Hitachi Energy, a subsidiary of Japan-based conglomerate Hitachi, will ramp up its global manufacturing capacity for transformers with a $1.5 billion investment by 2027, as a long queue for grid interconnections, particularly from renewables, is driving up demand.

The investment, which comes in addition to a 2020 announcement of a $3 billion injection in manufacturing capacity, will span across Europe, the Americas, and Asia, the company said in a press release.

Transformers are a key component for integrating renewables into the grid as they help regulate voltage and ensure grid stability. They are also used to integrate energy storage systems with renewables.

“The demand for transformers and electrical equipment has grown at an unprecedented scale, and we are investing to address our customers’ mid- and long-term needs,” said Bruno Melles, managing director of the transformers business at Hitachi Energy.

The company said it is expanding two transformer manufacturing facilities in the U.S. and one in Colombia. It invested about €30 million (~$32 million) in the expansion and modernization of its power transformer manufacturing facility in Germany in February of this year.

It also announced an investment of $180 million in a new transformer factory in the Vaasa region of Finland.

Extended lead times to procure transformers are a significant cause of delay in renewable project development.

Hitachi Energy was formed in 2020 when Hitachi acquired a majority stake in ABB‘s Power Grids business. Previously called Hitachi ABB Power Grids, it was later rebranded as Hitachi Energy.

It claims to be the world’s largest transformer manufacturer in terms of installed base and manufacturing capacity, with over 60 transformer factories and service centers.

In 2022, Hitachi Energy’s India arm was awarded a contract by NTPC Renewable Energy to supply power transformers for a 4.75 GW renewable energy park in Gujarat. The company was asked to provide 315 MVA 400/33/33 kV transformers manufactured at its transformers factory in Vadodara.

The U.S. Department of Energy (DOE) has introduced a comprehensive roadmap to expedite the integration of clean energy sources into the national transmission grid.

The Transmission Interconnection Roadmap outlines solutions for aligning interconnection processes with the increasing demand for renewable energy resources, which is driven by the rapid and widespread transition to clean energy.

The Interconnection Innovation e-Xchange (i2X) roadmap, released in April 2024, offers a range of solutions to diverse interconnection stakeholders, addressing both short-term and long-term challenges in the transmission system interconnection process.

The swift decarbonization of the U.S. electricity grid has resulted in a sharp uptick in requests to connect new clean energy generation sources such as solar, wind, and battery storage to the transmission system.

Between 2000 and 2010, the United States saw an average of 500 to 1,000 new transmission interconnection requests annually. However, over the past decade, this number has surged to 2,500–3,000 annually—an increase of 300-500%.

This backlog of requests has the potential to impede the deployment of clean energy significantly and result in heightened expenses for both project developers and electricity consumers.

A recent report by DOE’s Lawrence Berkeley National Laboratory reveals a substantial increase in generation and storage capacity seeking grid interconnection, with nearly 2,600 GW actively in the queue.

This surge has led to uncertainties, delays, and added costs for developers, consumers, utilities, and regulators.

Since the enactment of the Inflation Reduction Act (IRA), over 1,200 GW of capacity (including more than 500 GW of solar, over 540 GW of storage, and 125 GW of wind) have applied for interconnection.

Interconnection procedures must adapt to accommodate the substantial volume of current and future requests. Moreover, technological advancements, particularly in data gathering, analysis, and software management systems, have opened up new possibilities for automating aspects of interconnection procedures.

The roadmap is structured around four key objectives, each essential to the overarching goal of the DOE i2X initiative: facilitating a simpler, quicker, and more equitable interconnection process for clean energy resources while enhancing the reliability, resilience, and security of our electrical grid.

This roadmap includes four target metrics for 2030 that can be measured using publicly available data:

Transmission Interconnection Roadmap Goals

Goal 1: Enhance Data Accessibility, Transparency, and Security for Interconnection

Enhancing transparency in interconnection data would empower customers to evaluate and select potential projects, facilitate third-party modeling, streamline process automation, foster competition while ensuring fair outcomes, and enable the monitoring, tracking, and auditing of interconnection processes and improvements.

This objective acknowledges the importance of upholding data security through appropriate access control measures while expanding access to information regarding timelines, costs, and delays following the signing of an interconnection agreement (IA).

Solutions:

Goal 2: Enhance Interconnection Process Efficiency and Timeliness

Interconnection backlogs and delays often stem from the rapid increase in interconnection requests, inefficiencies within the interconnection processes, and limitations in workforce capacity.

