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We can do better: New report calls for more generator interconnection reforms

We can do better: New report calls for more generator interconnection reforms
Dominion Energy's Scott Solar facility in Powhatan County, Virginia (courtesy: Dominion Energy)

Have you ever tried to snag a morning Starbucks at a busy airport? Generally, all it takes is one look at a long line of frustrated fliers snaking around the establishment to get me over my desire for a caffeinated beverage.

Taking a gander at our generator interconnection queue might inspire the same reaction from potential project developers, and that has to change. More than 2,600 GW of projects are now waiting in the queue- more than double the capacity of our entire electrical grid.

A new report, Unlocking America’s Energy: How to Efficiently Connect New Generation to the Grid, recommends a series of interconnection reforms to streamline the process amid growing demand for electricity nationwide, calling for new approaches that can move new generation projects more quickly to completion while providing up-front cost certainty.  

Last year, the Federal Energy Regulatory Commission (FERC) released Order No. 2023, directing transmission providers to improve their interconnection processes, primarily by instituting a first-ready, first-served cluster study process, increased readiness requirements for interconnection projects, and firm deadlines for study completion. Since 2023 was issued, multiple grid operators have approved interconnection reforms, including the California Independent System Operator (CAISO) and the New York Independent System Operator (NYISO). Order No. 2023 set a critical foundation, the authors argue, but more can be done.

In the report, co-commissioned by Advanced Energy United and the Solar and Storage Industries Institute, Grid Strategies and The Brattle Group recommend further improvements to the interconnection process that deliver cost savings and improve reliability for customers, including:

  1. 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. 
  2. Implementing fast-track processes to quickly utilize existing and pre-planned interconnection capacity.
  3. Further optimizing the interconnection study process to identify the available headroom on the system, increase study efficiency, and remove unnecessary barriers.
  4. Speeding up transmission project construction. 

“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.”

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“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,” added 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.” 

The report’s authors contend modern 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. 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, Grid Strategies and The Brattle Group say, this raises costs for customers, delays necessary generation investments, and may compromise reliability. 

“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.” 

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 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.

“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,” notes David Gahl, executive director of the Solar and Storage Industries Institute, which co-commissioned the report.

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. 

“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 Gahl.

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. 

“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.” 

Click here to access the full report.