One of the biggest challenges facing our nation’s economic growth – and one of the largest threats to consumer energy costs and the reliability of our electricity system – is the ability to quickly connect new, large-scale energy resources to the transmission grid.

There’s now roughly 2,600 GW worth of energy sources stuck waiting in line to connect to the power grid (more than double the capacity of the current electricity system), held back by an antiquated way of studying and approving transmission grid upgrades. This process, known as ‘generator interconnection,’ was designed for an increasingly bygone era. In an era of more dynamic, more cost-effective, more distributed advanced energy resources, grid operators and electric utilities need a new approach for bringing new energy resources online. 

We’re overdue for an overhaul. Last year, the Federal Energy Regulatory Commission (FERC) took an important step in issuing Order No. 2023, which made important, but incremental changes to the generator interconnection process. This week, recognizing that fully resolving interconnection challenges is an ongoing effort, the Commission will hold a two-day workshop (September 10 and 11) to consider further reforms

In celebration of this opportunity to elevate the innovative solutions being discussed at FERC’s workshop, Advanced Energy United is leading a campaign we’re calling #InterconnectionWeek.

Please join us and others in the clean energy industry bringing attention to this critical challenge by using our social media toolkit and the #InterconnectionWeek hashtag in posts by individuals, organizations, and companies. 

While FERC Order No. 2023 provided important alignment of nationwide interconnection processes and requirements to filter speculative projects out of interconnection queues and impose more structure and certainty into the process, the rule was limited in scope. Even when releasing Order No. 2023 last year, Chair Willie Phillips made clear that FERC was not finished with interconnection policy reform; he announced plans for this week’s workshops soon thereafter. A new report, Unlocking America's Energy: How to Efficiently Connect New Generation to the Grid by Grid Strategies and The Brattle Group, co-commissioned by Advanced Energy United and the Solar and Storage Industries Institute (SI2), proposes additional reforms that can unlock more efficiencies to speed up interconnection processes. We also featured these reforms in a recent Advanced Energy United webinar, Accelerating Interconnection Reforms for a Stronger, More Affordable Grid, featuring report co-author Rob Gramlich of Grid Strategies, as well as representatives from United member company Clearway Energy Group, R Street Institute, and the Clean Energy Buyers Association. 

The recommendations in the paper target the root causes of interconnection challenges:  

• lack of available transmission capacity to accommodate new resources connecting to the grid 
• lack of upfront cost and schedule certainty that causes project developers to rely on the interconnection process as a cost discovery tool, and  
• an overly conservative identification of costly and time- and labor-intensive network upgrades needed to reliably connect new resources to the grid.  

These factors together lead to oversubscribed queues, unrealistic study results, project withdrawals, and cascading restudies, all of which add up to an interconnection process that is unnecessarily and unacceptably long, uncertain, and costly and ultimately a grid that is less affordable and reliable. Grid operators earned mostly Cs and Ds in a scorecard we published earlier this year evaluating interconnection outcomes and processes across the country. Order No. 2023 makes critical improvements that will help mitigate these challenges but falls short of fundamentally resolving them. 

Unlocking America’s Energy offers a new vision of the interconnection process, one in which proactive transmission planning and efficient use of already-available interconnection capacity are utilized to set an upfront price for interconnection and connect the “most ready” projects to the grid quickly via fast-track processes. As transmission planning catches up with the interconnection backlog, these fast-track processes become the norm, while the current cluster study process serves as a backstop only for projects that require network upgrades beyond those already anticipated. A streamlined and standardized interconnection study process would take full advantage of grid-enhancing technologies and non-wires solutions, and leverage automation—and therefore move projects through more quickly and identify ways to avoid costly network upgrades. After interconnection agreements are signed, transmission construction delays are reduced and cost increases are contained, enabling more projects to reach commercial operation more quickly. 

Each day for the rest of this week, which we are declaring #InterconnectionWeek, we will be expanding upon one of each of the recommended reforms from Unlocking America’s Energy.