In the United States, it’s anticipated that interconnection queue volumes will remain significant and potentially volatile in the foreseeable future. This objective encompasses solutions aimed at improving queue management practices, impacted system studies, inclusivity, fairness in processes, and workforce development.

Queue Management

Goal 3: Foster Economic Efficiency in Interconnection

This objective focuses on solutions to enhance cost allocation, minimize costs for electricity consumers, improve coordination between transmission planning and the interconnection process, and optimize transmission investment through advancements in interconnection studies.

Expanding interconnection service options and proactive transmission investments can reduce uncertainty and enhance the efficiency of cost allocations. Should ongoing efforts to alleviate interconnection bottlenecks prove ineffective, transmission providers may need to explore more significant departures from the current participant funding model for interconnection cost allocation.

Solutions:

Coordination Between Interconnection and Transmission Planning

Enhancing alignment in data inputs, assumptions, and process timelines between interconnection and long-term transmission planning can prevent transmission solutions that would be more efficiently identified in transmission plans from being triggered through the interconnection process.

Solution:

Align data inputs, assumptions, and process timing more closely between interconnection and transmission planning processes.

Goal 4: Ensure Grid Reliability, Resilience, and Security

In recent years, significant disturbances leading to the disconnection of inverter-based resources (IBRs) have highlighted performance issues not identified during the interconnection studies of the involved plants.

The solutions outlined under this goal aim to minimize these gaps by updating technical requirements within interconnection studies, models, and tools and enhancing industry interconnection standards.

Solutions:

DOE Support to Implement Solutions

DOE has multiple roles in implementing the solutions identified in the roadmap, such as facilitating solution adoption, providing funding and technical assistance, and supporting the research community.

Its Grid Deployment Office invests in accelerating the interconnection of clean energy generation through the $5 billion Grid Innovation Program, which supports the deployment of projects that use innovative approaches to enhance grid resilience and reliability.

DOE’s Solar Energy Technologies and Wind Energy Technologies Office recently released a $10 million funding opportunity for analytical tools and approaches to accelerate interconnection.

They will also lead a series of forthcoming public forums to implement interconnection standards to maintain a reliable, resilient, and safe grid.

Through the Title 17 Clean Energy Financing Program, the Loan Programs Office seeks to finance energy infrastructure projects, including infrastructure investments to support transmission interconnection, reconductoring transmission lines, and upgrading voltage.

The department also supports electric vehicle charging deployment through the Joint Office of Energy and Transportation (Joint Office). The Joint Office is convening stakeholders to identify gaps between transmission and transportation planning to accelerate transmission development within transportation rights-of-way.

DOE plans to release a draft companion roadmap focusing on the distribution grid in the coming months.

China installed 45.74 GW of solar power capacity in the first quarter of 2024, a 35.8% year-over-year growth, according to the National Energy Administration. The country also installed 15.5 GW of wind, 6.39 GW of thermal, and 1.81 GW of hydroelectric capacity. The country’s cumulative solar installations stood at 660 GW at the end of the quarter. As of the end of March, the country’s total installed power generation capacity reached about 2.99 TW. Solar power made up 660 GW, wind 456.6 GW, hydroelectric 423.4 GW, thermal power stood at 1.39 TW, while nuclear power accounted for 57 GW.

Tata Power Solar Systems will partner with the Indian Bank to bolster the adoption of affordable rooftop solar in the residential segment by making low-interest loans available to consumers. Under the partnership, financing solutions will be offered for installations up to 3 kW under the Pradhan Mantri Surya Ghar Muft Bijli Yojana and installations with capacities from 3 kW to 10 kW under the regular program. Residential consumers can avail loans up to ₹200,000 ($2,401) at a 7% annual rate of interest.

U.S.-based electric vehicle maker Tesla reported a total revenue of $ 21.3 billion in the first quarter of the financial year 2024, a 9% year-over-year (YoY) decrease. The decline in revenue was primarily attributed to a lower average selling price and a drop in vehicle deliveries, partly influenced by updates to the Model 3 at the Fremont factory and production disruptions at Giga Berlin. The revenue from the automotive segment stood at $17.38 billion, down 13% YoY. However, the energy generation and storage segment revenue was up 7% YoY at $1.64 billion.

At a time when solar open-access installations are gaining traction across the country, developers with small-capacity projects in Telangana say the inordinate delay in adhering to regulatory frameworks by distribution companies is creating bottlenecks. From tedious and time-consuming long-term open access renewal process to generator-end power quality challenges to partial payments for unutilized banked energy, the state’s solar open access developers cite a long list of problems threatening their projects’ feasibility.

