The topic of interconnection is complex but important. It impacts how desirable solar developers will find your land–and thus what they will pay to lease it. This article covers the basics.
All solar farms connect to a specific point on the electrical grid, the vast network of wires that connects every power generation plant to every home and business that consumes power. That point is called the “point of interconnection,” or POI.
There are two ways to interconnect: though a substation or through a tap. A substation is usually the better way to interconnect from a technical and cost perspective.
You’ve probably seen substations before and did not realize what they were. In the US, they look something like this:
You will only find them near larger high-voltage transmission line towers. In more rural areas, they are typically at the outer edges of towns or close to power generating facilities, manufacturing plants, or drilling/mining operations.
A substation is a fenced facility owned and operated by a utility. Its purpose is to convert high voltages to low voltages, or vice versa, using transformers. Substations are necessary because of mismatches in voltages. Your home runs on 120 volts (AC), but electricity is transmitted over distances at a variety of much higher voltages to reduce power losses. Power generating plants such as solar farms output power at different voltages, too.
If the nearest transmission line to your property has a voltage of, say, 115 kV (115,000 volts), the output voltage from the solar farm needs to “step up” to 115 kV to feed power into it. Likewise, the power that line carries to a neighborhood 50 miles away eventually needs to “step down” in voltage so that homes can use it.
A substation is generally an ideal place for a solar farm to interconnect because the facility is already there and the design of these facilities makes it easier to interconnect. The alternative is a line tap, which is essentially what it sounds like: “tapping into” an existing high-voltage power line. This can be more expensive and technically more challenging.
Substation Location Matters
The solar farm itself has a small substation, too, which is called a project substation. The project substation connects to the utility’s substation via a dedicated transmission line called a generation tie (“gen-tie”) that is mounted on poles.
Here’s the important thing: Gen-ties cost approximately $1 million per mile to construct. The farther away the utility substation is from your property, the more expensive the gen-tie will be to build. There may be land costs, too, if the developer has to pay other landowners for the rights-of-way to cross their properties with those poles.
These costs are almost always paid for by the solar developer, which makes the power generated by the farm more expensive, and therefore potentially less competitive against proposals from solar developers with properties that have closer substations. This, in turn, makes properties located far away from utility substations less appealing to solar developers, which means, all else equal, they would pay less to lease your land.
If you are really lucky, your property borders a utility substation. This could make the interconnection cost quite low.
Substation Capacity Issues
Just because you see a utility substation near your property does not necessarily mean interconnection will pose no challenges. The transmission lines that a substation connects to may not have enough capacity to handle the electricity currently flowing through them plus all of the electricity that the proposed solar farm would generate. The electrical equipment at some substations may also need to be upgraded to handle the additional interconnection of a solar farm. These are things that a solar developer will need to study before entering into a land lease agreement with you.