See Why State Interconnection Rules!

In recent years, there has been growing awareness of the importance of interconnection. But much of the mainstream dialogue has focused on interconnection of large, utility-scale clean energy systems which is governed by federal policies. State interconnection policies have typically gotten less attention. But local clean energy systems, whose interconnection depends on state interconnection rules, are a fundamental part of our clean energy future for a number of reasons:

1. The least-cost path to a clean energy future requires local clean energy. In fact, getting to a low-carbon grid with a mix of local clean energy and utility-scale will save U.S. ratepayers $473 billion by 2050 compared to utility-scale alone, according to research commissioned by Local Solar for All.
2. Local clean energy can offer resilience and reliability benefits, and help the electric grid. Local clean energy systems, especially energy storage and microgrids, can help communities keep the lights on during extreme weather, which is becoming more frequent due to climate change. Additionally, local clean energy can provide valuable benefits to the grid overall, easing stress on the system.
3. Local clean energy is a job creator. In fact, local clean energy (residential, commercial, and community scale) provides more jobs per megawatt than utility-scale clean energy, and helps keep those jobs local.
4. Renewable energy is an essential resource to fight climate change (and provide other environmental benefits like cleaner air). This transition will require clean energy at all levels of the grid, including local systems for families and businesses.

The many benefits of local clean energy are only accessible when those projects are able to connect to the grid. When state interconnection rules do not reflect the latest best practices, it can severely impede the transition to clean energy. 

Out-of-date or poorly designed state interconnection rules can cause customers to face long wait times (sometimes multiple years!) or excessive costs that hinder their ability to adopt clean energy. These challenges can also cause clean energy developers to lose out on business and stall market growth. 

But clean energy customers and developers aren’t the only beneficiaries when state interconnection rules are optimized. Improved interconnection processes can also benefit utilities through more efficient processes that reduce labor for their staff.

And all utility customers, even those who do not adopt clean energy directly, benefit from optimized state interconnection rules because it is significantly more affordable to transition to a clean energy grid with a mix of local clean energy and larger, utility-scale systems. In fact, research has shown that this approach can save U.S. ratepayers $473 billion by 2050 compared to utility-scale alone!

Finally, state interconnection rules have important equity implications, as we discuss below.

Recent data show that disinvested communities, including communities of color and low-income communities, often have local electric grids that are less able to accommodate new clean energy resources due to lack of grid infrastructure investment. That means expensive grid updates in those areas are more likely to be necessary for local clean energy to interconnect, exacerbating barriers to equitable access to clean energy.

Additionally, community solar is one of the best options for individuals who face barriers to owning their own renewable energy systems (such as renters and those living in multifamily buildings). Community solar projects that serve low-income customers and disadvantaged communities are particularly susceptible to barriers caused by poor interconnection rules.

Interconnection policies that fairly distribute grid upgrade costs and ensure efficient review processes for local clean energy systems like community solar can help ensure more equitable access to the benefits of clean energy.

The interconnection process can be broken down into six stages:

1. In the first stage, the interconnection customer can use available tools, such as pre-application reports or hosting capacity maps, to determine project siting, design, and estimated costs.
2. During the next stage, the customer submits an application for their project to the electric utility. Once the application is deemed complete, it enters the utility’s interconnection queue, which is essentially the waiting list for project review.
3. In the Evaluation stage, the utility reviews proposed projects (typically in a “first come first served” manner) to determine if they could cause adverse impacts to the grid that require additional study or upgrades to grid equipment.
4. During the Agreement stage, both parties sign the interconnection agreement and the interconnection customer pays for any required interconnection costs.
5. In the next stage, the interconnection customer constructs the project and the utility completes any necessary grid updates.
6. During the final stage, the utility performs a series of final system cheques before authorizing the project to begin operation.

There are several key characteristics of interconnection policies that align with best practices. State interconnection rules with these characteristics are more likely to enable local clean energy to connect to the grid in a cost effective, timely, and transparent process.

Good state interconnection policies:

1. Enable efficient reviews of projects requesting to interconnect.
2. Enable the advanced capabilities of energy storage.
3. Distribute grid update costs fairly.
4. Include accountability mechanisms.
5. Facilitate customer access to data on grid conditions.
6. Incorporate the latest technical standards, particularly IEEE 1547-2018

Many states have outdated interconnection procedures that lack these characteristics, putting ambitious state and federal clean energy goals a risk. For example, IREC and Vote Solar’s Freeing the Grid state interconnection scorecard found that only 8 states scored a “B” or better. Over 23 states don’t specify efficient timeframes for any step in the interconnection process.

As a result, interconnection remains one of the most daunting tasks in the clean energy adoption process. According to a 2021 installer survey by the Institute for Local Self-Reliance, nearly 80% of respondents identified state interconnection rules as the barriers that create the highest costs and longest delays in the local clean energy installation process.