By Jay Landers
In what it billed as a “historic step,” the U.S. Federal Energy Regulatory Commission recently released a final rule that aims to expedite the interconnection process, or the procedures by which new generation sources seek to connect to transmission systems.
Electricity advocates are hoping that the new rule will facilitate a timelier interconnection process and help decrease the record backlog of interconnection requests.
Released by FERC in late July , the final rule, which is titled “Improvements to Generator Interconnection Procedures and Agreements,” requires that all public utilities adopt new versions of such procedures and agreements that are intended to make the interconnection process more workable. FERC issued the new rule a little more than a year after it published a notice of proposed rulemaking related to the same issue (see “Proposal aims to reduce electric generation interconnection backlog,” Civil Engineering Online, July 27, 2022).
For its part, FERC did not shy from signaling the importance of the final rule. “Today FERC took an historic step in the modernization of the nation’s transmission grid by streamlining the interconnection process for transmission providers, providing greater timing and cost certainty to interconnection customers, and preventing undue discrimination against new sources of power generation,” according to the commission’s July 27 news release announcing the availability of the final rule.
“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,” said Willie Phillips, FERC’s chair, in the news release. “This is a watershed moment for our nation’s transmission grid.”
The final rule comes at a time when the backlog of proposed power generation and energy storage projects seeking to connect to the grid is larger than ever.
As of the end of 2022, 10,262 proposed projects accounting for more than 2,000 GW of total generation and storage capacity had begun the interconnection process, according to an April 2023 study from the U.S. Department of Energy’s Lawrence Berkeley National Laboratory. By comparison, the total existing U.S. generating capacity amounts to approximately 1,250 GW.
Renewable energy sources constitute the vast majority of the interconnection requests by far, with solar, battery storage, and wind energy totaling 95% of all proposed capacity, according to an April 6 news release from the Berkeley Lab announcing its study. However, it bears noting that most proposed projects never come to pass. “Looking back at a subset of queues for which data are available, only 21% of the projects (and just 14% of capacity) seeking connection from 2000 to 2017 subsequently reached commercial operations,” the release notes.
In 2022, connection requests grew by 40% compared to 2021, according to the Berkeley Lab release. If anything, the findings undercount the true extent of the interconnection backlog, as the study does not include data for the entire country. Instead, the data for the study come from seven organized electricity markets and another 35 utilities outside those regions. Combined, these areas represent just more than 85% of all U.S. electricity load, the release notes.
The surge in interconnection requests is occurring at a time when such requests are taking ever longer to complete. “Interconnection requests now typically take more than 3 years to complete the requisite grid impact studies in most regions, and the timeline from the initial connection request to having a fully built and operational plant has increased from (less than) 2 years for projects built in 2000-2007 to nearly 4 years for those built in 2018-2022,” the Berkeley Lab release states.
The final rule reforms the interconnection process in several key ways. Among these is the adoption of what FERC terms the “first-ready, first-served cluster study process,” according to the commission’s July 27 fact sheet on the rule.
This approach replaces the existing “first-come, first-served process,” whereby transmission providers assign 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. Unfortunately, the first-come, first-served process can incentivize generators to submit multiple requests for various project configurations to determine which one would have the most acceptable upgrade costs, contributing to the interconnection backlog.
Under the first-ready, first-served cluster study process, transmission providers “will conduct larger interconnection studies encompassing numerous proposed generating facilities, rather than separate studies for each individual generating facility,” according to the fact sheet. “This approach will increase the efficiency of the interconnection process, help minimize delays and improve cost allocation by analyzing the transmission system impacts of multiple projects at once.”
Generators, meanwhile, will have to meet requirements pertaining to financial deposits and site control conditions to enter and remain in an interconnection queue. These requirements will “ensure that ready projects can proceed through the queue in a timely manner,” according to FERC’s fact sheet. For their part, transmission providers will be subject to “firm deadlines” for completing interconnection studies and penalties if they fail to comply, according to FERC’s fact sheet.
Transmission providers also will 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,” the fact sheet notes. “This reform creates a more efficient standardized procedure for these types of generating facility configurations.”
The final rule has garnered largely positive reviews from electricity advocates, including the Edison Electric Institute, which represents U.S. investor-owned electric companies. “We applaud Chairman Phillips and the other commissioners for developing bipartisan solutions that require key changes, such as cluster studies and increased financial commitments, that will reduce interconnection backlogs,” said Phil Moeller, executive vice president of the Business Operations Group and Regulatory Affairs for the EEI, in a July 27 statement.
The American Clean Power Association hailed FERC’s final rule as a victory for its members, many of whom are engaged in the development of renewable energy. The final rule is a “much-needed action” and a “key step towards allowing new clean energy resources to predictably and cost effectively interconnect to the electric grid,” ACP said in a July 27 statement.
“This action will help provide relief to the nearly two terawatts of renewables and energy storage that are currently waiting to interconnect,” ACP said. “ACP looks forward to reviewing the final order and working in all regions of the country to expedite the ability of clean energy resources to interconnect in a timely manner and deliver multiple benefits to customers.”
The final rule is “certainly a step in the right direction,” says Riad Habib, senior vice president for energy and industry at Bureau Veritas North America, a testing, inspection, and certification company that works with clients in the offshore and onshore wind, solar, battery-energy storage, and transmission sectors. “Demand for new (renewable) generation and battery assets continues to grow as we see the project economics become more favorable when compared against traditional fossil fuel generation and continued federal and state incentive tail winds,” Habib says.
However, FERCs ruling “won’t necessarily solve all our issues,” Habib adds. “We need to recognize that the prolonged reviews are a function of the insufficient transmission infrastructure in place, and oftentimes the interconnection reviews are having to address issues around not just the interconnection of assets and build-out of reliable transmission infrastructure.”
The new rule is a “great step forward in trying to standardize the review process, but we should use this as momentum to evolve the review cycle while continuing to prioritize transmission reform,” Habib says.
FERC’s final rule was published in the Federal Register on Sept. 6 and will take effect Nov. 6.
This article is published by Civil Engineering Online.