Interconnection
Interconnection is the process of connecting a renewable energy system, such as solar panels or battery storage, to the electrical grid.
This critical step allows energy to flow bidirectionally, drawing power when needed and feeding excess electricity back to the grid when production exceeds consumption.
Interconnection has become a significant topic in the renewable energy landscape as more homeowners and businesses adopt solar power and battery storage. Each utility company has specific interconnection procedures for consumers to navigate to connect their renewable energy systems to the grid. For example, there are three major utilities in Southern California: San Diego Gas & Electric, the Los Angeles Department of Water and Power, and Southern California Edison. A typical interconnection process starts with an application submission, then a technical review, system impact studies, and final approval from the utility. This process is implemented to ensure that energy systems will not disrupt grid reliability while allowing customers to participate in net metering and credit programs.
Benefits of interconnection include:
- Credit for excess power through specific programs
- Grid resilience for system efficiency
- Potential demand response and other grid service programs
- Integration of your renewable resources with existing infrastructure.
For battery energy storage systems, interconnection is particularly important as these systems can provide services beyond just energy storage. Interconnected batteries can help with balancing grid demands, provide backup power during system outages, and will allow a customer to earn revenue through grid service programs based on the specific energy market.
Power Purchase Agreements (PPAs)
Power Purchase Agreements (PPAs) are 10 to 20-year contracts between electricity sellers and buyers regarding the privatized purchasing of power.
In a PPA, a developer installs and maintains an energy system like a solar farm or microgrid on the buyer’s property, while the customer agrees to purchase the generated power at a predetermined rate often lower than the utility company.
PPAs are growing increasingly popular due to the high call for more renewable energy across the United States.
Sunny locations are ideal for solar PPAs as it allows businesses to benefit from low-cost solar energy without the upfront installation costs.
The benefits of PPAs include reduced costs and carbon footprint without capital investment, paying a standard electricity rate allowing the buyer to mitigate peak demand prices, and easy access to renewable energy.