FERC complaint highlights ‘structural problem’ for renewables
A Midwest wind farm was hit with unexpected costs from connecting to the wider grid in a case that could discourage renewable energy development in the region, according to a complaint filed with the Federal Energy Regulatory Commission.
Nebraska-based energy company Tenaska claims grid operators charged the company an extra $66 million one year after its Clear Creek Wind project went online in northwest Missouri.
The proposed costs are “untenable” for the company, creating “significant uncertainty” for the future of Tenaska’s 242-megawatt wind farm and for other proposed renewable energy projects in the Southwest Power Pool region, according to the complaint. SPP is a regional transmission organization (RTO) that manages the wholesale power market in the Great Plains and parts of the Midwest and South.
“The facts here, if unremedied by the Commission, will certainly impact decision-making by developers of renewable projects on the SPP system and elsewhere,” Tenaska said in the complaint.
The case highlights flaws in outdated interconnection systems across the U.S. that have hampered the growth of renewable energy, according to analysts. Companies seeking to build large energy projects typically must obtain approval from a regional transmission organization or grid operator to connect to the bulk power grid, a process that can take years and carry a steep price tag.
Projects also can face network upgrade costs, or charges associated with upgrading high-voltage power lines to support the added electricity generation. A report released in April from the American Council on Renewable Energy (ACORE) found that many renewable energy developers have struggled to access SPP and other power markets due to high network upgrade costs (Energywire, April 6).
The issues raised in the FERC complaint reflect the need for changes to transmission planning and cost allocation, said Rob Gramlich, president and founder of the power sector consulting firm Grid Strategies LLC. The biggest expenses for grid improvements often fall to the project developer.
“This is unfortunately a common scenario and it reveals a structural problem with most [independent system operator] and RTO interconnection queue processes,” Gramlich said in an email. “From a generator perspective, network upgrade costs are a total crapshoot, and can change over time.”
In the case of Clear Creek Wind, SPP had identified $31.2 million in network upgrade costs for the project in 2018. Then, nearly two years after SPP had provided Tenaska with a final study on the wind farm’s expected impact to the system, SPP issued a new report proposing $66 million in additional costs for “upgrades to resolve pre-existing reliability issues that appear to be driven by higher queued generation resources,” said Nick Borman, senior vice president of engineering and construction at Tenaska, in an email.
SPP said the costs were assigned to Tenaska because another project had been withdrawn from the so-called interconnection queue, the company said in its FERC filing. But the actual reason was SPP’s decision “to change key assumptions” in its own studies, according to Borman.