Reform One: Adopt An Interconnection Entry Fee (September 10 Update)

Reform Two: Implement A Fast-Track Interconnection Process (September 11 Update)

Reform Three: Further Optimize Interconnection Studies (September 12 Update)

Reform Four: Speed Up the Transmission Construction Backlog (September 13 Update)

Reform One: Adopt an Interconnection Entry Fee

Lack of available transmission grid capacity (“headroom”) to accommodate new resource entry, as well as uncertainty with respect to interconnection costs and timelines, result in oversubscribed queues and a process that is less efficient and cost-effective than it should be. Unlocking America's Energy proposes an “entry fee” approach as the first step to make the interconnection process more predictable and efficient. Conceptually, an “entry fee” transforms the interconnection process from a very expensive and time-consuming cost discovery process that many projects won’t survive to a process focused on actually interconnecting projects ready and willing to pay the known cost to connect to the grid.

Under this approach, system capacity is assessed and proactively built through a long-term, multi-driver, and scenario-based planning process that accounts for projected new generator interconnection needs. Interconnection costs are set prior to the interconnection process based on the cost of expanding interconnection capacity. In effect, this proposal is the confluence of combining the long-term transmission planning process and the interconnection study process, a concept that has long been discussed among interconnection reform advocates. 

Once system capacity has been planned or identified (in the case of existing capacity), or both, interconnection customers with ready-to-develop projects compete to gain access to this available capacity based on their willingness to pay the posted entry fee and reasonable exit penalties (as applicable). Grid operators would subsequently confirm, through a streamlined process, the reliability of specific interconnection requests, and identify any local upgrades not addressed in the proactive planning process. This will greatly reduce risk and uncertainty around interconnection costs and timelines for developers, ultimately translating to more efficient and cost-effective market entry and more competitive electricity markets.   

Former Chair of the Arkansas Public Service Commission, Ted Thomas, wrote in Utility Dive recently about this “innovative solution” to removing uncertainty. Thomas added, “an entry fee model works best when combined with proactive transmission planning that anticipates future generation development needs and expands the grid accordingly — instead of a piecemeal, facility-by-facility expansion that ultimately costs consumers more.” 

An example of an interconnection process that follows this structure is the “fast-track” approach which we will discuss in tomorrow’s post about Reform Two.

Reform Two: Implement a Fast-Track Interconnection Process 

Reform Two explains how to make best and fastest use of existing and pre-planned available grid capacity (“headroom”) through “fast track” processes. 

Fast-track processes reduce interconnection timelines and provide greater schedule certainty by expediting interconnection requests that require no or minimal upgrades because they utilize existing and already-planned grid capacity. In addition to existing headroom and new headroom that will be opened up through proactive planning (as discussed in Reform One), over 100 GW of aging existing generating resources are projected to retire over the next decade, creating additional opportunities for new resources to interconnect without requiring significant upgrades. For projects that do not require system upgrades, requiring them to proceed through time consuming cluster study processes is unnecessary and less efficient for all parties—including projects moving through the cluster study process.  

In concept, the “fast-track” process is relatively simple, and follows an approach already in place in regions that offer workable “generator replacement” processes. Once headroom is transparently identified, the transmission provider would screen whether interconnection requests result in no or only minimal adverse impacts on the system. Those that pass the impact screen would advance on an expedited basis to the interconnection agreement phase of the process, while those that don’t pass the impact screen would proceed through the full interconnection queue process to identify necessary upgrades. If interest in the fast-track exceeds availability, a fair and transparent prioritization would limit entry.  

Over time, as proactive planning catches up with backlogged interconnection queues, most projects should be able to advance through fast-track processes, with the existing cluster study process serving as a backstop rather than the default. 

In parallel, interconnection process reforms (Reform Three, to be discussed next) will both expand availability of the fast-track and expedite and improve the process for those projects still moving through the existing cluster study process. 