U.S.-based renewables firm NextEra Energy said its first-quarter net income rose 12% year-over-year to $2.27 billion and that it expects data centers to drive electricity demand higher. The company has 3.5 GW in data center capacity operational and looks to add another 3 GW to 3.5 GW in its backlog from technology providers while seeing a 15% CAGR through the end of the decade for electricity demand from data centers. The quarterly revenue, however, dipped 14.6% to $5.73 billion from $6.71 billion last year, partly due to lower contributions from NextEra Energy Resources.

Microinverter and battery storage supplier Enphase Energy recorded a net income of $48 million during the first quarter of 2024, a year-over-year decrease of 75% from $192.32 million as the demand in its primary U.S. market witnessed a drop. In Q1 of 2024, the company reported quarterly revenue of $263.3 million, a 63.7% decrease YoY. Enphase’s revenue in the U.S. declined by roughly 34% compared to the fourth quarter of 2023. The drop in revenue was attributed to seasonal factors and a continued softening in U.S. demand, as they persisted in reducing shipments to manage channel inventory.

Rewa Ultra Mega Solar (RUMSL) has issued a request for proposal (RFP) to develop a 170 MW grid-connected ground-mounted solar photovoltaic project in the Neemuch Solar Park in Madhya Pradesh.

The power generated from the project will be procured by Madhya Pradesh Power Management Company (MPPMCL) and West Central Railway (WCR).

The last date to submit bids is June 07, 2024. Bids will be opened on the same day.

RUMSL / Government of Madhya Pradesh (GoMP) will provide land for the project’s development on the terms and conditions specified in the relevant land use agreement.

RUMSL will separately provide bidders with the land layout within Neemuch Solar Park. It will identify about 341 hectares of land for the project, which will be handed over to the solar project developer.

RUMSL will provide the power evacuation infrastructure (RUMSL Internal Evacuation Infrastructure), comprising one 33/220 kV outdoor sub-station associated with and dedicated to the project, in respect of the project at the Neemuch Solar Park site (Project Substation).

The project substation will also comprise two 110 MVA transformers and five 220 kV bays, including the transformer feeders and nine 33 kV circuit terminals to enable connections to the project, and one single circuit 220 kV transmission line connecting the 220 kV side of the project substation to the bay at the 220/400 kV substation.

As part of its Qualification Proposal, bidders shall furnish an earnest money deposit equal to ₹157.8 million (~$1.89 million).

The selected bidder shall furnish performance securities of ₹2.32 million (~$27,824) per MW within three days of accepting the letter of award.

Bidders must have a minimum net worth of ₹9.28 million (~$111,296) per MW of the quoted capacity.

If the project’s commissioning is delayed for more than six months from the project Schedule Commencement of Supply Date (SCSD), and if 90% of the project’s capacity mentioned in the power purchase agreement has not been commissioned by that date, then the developer will be excluded from participating in any future bids issued by the procurers.

A bidder or any of its associate/affiliates (and in the case of a Consortium, the members and their associate/affiliate) should not have failed to perform any contract exceeding a contract value of ₹3.94 billion (~$47.25 million) or had any contract terminated by any government or government instrumentality for breach by such bidder in the three years immediately preceding the Proposal Due Date.

Earlier this year, RUMSL issued a tender to secure 400 MW and dispatchable grid-connected renewable power.

In 2022, RUMSL floated a tender for Phase II 300 MW, which was won by NTPC, SJVN, and Hinduja.

Subscribe to Mercom’s India Solar Tender Tracker to stay on top of tender activity in real time.

Following years of fluctuation in the energy market, power purchase agreement (PPA) prices in North America were stable during the first quarter (Q1) of 2024. P25 solar and wind PPA offer prices increased less than 1% during the quarter, according to a recent report from LevelTen Energy.

Specifically, P25 solar PPA prices experienced a modest decline of 1.5% over the quarter, while P25 wind prices saw a slight increase of 2.4%.

LevelTen’s P25 Price Index represents the 25^th percentile PPA prices. All PPA price data in LevelTen’s report are based on the prices developers offer for PPA contracts, not the transacted PPA prices.

Sam Mumford, Analyst, Energy Modeling, LevelTen Energy, said, “A lower natural gas price from the mild winter and abundant solar panels, combined with hopes of lower interest rates, allowed some developers to offer slightly lower prices this quarter.”

