Whether it’s located at a retiring fossil-fuel-powered generator or just one we can afford to run less, these expedited clean energy projects can save utility customers $12.7 billion a year.
Thousands of gigawatts of clean energy are waiting to come online in the United States, bringing numerous benefits to communities across the country. However, these projects face potentially crippling delays. The current standard in which grid operators conduct interminable studies for new projects to connect to the grid, a process known as interconnection, can take up to half a decade. Right now, there are more than 2 terawatts (TW) of clean energy projects languishing in the interconnection traffic jam, far more than the 1.25 TW of electricity generation currently online.
The timing of these backlogs is a serious issue: electricity demand is taking off in a number of sectors and Inflation Reduction Act (IRA) programs that support clean energy development have sunset dates coming up fast.
Utilities in states that are seeing a resurgence of industrial and manufacturing activity, in part driven by IRA incentives, are calling for adjustments to their resource plans, referred to as “integrated resource plans” or IRPs. Some of these utilities are proposing adding new sources of power, including additional investments in gas plants. Not only are these moves regressive to climate goals, but they fail to leverage resources built into the IRA to solve for the increased clean tech manufacturing that the law helped create. In other words, the same law that is pushing the limits of our current energy system can and should be used to help meet new demand with clean supply.
For example, the Energy Infrastructure Reinvestment Program (EIR) offered through the US Department of Energy can provide low-interest financing that, combined with IRA tax credits, make these clean energy projects no-regrets investments — but the program expires in 2026. We have just over two years to leverage the $250 billion in loan authority offered in the EIR program. But with such a long wait time for projects to come online, how can we bring new clean energy projects into commercial operation fast enough?
The good news is: there’s an elegant solution.
By connecting nearby new clean energy resources to the grid using an existing power plant’s interconnection point, the whole process from applying for interconnection to commercial operation can shrink from an average of five years to less than one year. Not only does this allow new resources to bypass the existing traffic jam, but the size of the opportunity and the added benefits to workers and communities is another reason to shout about this strategy from the rooftops. We call it “clean repowering.”
Our analysis indicates that there is the potential to rapidly deploy 250 GW of new clean energy assets using clean repowering, reducing regulated utilities’ costs by $46 billion over a 30-year planning horizon — savings which flow down to customers under IRA requirements. This calculation includes the cost of the new energy resources, the costs of continued operation of existing fossil infrastructure, and the new costs of additional operations and maintenance positions to support the new clean energy resources.
These investments strengthen the resilience of existing systems, and they add this value without the need for costly grid upgrades or by risking reliability.
Here’s how it works.
Clean Repowering: The Express Lane of Energy Reinvestment
The standard interconnection study process for adding resources where no current interconnection right already exists can be endless. The process requires many studies, and every time a project drops out of the standard process, it must be restudied.
By contrast, using either the surplus interconnection process (adding resources without removing existing generation) or the generator replacement process (where new clean energy resources take the place of existing generation), the number of studies is reduced to one, maybe two.
That’s it.
Now, who can take advantage of this strategy?
Most of the United States Can Use at Least One Express Lane
The surplus interconnection service request is governed by a federal standard (FERC Order 845) and the entire country follows this standard except for New York state and parts of Texas. The process for generator replacement is separate and more expedient in some regions, but not all.
The 250 GW of clean energy resources that can use these express lanes is in addition to the 170 GW of clean generation currently in advanced development. Most of the opportunities this strategy represents are clustered in the midcontinent, mid-Atlantic, and Southeast; and more than half of them are concentrated with 20 electricity generation owners.
These systems can use clean repowering to save money, increase system resilience without risking reliability, and (bonus) reduce US carbon emissions by 25 percent relative to business as usual through 2035. All this is good news for our communities and the planet; and, because these reinvestments happen at the site of existing fossil generators, it’s great news for America’s workers and their families.
Growing Smarter: Clean Repowering in Minnesota
Xcel Energy Minnesota is utilizing clean repowering to reinvest in its energy infrastructure with new solar power and storage resources at the site of its biggest power plant, Sherco. It’s also aiming to retain all its employees as it retires its coal-fired generation units. The site will host the 710 MW Sherco Solar project and a pilot 10 MW battery storage facility, and the company has proposed building the Minnesota Energy Connection transmission line, which will connect 2 GW of clean energy resources in southwest Minnesota to the grid. The retiring coal-fired unit is also slated for new life, becoming a synchronous condenser, which will manage system stability as renewable energy resources come online.
The company plans to retain all the facility’s workforce, and the new clean energy development will also add well-paying jobs:
- Sherco Solar will create nearly 400 union construction jobs, 18 ongoing operations and maintenance jobs, and an estimated $350 million in local economic benefits through payments to landowners and local governments.
- The battery storage project will create 15 to 20 union construction jobs.
- Minnesota Energy Connection will create hundreds of jobs to build the transmission line and new wind and solar resources, and represents an infrastructure investment of more than $1 billion for the region.
Once completed, the Sherco solar and energy-storage facility will be the fifth largest solar installation in the United States, covering 4,500 acres.
The potential for clean repowering to reach into communities across the United States and change life for the better is difficult to overstate. While the Sherco project is perhaps the finest currently under construction, its 710 MW of planned clean power represents a drop in the bucket to what is possible. Cleaner air, more resilient energy systems, and millions of dollars in economic benefits are waiting.
Let’s not keep them waiting long.
June 7, 2024
By Ben Proffer, RMI Strategic Communications Manager/Carbon-Free Electricity
