for IREC

Sara Baldwin

Sara was IREC’s Vice President - Regulatory through May 2020, overseeing IREC’s regulatory team and its national and state engagement on distributed energy resource policies.