Reforms needed to expedite generator interconnection amidst growing demand for electricity
WASHINGTON, DC – Amid growing demand for electricity, a new report from Grid Strategies LLC and The Brattle Group recommends additional reforms to “generator interconnection,” the process by which new, large-scale energy resources are connected to transmission grids. The report, Unlocking America’s Energy: How to Efficiently Connect New Generation to the Grid, calls for new approaches to interconnection that can move new generation projects more quickly to completion while providing up-front cost certainty.
“The interconnection process needs to keep up with what we’re asking of it,” said Rob Gramlich, President of Grid Strategies. “There are now 2,600 GW of projects in the queue that require our attention. The reforms in the report would result in a faster, more efficient, more cost-effective approach to connect new energy projects to the power grid.”
“We are not doing a good job planning ahead for the transmission upgrades that, as we already know, will be needed to bring new resources online,” said Johannes Pfeifenberger, Principal at The Brattle Group. “And in the few cases where we are planning ahead, we don’t have a way to provide more certainty and allow resources to quickly take advantage of the already available or planned grid capacity. This report lays out a roadmap to plan ahead, provide up-front certainty, and connect resources quickly and cost effectively.”
Today, transmission planning does not account for all already-known future transmission needs, and the generator interconnection process is oversubscribed and bogged down by expensive network upgrades to accommodate the large numbers of proposed new projects. Developers are requesting access to the grid to build record levels of new resources to meet quickly-rising future electricity demand. In many cases, the total capacity of interconnection requests exceeds the total peak load, resulting in impractical interconnection studies with unrealistic outcomes. The result is a costly, unpredictable, and slow process that many generation projects enter but few successfully navigate to achieve commercial operation. Ultimately, this raises costs for customers, delays necessary generation investments, and may compromise reliability.
The report recommends greater reliance on proactive transmission planning, combined with a transparent “entry fee” for new generation to unlock the ability to fast track the “most ready” projects that are willing to pay the entry fee to access the existing and planned interconnection capacity. Clustered interconnection studies as we know them today would only be needed to evaluate upgrades for projects that cannot move through the “fast track” process. This approach – in combination with process efficiency improvements and efforts to speed up the necessary transmission construction – will result in a less costly, more predictable process that will bring more resources online more quickly to meet customer needs and enhance reliability.
Specific reforms proposed include:
- Providing upfront cost certainty by adopting an “entry fee” to be paid by interconnecting resources that reflects the actual cost of transmission upgrades needed to accommodate the interconnection of those resources.
- Implementing fast-track processes to quickly utilize existing and pre-planned interconnection capacity.
- Further optimizing the interconnection study process to identify the available headroom on the system, increase study efficiency, and remove unnecessary barriers.
- Speeding up transmission project construction.
The recommended reforms to generator interconnection come as the Federal Energy Regulatory Commission (FERC) prepares for its upcoming September 10-11 workshop on interconnection efficiencies and innovation. The recommended reforms seek to build on the new rules FERC issued last year to improve interconnection processes, which were more limited in scope.
“The process for connecting new energy projects to the power grid is outdated, unpredictable, and slow, which leads to higher costs and a less reliable grid,” said Caitlin Marquis, Managing Director at national business association Advanced Energy United, which co-commissioned the report. “At a moment when demand for electricity is on the rise, consumers can’t afford the status quo.”
"FERC Order No. 2023 made improvements to what is required of grid operators. However, additional structural changes to how new energy projects get connected to the power grid are needed now” said David Gahl, Executive Director of the Solar and Storage Industries Institute, which co-commissioned the report. “Adopting an ‘entry fee’ model that assigns transmission system upgrade costs commensurate with generator benefits to provide more up-front certainty about grid connection capability is a critical reform.”
“Reliable, affordable electricity is critical to businesses, and a faulty interconnection process that fails to bring new resources online efficiently is a direct constraint to economic growth,” said Kyle Davis, Senior Director of Federal Affairs for the Clean Energy Buyers Association, which endorses the report’s recommendations. “This report identifies important interconnection reforms that will accelerate development of new clean energy resources that are critical to enabling economic activity across growing industries.”
The report emphasizes that challenges to an efficient interconnection process occur even before generation projects enter the interconnection queue. Better transmission planning could prevent costly, lengthy upgrades, allowing developers to commit to grid access upfront with known costs. Automation and advanced software tools should also be used to speed up the process and enhance transparency before and during construction.
Click here to access the full report.