Canary Media examines the newest approval of reforms by the Federal Energy Regulatory Commission (FERC) to improve the efficiency of interconnection projects, quoting Caitlin Marquis on the anticipated positive and negative impacts of the commission's ruling.

The U.S. has far more clean energy projects seeking to connect to the grid than utilities and grid operators can handle. It’s a crisis that has been decades in the making, but one that must be resolved in the next few years if the country is to meet its climate goals.

Last Thursday, the Federal Energy Regulatory Commission approved a sweeping set of reforms to address one facet of that crisis: the need to streamline and modernize the rules and processes that govern how power projects interconnect to the nation’s transmission grids.

Clean-energy groups offered qualified praise for FERC’s effort to remove barriers that have left hundreds of wind, solar and battery projects languishing in yearslong backlogs to be considered for interconnection. But they also said the order was just the first step in a much broader effort needed to solve the country’s grid backlog problems, with the biggest step — finding ways to dramatically speed up the building of new transmission lines — still to come.

Those reforms are needed to clear what’s become ​“the largest backlog in history” across the country’s grid, Phillips said at Thursday’s meeting. At the end of 2022, more than 2,000 gigawatts’ worth of projects, the vast majority of them wind, solar and battery storage, were seeking grid interconnection. In some of the more congested parts of the country, ​“we have wait times of over five years, and the average project needed today won’t even begin construction until 2028,” Phillips said.

Clean-energy groups and grid experts had mixed reactions to FERC’s rule. Many praised the scope of reforms achieved, given the conflicts between clean-energy developers and utilities as well as FERC’s current commissioners.

The interconnection process is ​“really foundational to getting new resources online affordably and efficiently — and unfortunately, our current system isn’t doing that,” said Caitlin Marquis, managing director at clean energy trade group Advanced Energy United.

One example was a change to FERC’s ​“commercial-readiness” requirements for project developers. While the order does require developers to pay financial deposits that they can lose if they fail to meet certain milestones, the final version stripped out a contentious proposal to require developers to sign contracts with customers for their power before completing an interconnection agreement.

The problem with that, Marquis said in an interview, is that ​“projects don’t have contracts before they enter the queue, because they don’t know what their interconnection costs will be.” And so-called ​“merchant” projects that sell their power on wholesale energy markets ​“may never have a contract.”

Marquis also commended FERC’s decision to add, for the first time, hard timelines for grid operators and utilities to complete interconnection studies and financial penalties for failing to stick to them. Those penalties can add up to thousands of dollars per day, and they were hotly opposed by grid operators and utilities. Given that pushback, it’s notable that FERC ​“nonetheless recognized the importance of holding all parties in the interconnection process accountable,” she said.

At the same time, FERC’s order ​“unfortunately leaves important stones unturned,” Marquis noted in a Thursday statement. Those include its failure to demand improvements to what she characterized as ​“unnecessarily protracted and inefficient” interconnection studies, which can sometimes determine that developers must pay for millions of dollars’ worth of upgrades to areas of the grid that may be thousands of miles away from where they’re planning to interconnect, and the resulting ​“unexpectedly high costs of transmission system upgrades, which are ultimately passed through to consumers.”

Clean-energy groups also highlighted that FERC’s action on interconnection, while much needed, is only the first step in a much wider-ranging set of reforms required to break the logjam on clean energy growth. Simply put, there’s only so much that interconnection reforms can do to make room on increasingly crowded and constrained U.S. power grids.

Advanced Energy United’s Marquis cited the example of MISO, the Midwestern grid operator whose territory covers parts of 15 states from the Gulf of Mexico to Canada’s Manitoba province. MISO provides a ​“heat map” of available grid capacity across its territory, a potentially useful tool for clean-energy developers. Unfortunately, almost all of MISO territory is colored red on the map, indicating a heavily constrained grid — a condition that MISO hopes to resolve with a multibillion-dollar transmission expansion plan now in the works. 

Fixing that requires ​“making sure the transmission planning process is reformed and taking into account the need for new generation, so you’re making sure that in the future there’s more headroom on the system,” she said.

Read the full article here.