Costs for new generation projects to interconnect to the Midcontinent grid have risen dramatically in recent years, as the queue for new projects gets longer. For projects that have completed all grid studies, costs have nearly doubled in recent years, with the highest grid upgrade costs assigned to projects that ultimately withdraw from the queue.
These are findings from new research on the Midcontinent ISO (MISO) done by Lawrence Berkeley National Lab under the U.S. Department of Energy’s Interconnection Innovation e-Xchange (i2X project.
Big Queue
As of the end of 2021, MISO had over 160 gigawatts (GW) of generation and storage capacity actively seeking grid interconnection. This “active” capacity in MISO’s queue is dominated by solar (112 GW) and, to a lesser extent, wind (22 GW). MISO’s queue contains additional data for 366 GW of “withdrawn” projects and 62 GW of “in service” projects.
Submissions for MISO’s 2022 Generator Interconnection Queue again broke all records, increasing by 220% over 2021 levels. If all will be accepted as valid submissions, the active MISO queue would balloon to 289GW, more than 95% of which are either renewable or storage. The capacity associated with these requests is more than twice as large as MISO’s peak load in recent years (about 120 GW) and, if substantial amounts are built, will likely exert competitive pressure on existing generation. However, most projects have historically withdrawn their applications, often in response to high interconnection costs: only 24% of all projects requesting interconnection between 2000 and 2016 have ultimately achieved commercial operation at the end of 2021.
Berkeley Lab has gathered estimated interconnection costs for many of these generators from project-specific interconnection studies. The sample represents nearly 50% of all projects requesting interconnection from 2010 to 2020, or 30% when going further back in time to the year 2000. While it is sufficiently robust for detailed analysis, much data remains unavailable to the public. The paucity of easily accessible interconnection cost data poses a significant information barrier for prospective developers, resulting in a less efficient interconnection process. We have posted project-level cost data of this analysis on our project website.
Findings
The following are a few key highlights from our analysis:
Average interconnection costs have grown over time, though project-specific costs can differ depending on many variables. We present average costs and show their standard errors in the figures. For projects that have completed all required interconnection studies (“complete”), average costs nearly doubled for more recent projects relative to historical costs from 2000 through 2018 (Figure 1). Projects still actively moving through the queue (“active”) have estimated costs that more than tripled just over the last four years.Â
Figure 1 Interconnection Costs over Time by Request Status (simple means with standard error)
Projects that have completed all required interconnection studies have the lowest costs. Costs averaged $102/kW for complete projects from 2019 through 2021. Active projects have higher costs (average of $156/kW). Interconnection requests that ultimately withdraw from the queue (“withdrawn”) face the highest costs (average of $452/kW in the most recent years)—likely a key driver for those withdrawals. Of course, these are averages with project-level costs varying widely, as described in the study.
Broader network upgrade costs are the primary driver of recent cost increases. Costs for local facilities at the point of interconnection are similar for complete ($46/kW) and active ($48/kW), but larger for withdrawn projects ($67/kW). Costs for broader network upgrades beyond the interconnecting substation explain most cost differences and have risen sharply. Estimated network upgrade costs have grown since 2018 to $57/kW for complete projects and $107/kW for active projects. Among withdrawn projects, they account for an average of $388/kW for recent projects, or 85% of total interconnection costs.
Potential interconnection costs for wind, storage, and solar are larger than for natural gas. When looking at recent projects, irrespective of their request status, we find that wind ($399/kW), storage ($248/kW), and solar ($209/kW) interconnection costs are greater than natural gas ($108/kW) (see left panel in Figure 2). Focusing only on projects with completed interconnection studies, cost escalation is apparent for solar (average of $62/kW from 2000-2018 to $88/kW from 2019-2021) and wind ($73 to $144/kW) (right panel in Figure 2). Not shown in the figure is that wind projects that completed the interconnection study process in 2021 experienced considerably higher costs—$252/kW on average, nearly four times the historical average. This represents cost additions of about 16% on top of typical wind project installation costs in MISO. Wind projects that ultimately withdrew from the queue had average interconnection costs of $631/kW (equivalent to 40% of total project costs), compared with $358/kW (or 24% of installation costs) for withdrawn solar applicants.Â
Figure 2 Interconnection Costs by Fuel Type (left) and Over Time for Complete Projects (right)
Larger generators have greater interconnection costs in absolute terms, but economies of scale exist on a per kW basis. Medium-sized wind ($491/kW) and solar ($259/kW) projects face twice the potential interconnection costs per unit of capacity compared to very large wind ($222/kW) and solar ($125/kW) projects.
Interconnection costs vary by location, with projects in the eastern part of MISO (Indiana and Illinois) reporting overall lower costs, irrespective of request status (average of $50-70/kW). Applicants in the north (North and South Dakota) and parts of Texas have high average interconnection costs (average of $508-915/kW).Â
MISO has implemented numerous interconnection process reforms since 2008 to reduce queue delays and project cancellations. The ISO has also initiated new programs to further expand the transmission network and hopefully mitigate these cost increases in the future. The MISO board approved $10 billion of new bulk transmission to integrate more renewables, while their Joint Targeted Interconnection Queue initiative aims to invest $1 billion to address transmission needs along the MISO seam with the Southwest Power Pool (SPP).
This study builds on Berkeley Lab’s past work showing growing delays in processing interconnection requests, and illustrates another challenge with the interconnection process. This is the first interconnection cost analysis in a series of short briefing papers. Over the coming months, Berkeley Lab will post similar analyses for PJM, NYISO, ISO-NE and SPP.
The MISO study and underlying project-level interconnection cost data can be found here. Funding for the research was provided by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy, specifically the Solar Energy Technologies Office, Wind Energy Technologies Office, and Office of Strategic Analysis.