Transmission upgrade costs are skyrocketing, killing wind and solar projects

According to a January 2021 article in GreenTech Media, transmission interconnection costs for new power plants are skyrocketing, and this is killing wind and solar projects that don’t want to pay their fair share on the grid.

The article states:

Average network upgrade charges have grown from about 10 percent of total project costs a few years ago to as much as 50 to 100 percent of those costs today, according to data from Lawrence Berkeley National Laboratory and input from multiple ISOs and RTOs. 

In the western subregion of the Midcontinent Independent System Operator (MISO), assigned network costs have grown from about $300 per kilowatt-hour in 2015 to nearly $1,000 per kWh in 2017. Southwest Power Pool (SPP) has seen these costs rise from an average of $89 per kilowatt in 2013 to close to $600 per kW in 2017, and similar increases, though not quite as large, have occurred in New York ISO and mid-Atlantic grid operator PJM. 

The results have been dire for many developers. MISO’s western region has seen nearly all of the 5 gigawatts of renewable energy projects in its queue drop out in the past two years, despite having already secured power-purchase agreements, the report states. The last remaining project, consisting of 200 megawatts of wind and 50 MW of solar, faces about $500 million in upgrade costs. 

Wind and solar special interest groups have bemoaned the situation, arguing that making wind and solar projects pay for the needed upgrades that they are causing is somehow unfair:

This approach is like trying to “put the whole cost of the highway lane extension on the next car on the road,” Gramlich said. “Clearly the better way is to plan the size of the road based on expected future use of all the cars that will be coming.”

This is nonsense. If a company wants to build a factory in the middle of nowhere, they should have to pay for the access road that transports their goods and services to the main highway. If heavy trucks cause damage on local roads, the company doing the trucking should help pay to upgrade the road for everyone else. This is simply common sense.

The enormous, and growing, cost of connecting unreliable wind and solar power to the grid is yet another reason why these energy resources are destined to go the way of the Beanie Baby. Hype today, huh?, tomorrow.