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Plan to Zero – Get out of the Way I (#9)

Doug Houseman's picture
Visionary and innovator in the utility industry and grid modernization, Burns & McDonnell

I have a broad background in utilities and energy. I worked for Capgemini in the Energy Practice for more than 15 years. During that time I rose to the position of CTO of the 12,000 person...

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  • Jan 17, 2023
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Follow up to the ongoing 'Plan to Zero' articles:

 

In land speculation, a speculator ties up the rights to a piece of land by contract for a very small fee. Ideally the goal is to be a strategic piece of a very large project and hold out until the last minute, securing a very large payout by being the last piece in a puzzle.

In renewables speculators sit in interconnection queue for the minimum fee possible, tying up the queue with changes and other maneuvers that slow the number of approved projects, driving up the value of their approvals. Trying to force someone else in the queue to pay them to exit or to buy their project.

Some 80% of the projects in some of the independent system operators (ISOs) are speculative in nature. Based on the analysis of PJM and other ISO's. A the distribution or community level that same 80% for projects over 1 MW are never built.

To fix speculation we need to:

1)     Require a bond of what is estimated to be 50% of the cost to build the project up front with the application.

2)     Offer one and only one chance to exit the queue or modify their project

3)     Charge the full costs of the studies to the applications in the queue being studied, with 100% of the costs up front for the study. If you don't pay, your application is deemed withdrawn.

4)     At the point where the initial study of the queue is complete offer projects a chance to withdraw or to modify their project – this is a onetime deal. This is your only chance to redeem your bond.

5)     Complete the restudy, and provide each project with the interconnection costs, construction contract and a right to interconnect, setting a time for the project to be complete in the contract.

6)     Once the project is commissioned the bond is returned. If no construction happens the bond is forfeit.

7)     For each successful project the bond is reduced by 5% for a specific developer. For each project not built the bond increases by 5%.

 This makes speculation expensive, and gives developers who are interested in building a significant cost advantage over developers who are not. Yes, it means that newcomers have a cost disadvantage until they have proven themselves.

It shortens the interconnection queue, focuses scarce planning and engineering resources on the projects most likely to be built,

Interconnection queues are running 4 to 7 years at the ISO level, and at the utility level projects are taking up to 3 years for utility scale projects today and growing.

Taking the speculators and the gaming of project sizes out of the queue should help.

Intelligent guesses are it will cut queue wait times by 60-80%.

Getting us closer to what is needed to make the transition work.

PJM just changed their queue process to "first ready, first studied" While it moves real projects into construction faster, it does not clear out the queue, so no one has a real idea of how much of the queue is real and how much of it is speculators hoping for a pay day.

Discussions
Michael Keller's picture
Michael Keller on Jan 23, 2023

Seems to me the issue stems from an artificially created demand for unneeded power driven by lucrative, risk free government subsidies and mandates.

Basically a stampede has been created, overwhelming the normal regulatory process. Projects that are actually needed end up stuck in the queue.

Not so sure the speculators can be weeded out of the process, given the governments mindless push for green energy.

 

Julian Silk's picture
Julian Silk on Jan 23, 2023

This is a reasonable, but tough list.  Might it discriminate against new technologies?  Could 1) be satisfied by a bank loan, or does the entity have to submit some sort of equity promise or collateral?

Doug Houseman's picture
Thank Doug for the Post!
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