In a bid to cut down the long queues of renewable energy projects awaiting interconnection to the nation’s transmission grid, the United States Federal Energy Regulatory Commission (FERC) has taken steps to streamline the process.

The measures are expected to ease the process for transmission providers, ensure better timing and cost certainty to interconnection customers, and prevent undue discrimination against new power generation sources.

The reforms are significant for the U.S. energy sector, given that at the end of 2022, over 2 TW of generation and storage were waiting in line for interconnection. This equates to as much electricity generation capacity as all the power projects currently operating in the country. Projects have had to wait up to five years on average to connect to the grid. Renewable energy projects, especially, have had to bear the brunt of interconnection delays.

According to the National Lawrence Berkeley Laboratory, solar, storage, and wind projects accounted for 95% of the 2 TW of all proposed generation capacity awaiting connection to the grid in the U.S. at the end of 2022. The average time of queued renewable projects seeking interconnection increased by over 40% in 2022.

The reforms include the following:

• Institution of a first-ready-first-served cluster study process, with increased financial commitments for interconnection customers, to improve the efficiency of the interconnection process and minimize delays
• Imposition of firm deadlines and penalties of up to $2,500 per day for grid operators if they fail to complete their interconnection studies on time
• Incorporation of technological advancements into the interconnection process, including consideration of advanced transmission technologies in the interconnection study process. For example, transmission providers would have to allow more than one generating facility to co-locate on a shared site behind a single point of interconnection and share a single interconnection request
• Updation of modeling and performance requirements for inverter-based resources to ensure continued system reliability

Existing Challenges

The growth of new resources seeking to interconnect to the transmission system, coupled with the existing serial first-come, first-served interconnection study process, has created large interconnection queue backlogs and uncertainty regarding the cost and timing of interconnecting to the transmission system, increasing costs for consumers.

Consequently, new generating facilities cannot reach commercial operation in an efficient and timely manner.

The new rules, which came out of a Notice of Proposed Rulemaking issued in June 2022, will take effect 60 days after publication in the Federal Register. Compliance filings are due 90 days after publication in the Federal Register.

The reforms require all public utilities to adopt revised pro forma generator interconnection procedures and agreements to ensure that customers can interconnect to the transmission system in a reliable, efficient, transparent, and timely manner.

“This new rule will enable America’s vast power generation resources to connect to the grid in a reliable, efficient, transparent, and timely manner, and in doing so, help provide more reliable, resilient, and affordable electricity for all consumers,” FERC Chairman Willie Phillips said. “This is a watershed moment for our nation’s transmission grid.”

The FERC is also working on addressing the key issues of regional transmission planning and cost allocation. “We need to take a longer-term, forward-looking approach to planning for essential transmission facilities and to allocate the costs of those facilities in a just and reasonable manner while enhancing the reliability and resilience of the grid,” Phillips said.

The long interconnection queues have come at a huge cost, with congestion costs in regional transmission organization regions, excluding the California Independent System Operator (CAISO) region, amounting to a staggering $12.1 billion in 2022. Extrapolating these figures to include CAISO and the rest of the U.S. brings the total congestion costs to $20.8 billion, according to a report by power sector consulting firm Grid Strategies.

The interconnection reforms will go a long way in complementing the landmark Inflation Reduction Act, under which $369 billion would be spent to ensure energy security in the U.S. and achieve climate goals.