By Jay Landers
At a moment when new electric generation facilities are desperately needed in the United States, the time required to connect such facilities to the grid is increasing. Looking to help alleviate this problem, the U.S. Department of Energy’s Federal Energy Regulatory Commission issued in early July a proposal aimed at quickening the pace by which transmission providers respond to requests from energy generators to add proposed projects to transmission systems.
At the end of 2021, more than 8,100 proposed electric generation projects were seeking to be added to transmission systems across the United States, according to an assessment released in April by the Lawrence Berkeley National Laboratory. This figure is based on the interconnection queues of transmission providers representing more than 85% of the total U.S. electricity load. Interconnection queues consist of requests from energy generators to add projects to transmission providers’ systems.
All told, the approximately 8,100 projects represented more than 1,000 GW of generation and an estimated 427 GW of energy storage, the assessment found. Renewable energy sources constituted the majority of these projects, with solar power accounting for 676 GW, or more than 65% of the generator capacity.
Of course, just because a project has been proposed for interconnection does not guarantee that it will be built. Historically, fewer than 25% of projects that are accepted by a transmission provider into its interconnection queue for further study reach commercial operations, the assessment noted.
That said, the time required for generation projects to complete the interconnection request process and begin commercial operations appears to be increasing. Between 2000 and 2010, the typical duration for this process lasted approximately 2.1 years. By contrast, projects completed between 2010 and 2021 required about 3.7 years, according to the assessment.
The proliferation of renewable energy projects in recent years has contributed to the longer time frames associated with the interconnection process, according to FERC’s notice of proposed rulemaking, titled “Improvements to Generator Interconnection Procedures and Agreements,” that was published in the July 5 Federal Register.
The recent upsurge in proposed renewable energy projects has “created new challenges for the generator interconnection process,” according to the NOPR. “These new challenges are creating large interconnection queue backlogs and uncertainty regarding the cost and timing of interconnecting to the transmission system, potentially increasing costs for consumers. Backlogs in the generator interconnection process, in turn, can create reliability issues as needed new generating facilities are unable to come online in an efficient and timely manner.”
Seeking to address these problems, FERC’s commissioners voted to approve a draft version of the NOPR on June 16. “Today’s unanimous action addresses the urgent need to update, expedite and streamline our processes to interconnect new resources to the grid,” said FERC chair Rich Glick in a June 16 news release.
Out with ‘first-come, first-served’
A key provision of the NOPR would change the order by which transmission providers process interconnection requests. Currently, transmission providers typically use a “first-come, first-served” process that assigns an individual queue position to an interconnection request based on its date of entry into the queue. A transmission provider then studies interconnection requests according to their order within the queue. If a request is found to be feasible, the transmission provider provides the developer with an estimate of what it will cost to connect its proposed project to the transmission system.
However, certain aspects of the first-come, first-served approach contribute to the backlog of interconnection requests. For example, in various regions of the country, generators seeking to interconnect to the grid must submit interconnection requests to transmission providers in order to learn what particular projects will cost in terms of required upgrades to the transmission system. “Because the potential costs are so opaque, generators effectively have to submit multiple project configurations to determine if there’s one that is feasible to move forward,” says Gabe Tabak, counsel for the American Clean Power Association, the trade association representing clean energy companies.
In such situations, generators often end up withdrawing their interconnection requests for all but one or two of the most viable potential projects. “These withdrawals then impact the remaining interconnection customers in the interconnection queue,” according to the NOPR. “A withdrawal may necessitate re-studies and cause the shifting of network upgrade costs to lower-queued interconnection customers. New cost estimates, in turn, can alter a proposed generating facility’s commercial viability and create further re-studies and withdrawals, often referred to as cascading re-studies and withdrawals. These re-studies exacerbate the cost uncertainty faced by interconnection customers and prevent the transmission provider from maintaining a model base case for how its transmission system is expected to reliably operate and serve load in the future.”
In with ‘first-ready, first-served’
To alleviate such problems, FERC is proposing to replace the first-come, first-served approach with what it calls a “first-ready, first-served cluster study process.” The latter method offers a “more efficient way of processing a large interconnection queue because it allows transmission providers to study numerous proposed generating facilities at the same time, rather than study each individual interconnection customer’s request separately and serially,” according to a June 16 summary of the proposal from FERC.
The NOPR also would seek to expedite the interconnection process by requiring transmission providers to share certain information with generators in advance of submitting interconnection requests. As a result, generators “would be able to get an estimate of what costs would be for a particular configuration in a particular spot,” Tabak says.
In this way, generators would be less likely to submit multiple interconnection requests for similar projects. Similarly, the NOPR proposes “more stringent financial commitments and readiness requirements for interconnection customers to remain in the interconnection queue,” according to FERC’s June 16 summary. These measures “will discourage speculative interconnection requests and allow transmission providers to focus on processing interconnection requests that have a greater chance of reaching commercial operation,” the summary states.
Meanwhile, the proposal also calls for imposing stricter deadlines on transmission providers when conducting studies associated with interconnection requests and assessing penalties in some cases when deadlines are not met. Such provisions are necessary to prevent delays on the part of transmission providers, Tabak says. Today, taking longer than mandated deadlines to complete these studies is “virtually a consequence-free proposition for” transmission providers, he maintains.
Support for the proposal
The proposal is staunchly supported by the renewable energy sector. “Interconnection queues are one of today’s biggest challenges to building a clean energy economy, and ACP is pleased to see FERC propose a rule to address these pressing issues,” said Heather Zichal, ACP’s CEO, in a June 16 news release. “ACP believes that FERC’s proposed rule represents an important step in bringing certainty to the timing and cost of interconnection, so that projects can quickly and reliably connect to the grid and deliver affordable, clean energy to customers.”
For its part, the American Public Power Association views FERC’s efforts to make the interconnection queue more efficient as “promising,” says John McCaffrey, senior regulatory counsel for the association. In particular, McCaffrey points to the commission’s attempts to reduce the number of what he calls “speculative projects” entering the interconnection queue. The NOPR’s proposed increased financial commitments and stronger readiness requirements to enter the queue “appear to be a step in the right direction,” he says.
Decreasing the number of projects entering the interconnection queue would confer multiple benefits, McCaffrey says. “To the extent that you have fewer proposed generators interconnecting in the queue, and the ones that do remain have greater likelihood of actually proceeding, that makes the queue both overall more efficient and more predictable,” he says. “I think that benefits the entire system. It benefits the other generators in the interconnection queue, and it also benefits the transmission providers and the other entities that are already on the transmission system.”
Comments on the NOPR are due to FERC by Oct. 13.