A National Grid transmission study has ensnared nearly 1 gigawatt of distributed solar in Massachusetts, delaying progress on numerous projects as the federal Investment Tax Credit phaseout approaches and causing anxiety in one of the nation’s largest markets.

National Grid initiated its "cluster study" in May, roping in a slew of distributed projects above 1 megawatt to assess their collective impact on the transmission grid. Taken in two phases, National Grid has lumped 372 megawatts of advanced projects — many "shovel-ready," according to developers — into the first part of the study, slated for completion in late 2019. The second phase, encompassing 490 megawatts of earlier-stage projects, will be finished in early 2020.

The utility says the study is integral to determining how a rush of distributed projects spurred by new state incentives will affect the grid. But the study means uncertainty for developers, who say it imperils large portions of their Massachusetts pipelines.

“The transmission study is kind of an after-the-fact reaction to the absence of proactive policies to build out the grid to accommodate higher levels of renewable energy. It’s something we see around the country,” said an employee who works in policy at a large developer and asked to speak anonymously. “That’s essentially what we have here: The state has a functioning incentive program and ambitious goals for clean energy and solar. But the utilities have not been…tailoring their investments to keep up with that level of ambition.”

Under a 2008 state law, Massachusetts is required to reduce greenhouse gas emissions 80 percent below 1990 levels by midcentury. Legislators also enshrined an increasing renewable portfolio standard last year as the governor unveiled new clean energy priorities.

Historically, state policies have compelled Massachusetts utilities to be relatively welcoming to solar. The state now gets 11 percent of its electricity from the resource, compared to just 2 percent nationally.

But utilities say reaching higher penetrations will be difficult without a full assessment of grid-level impacts, which they say became clear when solar applications spiked drastically last year. National Grid received 253 distributed-generation applications in April 2018 — the highest number for any month — compared to just 33 applications in April the year before. That was due to demand from the Solar Massachusetts Renewable Target (SMART) program, which went into effect in 2018.

National Grid recognizes the difficulty developers are currently facing, and is working to engineer around the massive demand, said Tim Roughan, director of regulatory strategy. With a high concentration of projects in central and western Massachusetts, the utility is worried about possible overloads on the transmission system.

“[SMART] was simply wildly oversubscribed from the get-go,” Roughan said in an interview. “The days of just proposing a project and plugging it in are over. We need to very carefully understand and engineer these things to move the planet toward a carbon-free world.”

The state Department of Public Utilities has also opened up a docket to examine the interconnection of distributed generation (the regulatory agency pointed GTM to its docket but declined to comment further).

Though the utility recently pulled 90 megawatts out of the study and allowed those projects to move forward, developers are struggling to cope with uncertainty on the remainder. Hannah Muller, director of public policy at California-based developer Clearway Energy Group, described the current environment bluntly at a late July Greentech Media event: “This is a disaster.”

“The situation in Massachusetts is not a one-off....[or] a fluke; it’s the history of DG when we start to hit significant penetrations,” said Muller at the event. “We have to start paying attention to the transmission system.”

Projects sitting idle

Roughan said National Grid understands developers' concerns, but insisted the utility needs more information before offering further answers.

“I think we’re all a little surprised by how quickly we got to this saturation, but frankly we’ve had some very generous programs,” he said. “We also have to remember that there’s a reason we’re here: It’s because of the incredible success of the solar community.”

Developers say that success is currently at risk. Numerous companies told Greentech Media that significant portions of their Massachusetts pipelines were caught up in the study. The majority of the projects are community solar, an area in which Massachusetts was an early leader.

At the July GTM event, Tony Orr, senior vice president of legal at Pennsylvania-based developer Dynamic Energy, said the study included all of Dynamic’s projects in the state.

Solar developers are especially frustrated because they weren’t officially notified until November that their projects would be included in the study. Many said their projects had already secured interconnection service agreements. Some had already been constructed.

“We have shovel-ready projects that have suddenly hit the brakes,” said Orr at the event.

“A bunch of these projects across the various companies were already constructed,” said a different employee at another national developer, who asked to speak anonymously. “Literally sitting in the fields: racks, solar panels built, ready to be turned on. And now we are told these projects can’t go forward.”

National Grid said the delay in officially informing companies had to do with its efforts to compile data and finalize which projects needed to be studied. Roughan said most projects are likely to proceed to interconnection on schedule.

“It’s just a matter of the information. You don’t know the answer to the study when you start it. That’s why you have to do the study,” he said. “We just didn’t know the extent of upgrades we were going to need.”

Roughan said the utility did its best to keep partners in the loop through its engineering representatives, who liaise with developers on solar projects.

Developers acknowledged that communication from National Grid has improved. But by the time the study concludes, many say their projects will be so delayed that they’ll have taken a hit to their bottom line. To invest in a project, tax equity investors need clarity on when it will come online and begin churning out money. If projects are pushed into later years, they could also miss out on the tax benefit tied to the ITC, which starts stepping down in 2020.

According to Michelle Davis, a senior solar analyst at Wood Mackenzie Power & Renewables, the uncertainty coupled with possible transmission upgrade costs will likely mean “substantial pipeline attrition.”

Part two of the cluster study has already seen attrition at 13 percent, according to an August National Grid presentation, shrinking from 565 megawatts to 490 megawatts.

A "cautionary tale" for other DG markets

Everyone involved agrees the conflict arose out of a positive situation: the abundance of solar in Massachusetts. But they remain divided on how the situation should have been handled.

Jeremy McDiarmid, vice president of policy and government affairs at the Northeast Clean Energy Council, said the procedural discord will have to be solved if solar is to become a bigger presence on the grid.

“It could have a chilling effect on investment in Massachusetts solar projects going forward if we don’t collectively figure out how to manage these types of challenges,” said McDiarmid. “It’s incumbent upon all stakeholders and particularly the utilities to do a better job of looking ahead and anticipating a greater volume of projects coming into the queue.”

Roughan, though, said it’s not so easy for utilities, which must follow the norms of regulatory rulemaking and rate-setting.

“There’s no regulator in the world that is going to allow utilities to build something in the hopes that a bunch of DG will connect to it,” said Roughan.

He also said National Grid couldn’t have planned for the serious oversubscription of the state’s incentive program.

The developers who spoke to Greentech Media, all national, said they hope other states with proliferating solar sectors heed warnings from Massachusetts so their own growth isn’t slowed.

“For other states…this will have been a useful cautionary tale,” said the second developer employee. “Wherever states are within a few years of reaching high DG penetration, the distribution utilities have got to be talking to the transmission operators about how they will coordinate.”

Several developers pointed to positive examples set by nearby New York, where regulatory staff participate in two interconnection working groups that coordinate with stakeholders to anticipate problems before they arise.

“New York is by no means a nirvana…but I think there’s great value in the work they’ve done there,” said Ben Downing, vice president of new market development* at Boston-based developer Nexamp, at the July GTM event. “We’ve missed an opportunity here in Massachusetts by not following their lead.”

Massachusetts will likely have a chance to learn from itself as well, though. As developers look forward to more clarity out of the cluster study, National Grid is girding for more, said Roughan.

“Other parts of the state will need to have a cluster study, there’s no question.”

Correction: This quote was originally incorrectly attributed to Kelly Friend of Nexamp.