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California’s new DER interconnection rules include hosting capacity analysis results

Last week, the California Public Utilities Commission (CPUC) issued sweeping changes to Rule 21, the rules under which distributed energy resources, like solar power and energy storage, may interconnect to California’s electric grid.

The changes, which were years in the making, represent a radical shift in how states handle interconnection policy, with a number of unprecedented changes that stakeholders say will provide a model for regulators in other states who are looking to increase the amount of renewable energy on the grid.

Today, lengthy processes for interconnection approval that rely on outdated technologies can often be a barrier and slow down the speed at which a state is able to decarbonize its grid.

The revisions to Rule 21 encompass many issues but three of the most noteworthy include the following, which we expand on below this list.  

  1. the plan to incorporate data on the actual grid conditions at the locations of projects that request to interconnect;
  2. an option for developers to propose project operating schedules that are based on those grid conditions; and
  3. the addition of more advanced interconnection policies for interconnection of energy storage projects.

The incorporation of data on grid conditions into the interconnection process is an important change. Now, California utilities will start to use Integration Capacity Analysis results when making interconnection decisions. Integration Capacity Analysis (ICA), called hosting capacity analysis in other states, is a process of modeling the electricity grid to determine the conditions on a utility’s distribution grid that impact its ability to host additional distributed energy resources (DERs), like solar or energy storage, at specific locations without the need for costly upgrades and/or lengthy interconnection studies.

“ICA is a revolutionary leap forward in grid transparency, in terms of providing customers, developers, and regulators with truly useful, accessible and in-depth distribution grid information” said Sky Stanfield, partner at Shute, Mihaly & Weinberger who represents IREC in clean energy regulatory proceedings, including the Rule 21 revision process. “This first-ever incorporation of ICA in the interconnection process is a key milestone that has the potential to reduce the guessing game in selecting interconnection locations and to vastly improve the process for clean energy customers and developers.

The ruling will allow project developers to take ICA results into account in order to avoid costly grid infrastructure upgrades that could make their project financially infeasible. Specifically, project developers will be able to propose operating schedules for their projects that are tailored to the grid conditions at their project location. For example, an applicant could propose to export more energy when it supports the grid, like during California’s recent heat waves, and to curtail the energy produced by a solar project when it would stress the grid, such as in months with less energy demand. This will significantly benefit the grid, reduce the need for expensive upgrades, and lower the costs of DER deployment.

Finally, the updates to Rule 21 also provide guidance for the interconnection of energy storage projects to the grid. This is significant because energy storage has a number of unique characteristics compared to other DERs like solar. In particular, energy storage systems can be designed with the capability to limit or prevent the export of energy onto the grid altogether. This new rule provides much needed clarity for these “limited export” systems and will increase access to lower-costs methods for controlling export. It also includes the use of the most recent test standard for power control systems issued by UL.

As California grapples with unprecedented climate change impacts, from wildfires to heat waves, providing pathways to deploy more renewable energy and energy storage faster and when it is most needed will help the state transition to a lower-carbon, more resilient grid. With these changes to Rule 21, stakeholders believe that California regulators have set a new standard for modern interconnection policies that will support this goal.

The ​Interstate Renewable Energy Council (IREC)​ was deeply involved in developing and advocating for many of the changes adopted and commends these efforts by the CPUC.

“IREC applauds the CPUC’s recent updates to Rule 21, which significantly modernize California’s energy policy and pave the way to more rapidly deploy large amounts of clean energy—critical to meeting the state’s climate commitments and increasing resilience,” said IREC President and CEO Larry Sherwood.

“Today’s changes are a major milestone that represent the culmination of many years of work. IREC has been engaging on Rule 21 since 2011 and has been involved in almost every major innovation, including helping to develop California’s Integration Capacity Analysis, which today’s decision puts into use in improving the interconnection process.”