FERC directs Transmission Providers to implement cluster studies, among other reforms

WASHINGTON, DC, July 27, 2023 - The Federal Energy Regulatory Commission (FERC) voted today to finalize rules regarding how interconnection queues across the nation should be governed. The ruling establishes requirements that must be met by all public utility transmission providers, such as Regional Transmission Operators (RTOs), Independent System Operators (ISOs), and utilities in non-RTO/ISO regions. The long-awaited final rule follows up on a Notice of Proposed Rulemaking issued by the Commission last July, in which the Commission recognized that interconnection backlogs threaten reliability and just and reasonable rates. Requirements in the final order include a transition to cluster studies, replacement of the “reasonable efforts standard” with study deadlines and penalties for transmission providers, and provisions to better accommodate new technologies such as storage and hybrid resources and to ensure consideration of grid-enhancing technologies.  

“Advanced Energy United and our members applaud the Commission for identifying the urgent need for interconnection reform and for working diligently to put forward a final Order that will start to improve the broken interconnection process,” said Caitlin Marquis, Managing Director at Advanced Energy United. “In light of the scope of the interconnection challenge, we also appreciate Acting Chair Phillips’s recognition that there is ‘so much more to do,’ and hope to see this momentum maintained with follow-up efforts by the Commission to address additional interconnection reform needs." 

“We will be digging into the details of the Order over the coming days, but an initial review of the reforms finalized and those left out indicates some promising progress over the original proposal,” added Marquis. “In particular, we are pleased to see the Commission step back from problematic non-financial “readiness” requirements that were unworkable, and to see important provisions regarding Transmission Provider accountability and accommodation of advanced energy technologies included in the final rule—although the details of how those proposals were finalized will matter a great deal. However, we know the requirements this new rule codifies will only go so far toward addressing the root causes of current interconnection backlogs and delivering an interconnection process that’s equipped to facilitate the scale and pace of the energy transition.” 

Over 2,000 GW of advanced energy generating and storage capacity is currently seeking transmission access, representing a huge potential to contribute to grid reliability needs, provide low-cost energy, create good paying jobs, and ensure individual states can reach their energy policy goals. The demand for transmission access is only accelerating: FERC acknowledged last June that at the end of 2021 the megawatt volume of interconnection requests had tripled over the previous five years.  

Studying these projects in a timely and efficient manner is critical to achieving reliability and affordability through the energy transition, but it will require a fundamentally reformed interconnection process that is equipped to handle the volume and variety of projects seeking to connect to the grid.

FERC’s final Order advances some important best practices, such as:

• moving all regions toward a “first-ready, first-served" cluster interconnection process
• instituting firm study deadlines and penalties for transmission providers
• requiring a standardized affected system study process
• allowing greater flexibility in co-locating generation resources at the same interconnection point
• requiring modeling assumptions that more accurately reflect energy storage operating parameters, and
• requiring consideration of grid-enhancing technologies in cluster studies.

These reforms, if well crafted and well implemented, should help to make the existing interconnection process incrementally faster and more flexible, but they fall short of the comprehensive interconnection reforms needed to address current queue backlogs.

“While this FERC action to improve the interconnection process is welcome, the final rule unfortunately leaves important stones unturned,” said Marquis. "The Order does not address some of the root causes of mounting interconnection costs and delays, including an unnecessarily protracted and inefficient study process and unexpectedly high costs of transmission system upgrades, which are ultimately passed through to consumers." 

“United looks forward to engaging on the compliance process to ensure the best possible implementation of the reforms put forward by FERC today, and we look forward to continuing to engage with the Commission to address still-unresolved interconnection challenges.” 

Additional resources: 

• Report: Understanding FERC’s Proposal for Relieving Interconnection Delays (Sept 2022) 
• Blog: The Queue is Jammed. How Can FERC Get More Renewables Connected to the Grid? (Sept 2022) 
• Webinar: Interconnection: Why It's Broken & How to Fix It (May 2023) 

Click here to learn more about Advanced Energy United’s work eliminating barriers and expanding opportunities for advanced energy technologies in wholesale markets.