However, he anticipated that this favorable period would not persist for long. The dynamics are shifting with the rapid growth of artificial intelligence and widespread electrification, coupled with more corporations joining the PPA buyer pool ahead of the 2030 sustainability targets.

Potential trade restrictions loom as the two-year tariff pause on PV components from specific Southeast Asian nations concludes in June, which could swiftly affect pricing. Moreover, increased government scrutiny on the solar supply chain might escalate developer costs, potentially influencing PPA pricing.

Buyers benefit from price drop

In the Electric Reliability Council of Texas (ERCOT), P25 solar prices have declined for the second consecutive quarter, dropping by 1.6%.

Similarly, California Independent System Operator (CAISO) witnessed a noteworthy decrease in P25 solar PPA prices, with a substantial 12.7% reduction this quarter.

“The decline in CAISO’s prices can be attributed largely to a surge in competitively priced projects below 50 MW entering the LevelTen Energy Marketplace in Q1,” explained Mumford.

Conversely, in Alberta Electric System Operator (AESO), there was an uptick in offer liquidity, likely due to the recent removal of the moratorium on renewable energy projects exceeding 1 MW in the province. However, considerable regulatory ambiguity persists, potentially contributing to the 7.2% increase in P25 solar prices.

“While offer volumes rose in AESO this quarter, they were accompanied by higher prices compared to those in Q4,” noted Mumford.

Wind prices hit by development costs

In North America, P25 wind prices increased by 2.4%. Despite benefiting from similar favorable factors as solar prices, developers face challenges concerning turbine availability and pricing.

In Pennsylvania, Jersey, and Maryland Interconnection (PJM), P25 wind prices surged by 17.7%. Mumford attributed this rise to escalating project development costs across various aspects, such as land, interconnection, supply chain, and construction.

Mumford said, “Numerous projects in PJM notably raised their prices in Q1 compared to the fourth quarter. While interconnection challenges might alleviate over time, it’s improbable that costs in other areas will decrease.”

The current period of relative stability in PPA prices during Q1 of 2024 presents a rare opportunity for buyers. Mumford cautioned that this trend is unlikely to persist indefinitely due to increasing demand pushing PPA costs higher.

He said the emerging strategy of bundling PPAs with clean energy tax credits is a financially sustainable procurement alternative for buyers.

Europe

In the initial quarter of 2024, PPA prices across Europe decreased by 5%. Specifically, solar P25 PPA rates declined by 5.9%, while wind prices dropped by 4.3%.

This downward trend in PPA prices reflects the ongoing impact of subdued wholesale electricity prices across Europe, with factors such as reduced costs in the solar supply chain and a more stable regulatory environment also playing a role.

“Europe’s energy markets seem to finally be reaching a period of relative stability, with even a light downward trend,” said Plácido Ostos, Director, European Energy Analytics,  LevelTen Energy.

Ostos, however, warns that the trend could reverse. Electricity demand will grow, and certain regulatory uncertainty remains.

For instance, Europe is seeing the potential for increased government oversight on PV component supply. These factors could all impact PPA prices soon. The relative stability of the current moment makes it a suitable time for buyers to go to market.

Pressure on PPA prices

Lower wholesale electricity prices resulting from Europe’s mild winter have intensified the pressure for PPA prices to become more competitive.

Several markets witnessed significant price drops during Q1, with Germany and Sweden experiencing robust decreases of 12.7% and 13.2% in their P25 prices, respectively. In Spain, prices declined by 10.5%, partly due to solar price cannibalization.

“The ongoing decline in solar module prices, driven by an influx of China-based PV components, also played a role,” Ostos said.

However, concerns within Europe’s domestic PV manufacturing industry have led to calls for government intervention, which could potentially restrict the supply of inexpensive components and elevate solar PPA prices.

An exception to the general trend was observed in Romania, where P25 solar prices rose by 8.6%. Ostos said, “Romania’s price increase in Q1 marks a reversal from the previous quarter’s trend, which saw an 11% decrease in Q4.

In line with solar trends, European wind PPA prices decreased 4.3% during Q1. This decline was attributed to a significant 8.8% drop in Spain due to limited project liquidity.

Poland debuted on the Wind P25 PPA Price Index in Q1, owing to improved liquidity.

According to a Lawrence Berkely National Laboratory report, the levelized cost of energy for utility-scale solar projects decreased by about 85% in the U.S. since 2010 to $33/MWh in 2021.