This month, the Philadelphia Inquirer published a story about a roofing contractor in Chester County, Philadelphia, who painstakingly designed and installed a ground-mounted solar array himself only to be told by his local utility PECO that it would cost him $45,000 to interconnect to the grid.
PECO told the homeowner that “equipment would have to be upgraded not only along the rolling road he lives off in the Marshallton section of West Bradford Township, but farther down the road as well,” according to the Inquirer. The article said PECO told the man the distribution system near his home was too small to handle the amount of energy his array might send back to the grid.
Three solar installers in Philadelphia have experienced similar struggles with the utility, but they took issue with the article for different reasons.
“Zero denial rate for other utility companies”
One of the contractors felt the article was a bit unclear.
Dara Bortman, VP of marketing and sales at Exact Solar, said the article implies that the reason the man was surprised by the fee was because he wasn’t a solar contractor and isn’t in the business.
“The reality is that even us solar contractors in PECO territory—which is basically the greater Philadelphia area—we don’t know when a potential interconnection is going to be a problem until after we submit an interconnection application to PECO,” Bortman said.
Exact Solar does half its business in Pennsylvania and half in New Jersey. It works with six utilities. PECO is the only one that denies its interconnection requests.
“There’s literally zero denial rate for other utility companies,” Bortman said. “For PECO, they’re denying 30% of the initial interconnection applications in their territory.”
Interconnection applications come with extra costs too. PECO spokesperson Kristina Pappas said the applications range from levels 1 to 4, with almost all applications falling under levels 1 and 2. Level 1 applications are for 10-kW or smaller systems and cost $100. Level 2 are for systems between 10 kW and 2,000 kW and cost $250 + $1/kW.
Bortman said in 30% of the cases, PECO will either deny the request with “simple solutions,” or deny the request and require a detailed engineer’s report, which could cost an additional $400. “Simple solutions” usually cost about $750 to customers in order to move ahead with interconnection. Pappas said the engineer’s study covers the administrative review and quick technical review to see if the system can be safely installed.
In contrast, PECO spokesperson Doug Oliver said more than 93% of all interconnection applications PECO has received have been approved for installation. However, PECO considers approvals to also be instances where the utility says the homeowner will be approved after they fulfill a “simple solution.” Bortman calls those instances denials with simple solutions. Pappas explained further in an email, “If approved, the customer can choose to proceed with their installation. If they choose not to install, that is not considered a denial by PECO.”
PECO defines a simple solution as “work that can be performed between the distribution transformer servicing the customer and the customer’s meter,” and Bortman said she’s had solutions like upgrading wires or reducing the system size to lower the voltage. A result of an engineer’s review could mean a transformer needs to be replaced. Bortman said Exact Solar hasn’t been asked to replace a transformer, but other installers she knows have.
Exact Solar recently attempted to install a 2.7-kW residential system and was denied with no simple solutions. After more than $500 in application and engineer’s fees, the new solution was to change the home’s circuit to the one across the street.
“Their system was cheap to begin with. And now [PECO has] added more than 10% of the cost of the system in additional fees,” Bortman said.
Now Exact Solar tells potential customers up front that the interconnection could pose a problem, which could mean additional costs and an extended installation time. For its projects in PECO territory, Exact Solar always submits the interconnection application first, before starting any work or even acquiring permits. If PECO comes back with a cost that’s too high for the customer, Exact Solar refunds the customer any money it hasn’t already spent from the deposit.
“Every one of our customers has decided to move forward, but we tell everyone that if they don’t want to, we completely understand and will return whatever money out of their deposit we haven’t spent,” Bortman said.
“That’s pretty tame”
Micah Gold-Markel, founder of Solar States, said he’s surprised that the homeowner’s cost was newsworthy.
“That’s pretty tame from the stuff that I’ve gone through and other installers have gone through,” Gold-Markel said.
Gold-Markel said PECO’s interconnection fees have been a problem for Solar States for years, and that he was once told by PECO that a residential system would cost $250,000 to interconnect.
“They were like, ‘We have to upgrade the entire feeder circuit in order to accommodate solar on this circuit,’” Gold-Markel said.
So Solar States had to halt the project.
Like Exact Solar, Solar States also works with many different utilities. The company installs in Pennsylvania, New Jersey and New York.
“We’ve had our struggles with other ones for sure, but not anything on the scale of what PECO does,” Gold-Markel said. “In PECO’s defense, I think that they’re trying to get better now.”
PECO has tried to remedy the problem by creating a virtual map for installers to type in an address and see the probability of interconnection issues. Gold-Markel said that map will be helpful for installers, but he’s hoping the utility makes more of an effort to get up to speed with evolving technology.
“Unfortunately, PECO has traditionally reacted slower than the rest,” Gold-Markel said. “I do think that they’re catching up now, though. Or, they’re trying to catch up now.”
But Oliver insisted PECO isn’t far behind utilities across the country.
“The way our system is set up is the way it’s set up for utilities across the entire country,” Oliver said. “The entire grid—not just PECO’s grid here in southeastern Pennsylvania.” Oliver said PECO is proud to be leading the effort to find answers to interconnection issues.
He points to the map as a way the utility is trying to work with solar contractors to make their jobs easier.
“To the extent that contractors know where the challenges are, they can either avoid some of the challenging areas or bundle customers who may be interested in interconnecting with the system,” Oliver said.
Oliver acknowledges the interconnection process is cumbersome, and points to the 4-kV distribution lines that make up 25% of PECO’s total system. The 4-kV lines have maximum and minimum voltage requirements that make adding solar a balancing act for the utility. The rest of PECO’s distribution lines are either 13 kV, 34 kV or 69 kV. Higher-voltage lines mean more electrical capacity that can handle solar energy.
