With rooftop solar growing in demand, there are some places in New Mexico where residents are being told they cannot install solar panels due to capacity limitations.

For example, Public Service Company of New Mexico (PNM) placed 178 applications for interconnection on hold in 2019 and 2020 because of capacity constraints on the feeder systems.

Eric Chavez, a utility spokesperson, said PNM never denies customer interconnection applications, however it will place applications on hold until capacity becomes available in that area.

As state regulators work to update interconnection rules for utilities, they will need to address the growing popularity of rooftop solar panels and the impact that has on the grid. Interconnection refers to when a customer can generate some of their own electricity but remains connected to the grid.

Utilities are currently working under an interconnection rule and manual that was last updated in 2008. Since then the demand for solar panels has increased and the technology has changed.

There are more than 25,500 customers within the PNM service territory with interconnection agreements. Chavez said PNM saw a 44 percent increase in applications in 2020 compared to 2019. About 6,600 customers submitted applications in 2020.

The New Mexico Public Regulation Commission opened an inquiry into interconnection policies in January with the ultimate goal of updating the rules and manual. 

An interactive map shows areas within PNM’s service territory where the feeders are at capacity. Feeders typically take electricity from substations and transport the power to homes. When solar panels are generating more electricity that the customer can use, the excess electricity is placed onto these feeder lines and systems.

Under the current interconnection rules, a customer who wants to install rooftop solar but lives in an area where the feeder is at capacity must pick up the cost of the upgrades if they are determined to have a grid-tie solar system. This can be cost prohibitive to customers.

“PNM has assessed the cost for the system improvements for each feeder and they would generally be in the range of $1M – $10M per feeder depending on the specifics of the particular feeder,” PNM stated in a January letter to PRC Commissioner Cynthia Hall. “The current Commission rules require that the cost of utility system modifications required pursuant to the fast track process or the full interconnection study process shall be borne by the interconnection customer unless otherwise agreed by the parties. Amending this rule would require policy decisions on cost recovery, cost/benefit analysis and other considerations.”

That means a customer in an area where the feeder is at capacity would have to pay $1 million to upgrade the feeder before they could connect their rooftop solar system to the grid.

In a March filing by Kit Carson Electric Cooperative after a PRC workshop about interconnection, the utility argued that if the utility was to pay for upgrades to feeder lines, transformers or substations for the sole purpose of allowing people with solar panels to connect to the grid in areas without much capacity it would result in the customers without solar panels subsidizing those who are installing solar panels.

But Sachu Constantine, the managing director for regulatory affairs for the advocacy group Vote Solar, said there are solutions that can help address capacity issues. He said the grid was designed for power to flow one way. Now, with growing numbers of customers installing solar panels, power is flowing back onto the grid.

This can mean too much voltage is flowing onto the grid or there is too much electricity being produced. When this happens, utilities say it can compromise the reliability and safety of the utility system.

“It is absolutely true that if you get a big concentration of solar on one particular circuit, it can cause problems,” Constantine said.

He recommended requiring smart inverters, which can address voltage concerns, and encouraging battery storage. He said the battery storage could be installed by the customer or by the utility to store excess energy generated when the solar panels are producing more electricity than is being consumed. That excess electricity can then be used to provide power when the solar panels are not working, like at night.

Constantine said utilities should be encouraged to work with solar customers to take advantage of technology like smart inverters to provide voltage regulation and frequency control.

He said regulators need to recognize that utilities operate as a monopoly.

“Competition is always a good thing,” he said. “And choice, real consumer choice, is very important to keep monopoly utilities operating efficiently.”

At the same time, he said, regulators should be aware of how exports of energy onto the grid can be hard for utilities to manage. He also said encouraging robust battery storage can help address that while also improving resiliency.

Constantine said the electrical infrastructure is regularly upgraded. He said as these upgrades are made “we’re going to have to increase the ability of the grid to go in both directions.” 

But utilities are not as optimistic about the use of battery storage by customers to help address those problems.

Kit Carson Electric Cooperative addressed this in its March filing. 

“KCEC cannot determine or control when the battery is turned on, when it is recharging, whether the battery is charging at a reliable rate, or what application the battery will be used for, all of which impact the flow of electric energy on KCEC’s electric distribution system,” the filing states.

Both Chavez and Constantine said it is important for utilities and customers to work together. 

Chavez encouraged customers wanting to install solar panels and connect to the grid to contact PNM early on and keep the utility engaged in conversations throughout the process. 

Chavez said regulators can help utilities as rooftop solar continues to grow.

“Regulators could assist with solar interconnections by streamlining the regulatory process, ensuring infrastructure costs of the grid necessary for system-wide reliability are shared equally among all customers, and that approved utility incentives are aligned with current customer needs,” he said.