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Solar developers balk at increased Central Maine Power interconnection costs

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Solar developers balk at increased Central Maine Power interconnection costs

Central Maine Power Co. has provided more clarity on the scale and scope of estimated cost increases for hundreds of megawatts of distributed solar projects to connect to the grid. Questions over these increased costs recently prompted an intervention by the governor and have solar developers wondering if their projects remain economical.

Maine Gov. Janet Mills on Feb. 8 called on the state's utility regulator to investigate emerging voltage problems apparently impacting CMP's ability to connect distributed solar projects to its substations without charging developers significantly more than previously estimated.

One day later, the utility responded to Mills' inquiry with its own letter to the Maine Public Utilities Commission, stating that it now "believes lower cost upgrades, or the complete elimination of upgrades, may be possible with further study," and that "estimates for all but a limited number of substations are now in the range of $175,000 to $375,000 for those substations that will require upgrades."

CMP said "very substantial increases over the originally estimated costs for required system upgrades" were due to the utility's technical team using what it characterized as a "traditional utility approach" when looking at the "unique challenges" of reconfiguring the grid to flow power bidirectionally, not unidirectionally.

This approach "understandably caused confusion and concern in the industry," the utility acknowledged.

Even if the cost increases are not as large as initial estimates, though, developers are rattled by a problem that could tank many projects in the state if not resolved. The governor wrote that it is "deeply regrettable that CMP apparently did not anticipate these issues at the time they entered into these interconnection agreements," adding that some of the projects are already built and ready to connect to the grid.

Since early 2020, following the state's approval of net energy billing, CMP has processed over 600 applications to interconnect distributed solar generation projects that would bring over 2,000 MW of power onto the grid, utility spokesperson Catharine Hartnett noted in a Feb. 9 email. That amount of generation would exceed the total current peak power demand in Maine of 1,700 MW and represents a "pace and scale" of development "unprecedented in the state," she added.

"Over time, as the impact of these projects has become clearer, we have determined that there are about 110 substations on the CMP system that are not equipped to safely accommodate the volume of solar generation seeking to interconnect on CMP's distribution system," Hartnett said, explaining that the utility's transmission system would require additional protection upgrades to mitigate potential safety and over-voltage issues. CMP has approximately 300 substations throughout its transmission system, according to a company webpage.

The utility has subsequently spent the past few weeks notifying some developers of concerns with the grid's ability to handle their projects, and in some instances, suggesting a new price tag for interconnection costs that project stakeholders say are too high.

Jeffrey Payne, the executive director of the Maine Renewable Energy Association, said Feb. 9 that he first learned of the problem "in dribs and drabs" in January when several of his group's members mentioned the voltage concern.

But during a mid-January interconnection working group meeting with the public utilities commission, Payne said the utility "somewhat reluctantly" brought up the extent of the voltage problem when asked about it.

Payne recalled that "you could literally hear ... the concern and frustration from folks on the phone, reacting sort of like, 'Wait, what is happening?' and, 'This is how you were going to tell us?' and 'How far and wide does this problem go?'"

The executive director added that many solar developers are experiencing a great deal of uncertainty and CMP has provided little information to address it.

Solar developers also question when the utility, which is owned by Iberdrola SA's Connecticut-headquartered Avangrid Inc., first knew of the problem.

"If they learned about it, let's say, in the summer, we could have been working with them on this, there could have been technical solutions that they just aren't thinking of," Payne said, adding that he is "very skeptical that this problem was suddenly identified 14 days ago."

The Maine Public Utilities Commission intends to address that question within its investigation, which will also examine technical considerations, how earlier studies were conducted and how projects will be impacted, according to commission media liaison Susan Faloon. Commissioners expect to formally begin the investigation within a few weeks.

Projects imperiled

Payne is certain that projects will be killed because of the new cost increases.

"The problem we have now is some of those companies that got those upgrade costs weeks, months or, in some cases, years ago, are now being told that the price has ballooned," Payne said. "I know one specific example where there was an original upgrade cost of $239,000 [and] suddenly, CMP came back and said it's going to be $12.2 million."

For Bob Cleaves, the situation could imperil the bulk of his portfolio. Cleaves is the co-founder of Portland, Maine-based Dirigo Solar, which was notified by CMP via email that out of their 16 projects, 10 5-MW facilities may be impacted.

That puts at risk Dirigo Solar's $50 million investment across the portfolio, all of which Cleaves said have interconnection agreements. Most of the projects have off-takers, and three already have deposits down with the utility, according to Cleaves, who said Feb. 9 that he is waiting for more information from CMP.

Cleaves noted that some of the projects have interconnection agreements that predated when "Central Maine Power was inundated with the current level or projects."

Along with the interconnection agreements, Cleaves said Dirigo paid for a study by CMP that indicated no problems. "There's a legal issue there," he added.

Although Hartnett, CMP's spokesperson, noted that state utility regulations hold distributed generation developers responsible for upgrade costs, CMP is "still examining the costs and options with a goal of moving forward quickly, safely and at the least possible cost."

While developers and the state government wait for answers from the utility, any long-term impact to the state's renewable power sector will take time to emerge. Maine, which was the sixth U.S. state to target 100% clean energy, aims to reach carbon-neutrality by 2045.

"It's going to be hard to attract investment dollars when you can't rely upon a utility study," said Cleaves. He believes there are two key issues: that the utility did not adequately study substation conditions for developers planning to invest, and that Maine's grid requires more investment to accommodate a decarbonized future.

Payne said he hopes "that there's not a long-term impact on the state's ability to attract and host this type of investment" because "it is such an economic, environmental and employment opportunity for the state."