“It’s a lot of bullshit, really”
A third installer thinks the article was a scare tactic to dissuade people from going solar.
“What a lot of people have to realize is what is going on right now: This is the transition of energy,” said Sam Park, owner of Arsenal Solar. “We’re going from fossil fuels to renewables, and then we’re also going from a grid-dependent society/system to a grid-backup.”
Park thinks these utility growing pains are inevitable, especially in Pennsylvania where coal is still king. He doesn’t understand why the homeowner didn’t try other options to mitigate the $45,000 request.
Since high voltage was the issue PECO identified, Park said the man could have switched to a different inverter or used different kinds of panels to reduce the voltage feeding into the grid.
Park continuously asked the question: Why didn’t the article include the size of the system? It said 48 panels, but not the kilowatt size.
“This article, maybe it could be just a negative play to try and kind of bash solar. I see holes there, it doesn’t make sense,” Park said.
Oliver said the kilowatt size wasn’t included in the article because the utility wasn’t at liberty to talk about the customer’s account.
Park has run into PECO’s interconnection costs with his customers, but never anywhere close to $45,000. One of Arsenal Solar’s installations was happening in a neighborhood where five to seven homes already had solar on them. PECO responded to the interconnection application by saying it would have to add an additional transformer to handle the load. Park says PECO quoted that addition around $5,000. The engineers took a second look at the project and gave the go-ahead without having to add the transformer.
“So $45,000—that’s insanity. It just seems like this article is a negative play on solar, and like I said, it just seems like it’s trying to scare people away. Yeah, it’s a lot of bullshit, really,” Park said.
Bortman agrees that the article has attracted some negative views about solar. She said in the comments section of the Inquirer article, there are a few comments in support of solar, but more of the opposite.
“There’s a lot of people that are pro-solar, but then there’s a lot of naysayers that are like, ‘Oh, see, it’s only for the rich,'” Bortman said.
The 399 comments on the article on August 16 are a good representation of the fight between renewable advocates vs. fossil fuel supporters. Username “Burn In Hell” commented, “Burn, Baby, Burn! Coal and oil are still the best way to go….and this article PROVES it!” and username “George” replied, “Coal is the good way to go if you live upwind of the power plant, don’t eat fish and don’t plan on having any children.”
Other comments touched on the nuances of working with PECO, like a user named “James” who said, “I wasn’t charged even close to that amount when I put my solar panels in” and others who suggested battery storage as a solution to the man’s problem.
Bortman and Gold-Markel both brought up a larger question for PECO: Who’s responsible for paying for grid upgrades?
“My question has constantly been, ‘Why haven’t you spent our taxpayer dollars, since you’re a publicly funded monopoly, to upgrade your infrastructure when all these other utilities obviously have?” asked Bortman.
She would be more comfortable with PECO establishing some type of depreciation system, where if it was planning to upgrade the system in two years but needed to do it early for a solar customer, the customer would only pay a portion of it in exchange for PECO expediting the process.
“Basically, they’re putting their infrastructure upgrade costs onto solar customers,” Bortman said. “Why should my customer have to pay 100% of the cost to replace that?”
Oliver said PECO tries to do its best to fairly charge solar customers. When the utility gets an interconnection application, it must take many factors into account, including the size of the solar system, how many customers are served by the nearby substation, and how close that substation is to it bandwidth limits.
He said PECO invests close to $550 million into grid upgrades each year, and that PECO only asks solar customers to pay for the upgrades when there are no plans to upgrade their substation anytime soon.
“Out of a basic sense of fairness, we continue to go back and evaluate what we’re doing and what the customer’s doing to ensure that we’re not passing along any cost to them that we would otherwise incur as the utility,” Oliver said.
However, Oliver said it wouldn’t be fair to the non-solar ratepayers if the utility paid for all the upgrades for solar.
“Any investment that we make, we recover through the rates that our customers pay. So if we were to pay for a customer’s solar interconnection, that customer receives the benefit of reduced electricity because they’re sometimes using solar,” Oliver said. “But that benefit that they receive, all of our other customers would be paying for.”
Gold-Markel said he’d like to see some creative thinking to update PECO’s grid, maybe even at the federal government level.
“Let’s see if we can find some grant money and some collaborations where we can do this,” Gold-Markel said. “Figure out ways to get this thing done collaboratively rather than just throwing out big numbers and shutting down the conversation.”
Though he doesn’t think it’s intentional, Gold-Markel thinks PECO is inhibiting innovation in solar through these arcane fees.
“I know the people at PECO,” Gold-Markel said. “They’re good people. I think that they’re just hamstrung.”
Gold-Markel said he thinks one reason PECO is lagging on innovation is because it isn’t allowed to own any solar projects itself. The utility is granted a unique monopoly in the state, so it’s not allowed to own any generation.
“They don’t really have experience with the oddities of solar because they can’t own any solar,” Gold-Markel said.
Oliver disagreed, saying PECO is working hard to help ease the interconnection burden by updating internal systems and convening a solar collaborative comprised of installers, low-income advocates, energy efficiency gurus and other interested stakeholders.
“We are unequivocal in our support of a solar future and to accommodating our customers’ preference toward solar,” Oliver said.
Although the three installers were frustrated for slightly different reasons, Gold-Markel has hope that the interconnection issue can be resolved. And if there’s no creative solution to be reached, if solar customers continue to pay for grid upgrades, the whole system will be upgraded at some point.