The operator of California's electric grid has a plan for improving the way new renewable power facilities can connect to it, but solar and wind power developers say the plan falls short.

The California Independent System Operator plans to file with federal regulators later this month a new set of rules for reviewing new power project interconnections. The new rules will streamline the process and cut down the amount of time it takes to make a decision, said Gregg Fishman, a spokesman for the ISO.

The organization will review projects in clusters, rather than individually to speed the process, and will require a much larger application fee to discourage less viable projects.

Industry groups representing wind and solar power developers said they were pleased the ISO is taking action to speed up interconnections, but that they found the new rules inadequate.

The ISO plans to speed its review of 90 of the 361 applications current being processed using its old rules, then tackle a second portion of the applications using the new, streamlined rules. A third group of applications will be on hold indefinitely.

"While the proposal tremendously improves the status quo, the study timeline remains untenably long and fails to integrate generation interconnections with the transmission planning process," said Nancy Rader, a spokeswoman with the California Wind Energy Association.

The 361 applications represent 105 megawatts of generation, with 65% of it representing renewables. It's an enormous amount of generation capacity, and it will take time to get through, said the ISO's Fishman.

"I'm sure there are project sponsors who are not happy" that their project was deferred or put on hold, Fishman said. "We were faced with difficult decisions; we had to draw a line in the sand, and this is where the line is."

State regulations require all power providers to use renewable sources for 20% of the electricity they sell by 2010. The mandate has encouraged developers to propose new renewable power projects and utilities to sign power purchase agreements for output from many of the projects. A major obstacle for renewable power developers has been dealing with the ISO's slow, lengthy review process.

Rather than review each project individually, the ISO will look at groups of projects clustered in the same location. The organization will also increase the application fee, from $10,000 to $250,000.

"The $10,000 fee allows projects that may not be viable to get into the queue and hold a place in the queue when, for some of these projects, it's not clear they will get built," Fishman said.

Applicants also will have to have a lease or land deed showing that they have permission to build the project, or else put up an additional $250,000, under the new rules.

These changes will help, but won't significantly improve the long wait time for new projects, said Shannon Eddy, executive director of the Large-scale Solar Association.

"Under this proposal, renewable power generators ... who may have applied for interconnection as early as 2006 will not be included in transmission plans until 2011 and - if major transmission upgrades are required - cannot expect to provide clean, renewable power to the grid prior to 2016," Eddy said in a statement.

The long lead time for getting approval to connect to the grid will "stifle innovation and discourage renewable developers from participating in the California market," she said.

Streamlining the interconnection application process is an important challenge, said Keely Wachs, a spokesman for PG&E Corp. (PCG) utility Pacific Gas & Electric.

"Building transmission and making sure new projects come online is one of the most significant challenges we face in bringing renewables to our customers," he said. The

Large-scale Solar Association represents solar power developers Abengoa SA (ABG.MC), Ausra Inc., BrightSource Energy Inc. and Solel Solar Systems Ltd. CalWEA represents Acciona SA's (ANA.MC) North American subsidiary, AES Corp. ( AES), Ameron International Corp. (AMN), and EDF Energy Nouvelles (EEN.FR) subsidiary EnXco Inc., among other companies.

Copyright 2008, CNN

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