Reform Three: Further Optimize Interconnection Studies

In Reform One and Reform Two we discussed proactive transmission planning, an interconnection entry fee, and a “fast track” model to quickly connect projects that require no or minimal network upgrades. Reform Three involves optimizing the study process itself through: 

• Identifying only network upgrades that are consistent with the requested interconnection service level, 

• Identifying the most cost-effective solutions for resolving reliability violations (e.g., by relying on grid-enhancing technologies, GETs), 

• More closely aligning data inputs, assumptions, and process timing between interconnection study processes of different local and regional scope, 

• Using automation to expedite interconnection studies, and 

• Establishing independent interconnection study monitors. 

Currently, interconnection studies often trigger network upgrades that are not truly required to maintain system reliability. These costly upgrades slow down the whole process: they lead to avoidable withdrawals, multiple time-consuming restudies, and ultimately construction of upgrades that are not necessary, contributing to supply chain constraints and construction delays for all interconnection upgrades. Real-time operator grid management has features which can avoid the need for network upgrades, such as through market-based generation redispatch. Adopting practices to better align required upgrades with requested service levels and providing interconnection customers an energy-only option for interconnection relieves both interconnection customers and electricity customers of unnecessary upgrade costs. 

In addition to reforming the study process to identify fewer reliability violations, we should be relying on the most cost-effective solutions to resolve those reliability violations, such as use of simple remedial action schemes and grid-enhancing technologies. 

Additional efficiencies can be gained by improving study alignment between local and regional systems, and between the host system (i.e., the regional transmission system where the interconnection request was initiated) and affected system (i.e., an impacted neighboring transmission grid), so interconnection requests can be studied more quickly and with less uncertainty to developers. To further increase process efficiency and reduce interconnection timelines, automation of interconnection studies should be more broadly adopted and further applications of automation should be explored. 

Finally, the report puts forward a recommendation for Independent Interconnection Study Monitors to evaluate study processes, assumptions, and outcomes, and identify opportunities for improvement.

Reform Four: Speed Up the Transmission Construction Backlog

Reforms One through Three, we identified opportunities to fundamentally re-think the generator interconnection process, starting with proactive planning that occurs before an interconnection request is even submitted, and ending with improvements to the interconnection study process. In Reform Four, we consider what happens after an interconnection agreement is signed. Over the past few years, there have been observable increases in delays during this phase, when construction of the actual network upgrades occurs. These delays directly correspond to delays in commercial operation, and many of the delays that projects experience are beyond the developer’s control. 

While network upgrade construction timelines are increasing across the industry, information about the root causes of these delays is limited. Some transmission owners complete upgrade projects more quickly and with fewer delayed projects (or shorter delays) than other transmission owners, suggesting there is significant room for improvement. Looking across all transmission owners, the most convincing evidence for what causes the transmission construction delays relates to supply chain constraints affecting key equipment for transmission upgrades. To help alleviate these constraints, or at least mitigate the negative effects they have on developers, grid operators, and transmission owners, Unlocking America’s Energy suggests two areas of project construction improvement: 

• Improve reporting on the transmission project construction phase: To better understand and address the causes of the transmission construction backlog, FERC, the regions, transmission owners, and state regulators should implement improved reporting on progress toward constructing new transmission facilities. These data will shed light on the relative importance of potential root causes of construction delays, including (1) project management prioritization by transmission owners, (2) other construction issues including supply-chain availability and limited outage windows, and (3) voluntary delays of in-service dates by interconnection customers. Increased transparency and better understanding of the underlying factors leading to construction delays is a necessary first step to shrinking these delays. 

• Industry and government collaboration to reduce supply chain bottlenecks: To address supply chain constraints, the report recommends a cooperative procurement program. Such a program could provide equipment manufacturers with the assurance needed to expand factories. This can best be accomplished through voluntary action by transmission owners, facilitated by federal assistance with financing. Report co-author John Wilson of Grid Strategies expounds on this solution in a recent LinkedIn blog post.  

If Reforms One through Four are implemented, we will be much closer to an interconnection process that will bring new resources online efficiently to address the dual challenges of preserving reliability amidst rapidly growing demand and maintaining affordable electricity prices.  

Let’s get to work!