Minnesota overhauls interconnection standards to streamline clean energy
While state regulators took significant steps, some decisions were deferred.
On May 24, Minnesota made new strides for clean energy and became the third state in the Midwest in the last three years to adopt wholesale reforms to their state interconnection procedures — creating a more transparent and effective interconnection process for customers.
The updated rules are the result of more than two years of work at the Minnesota Public Utilities Commission (PUC), by the Interstate Renewable Energy Council (IREC), in partnership with Fresh Energy and the Environmental Law & Policy Center (ELPC). In May 2016, the three organizations jointly petitioned the PUC to initiate a proceeding to establish new interconnection standards that better align with where the current market for distributed generation is and achieve greater consistency with national best practices. The request stemmed, in part, from the state’s early challenges connecting community solar garden projects to the grid, which led to major backlogs and increased delays and costs for consumers and communities. This coalition of groups was also looking to streamline the interconnection process for rooftop solar systems, which constitute the vast majority of interconnection applications in the state.
Interconnection standards are the great equalizer in clean energy markets, and they remain a key building block to support a strong foundation for continued clean energy growth. Minnesota’s interconnection standards were some of the first to be adopted in the country, but they have not been significantly updated since 2004. Given the state’s upward growth trends in renewable energy, and with new prospects for energy storage and smart inverter adoption on the horizon, the timing for these improvements is good.
The recently adopted reforms (ref. Docket E999/CI-16-521) replace existing state rules with new procedures based on a national model established by the Federal Energy Regulatory Commission (FERC), known as the Small Generator Interconnection Procedures (or SGIP), along with some additional national best practices from the many states IREC has worked in over the years. These improvements create greater consistency across all Minnesota utilities, which will translate to cost- and time-savings for project developers, consumers, and even utilities. However, the Minnesota PUC also declined to adopt some important best practices and also deferred some critical decisions to a later point in the process.
Here are some of the key elements of the decision:
- Rules aligned with national models: Minnesota adopted interconnection rules based on a 2014 FERC model. The use of a more nationally recognized model helps decrease the learning curve for interconnection customers and should facilitate updates in the future as innovations emerge from states using similar frameworks.
- A formal screening process for mid-size systems: The new rules adopt a fast track and detailed supplemental review process that allows mid-sized projects to be reviewed using a two-tier screening process, rather than requiring all projects to go through a full study process. Detailed supplemental review has been adopted in states with high penetrations of DERs such as California and Massachusetts, as well as in other Midwestern states, such as Illinois, Iowa and Ohio. Having this provision part of Minnesota’s standards will become increasingly valuable as distributed generation penetration increases. The fast track screens follow the FERC SGIP model but contain a few Minnesota specific modifications. While overall a promising improvement, the PUC opted to adopt a more conservative eligibility limit that may send some larger projects to full study unnecessarily, particularly in Xcel’s service territory.
- Improved application and review process for smaller systems: One of the most important changes allows the most common projects in the states, i.e. small rooftop solar projects, to use a more simplified application and review process. While this change should help streamline the interconnection process for projects smaller than 20 kW, the currently adopted timeline of 11 weeks is nearly three times the average time (4 weeks) for small systems in other states. After much deliberation on this timeline before and during the hearing, the PUC declined to adopt more innovative and improved timelines, which, if left unresolved, could add substantial costs and delays to residential and small commercial customers. Fortunately, the PUC deferred their decision on one key timeline, so there remains an opportunity to reduce the process time for smaller projects. Forthcoming deliberations by the PUC will determine whether or not Minnesota adopts a truly more expedited and improved process for smaller systems.
- Addition of energy storage: The new rules include energy storage systems in the definition of eligible projects, creating a clearer process for energy storage customers to connect their projects to the grid. There is, however, considerably more work that needs to be done on energy storage to streamline the process for these projects, and many of the more critical issues will be considered during the concurrent updates to the technical standards documents. Though some interim progress is important for energy storage, the path for energy storage interconnection remains unknown until future resolution of these issues.
- Adoption of a pre-application report: The new rules allow interconnection customers to request a pre-application report from their utility, which 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.
- Reporting on interconnection: The PUC required utilities with more than 40 applications a year to publish a public interconnection queue that enables customers to track the progress of interconnection projects. The PUC also adopted some temporary annual reporting requirements, which will provide enhanced visibility into how well the new interconnection process improvements are working. However, the requirements lack a few key details particularly important to understanding whether the process is really working (i.e., translating into time and cost savings for customers).
With these improvements adopted, the PUC will turn its attention to updating the technical standards document to include smart inverter settings, the requirements for energy storage, and the other deferred issues noted above. The PUC also acknowledged that looking at these issues once every twelve years is no longer realistic, especially given the quickly evolving technology and energy landscape. Through this regulatory proceeding, they established a new framework to make the state interconnection procedures more of a living document that can be updated on a periodic basis, as-needed. In doing so, Minnesota has set the course for ongoing improvements and reforms that will ensure it continues to make clean energy progress.
Sky Stanfield is a partner with Shute, Mihaly & Weinberger LLP and regulatory counsel for the Interstate Renewable Energy Council, Inc.