Published on August 12th, 2015 | by Silvio Marcacci9
Solar Interconnection Delays Cost America Millions — Here’s How We Solve Them
August 12th, 2015 by Silvio Marcacci
Solar interconnection delays, or the process of connecting a new energy system to the grid through a utility, is costing rooftop solar owners millions and potentially slowing solar adoption rates across the country.
But even though wait times and lost savings grow as more consumers add solar panels to their homes, new research suggests standardized processes and improved communication between utilities and their customers could solve the solar interconnection problem.
Solar Interconnection Delays Grow As Solar Spreads
Many consumers think adding rooftop solar is a simple process – sign a contract with an installer, they bolt panels onto a roof, and clean energy starts flowing – but the process isn’t that simple.
Any rooftop solar array must go though four major steps in order to receive the full benefits of grid connection: Applying for and receiving utility interconnection review and approval, building the solar array, passing local building permit inspection, and receiving permission to operate (PTO) from the utility.
These four main steps may be common, but the requirements to pass them differ from state to state and utility to utility, raising the potential for application errors to delay interconnection. As more homes add rooftop solar, the average time to interconnect gets longer – an average increase in PTO approval of 68% from 2013 to 2014, according to EQ Research.
Time Is Money For Solar Consumers and Installers
As with anything, time is money when it comes to rooftop solar interconnections. EQ Research cites a Department of Energy estimate showing one day’s delay for every rooftop solar system projected for installation in 2015 would cost the US $4 million in lost electricity generation.
“You have assets installers are building and these assets are stranded there sitting on the roof,” Brendan Reed of SolarCity recently told the Washington Post. “There’s revenue loss happening, but even more significantly, it’s affecting customer experience and referrals.”
The cost of delay is most acute from a homeowner’s perspective. Residential solar owners in California (America’s biggest solar market) missed out on over $4.7 million in production over the past four years due to interconnection delays. Considering the biggest driver of new solar adoption is peer referrals, any unhappy customer is a potential bad review and thus one fewer solar rooftop.
Solar interconnection delays also present problems for installers, many of whom already face low profit margins. Delays add to soft costs, which comprise 64% of the total cost of residential solar projects, and mean less profit for third-party owners (e.g., SolarCity, Sunrun, Sungevity, and Vivint Solar) who don’t start receiving payment until systems are energized. With the federal Investment Tax Credit expiration looming in 2016, installers will need to wring all possible efficiencies out of the process in order to stay viable.
Five Ways To Prevent Solar Interconnection Delays
So, since solar interconnection delays keep increasing and vary from state to state, what can utilities, installers, and homeowners do to reduce them?
PTO review and approval time is the biggest sticking point, averaging 25 days across the US in 2014, but EQ Research suggests six ways to standardize the solar interconnection process:
Most utilities require interconnection applications to be manually filled out and submitted for review. This creates potential errors like using the wrong form, incorrectly filling out forms, or incorrectly inputting data – all of which could be prevented through online application systems. EQ Research cites California utility PG&E’s success, noting its new online application system cut application errors from 40% to 5%, and suggesting utilities with high rooftop solar penetration could “cut costs significantly over a relatively short amount of time.”
Nearly all utility interconnection procedures require installers to submit a pre-construction application before installing a rooftop array and a post-construction interconnection application, but EQ Research cites California’s investor-owned utilities allowing customers to submit pre- and post-construction applications at once after system construction. This efficiency is enabled by the utilities providing maps of available generation capacity for different areas, meaning installers can start work knowing the system won’t be denied due to reliability concerns.
Regulate and enforce deadlines
While most states set regulatory deadlines for utilities and applicants to take action during the interconnection process, several states (notably Arizona and Maryland) have no time limit on PTO review by utilities, and states with PTO time limes may allow different timelines for different utilities. EQ Research recommends states adopt model interconnection guidelines while regulators better enforce utility timelines.
Improve utility communications
Unsurprisingly, utilities who are responsive to applicants tend to have faster interconnection times – an application can be delayed for extended periods over errors that could take minutes to fix. EQ Research suggests adequate staffing levels or switching to “assembly line” review processes to cut PTO waiting periods.
Coordinate with local jurisdictions
Utilities must usually wait for local jurisdictions to approve permits before providing PTO, but timelines and requirements vary even within a single utility territory. EQ Research recommends utilities and local jurisdictions work together to standardize requirements and streamline inspections.
Avoid over saturation
Interconnection requests can be denied even if all permits are approved due to high solar penetration on local grids threatening reliability due to too much potential supply. EQ Research suggests installers monitor specific locations within utility territories where interconnection is becoming problematic and utilities provide installers access to solar penetration levels to prevent this problem.
Improving Interconnections Benefits Utilities, Too
America’s solar industry may seem mainstream, but it’s still just 1% of our national electricity supply, and will endure growing pains as it spreads and matures. Improving the solar interconnection process will not only help customers save money and keep installers profitable, but it can also help utilities manage their systems.
PG&E recently outlined this approach in a Greentech Media editorial noting that streamlining its approval process has cut application costs 70%, empowered it to connect a new solar customer to the grid every 11 minutes, and improved customer satisfaction. “Collaboration is key to helping utilities move toward improving their solar interconnection and customer service systems,” wrote Aaron Johnson of PG&E. “By significantly reducing time to connect customers… utilities will gain more customer loyalty, achieve higher customer satisfaction overall, and save operational costs.”