The Queue is Jammed. How Can FERC Get More Renewables Connected to the Grid?

Posted by Jeff Dennis and Sam Ressin on Sep 28, 2022 1:00:00 PM

Blog Post 2022-09-19 745

The growth of renewable energy has been accompanied by a worrisome trend: rising delays and wait times for projects asking for connection to the grid. These holdups lead to canceled projects, lost jobs, and wasted effort. Without changes to interconnection, this trend will only worsen, as the passage of the Inflation Reduction Act and rising fuel costs for conventional generation accelerate advanced energy adoption. Earlier this year, the Federal Energy Regulatory Commission (FERC) took the first step toward streamlining the interconnection process, but there is a long way to go.

On June 16, FERC issued a Notice of Proposed Rulemaking (NOPR) proposing changes to its regulations governing interconnection processes and agreements nationwide. This was not a surprise. In July 2021, FERC issued an Advanced Notice of Proposed Rulemaking (ANOPR) teeing up a host of issues related to transmission planning, cost allocation, and interconnection. Then in April, FERC issued its Transmission Planning and Cost Allocation NOPR (Transmission NOPR), in which the Commission presented steps to improve transmission planning and stated its intent to address problems with the interconnection process in a later proceeding. This NOPR on interconnection represents FERC’s next step on the way to improving the nation’s grid.

The need for reform is clear and pressing. As FERC notes, data compiled by the national labs show that, at the end of 2021, over 8,100 interconnection requests, representing over 1,000 GW of generation and an estimated 420 GW of electric storage, were waiting in interconnection queues across the country—triple the amount of five years ago. AEE noted earlier this year that more than 2,000 solar, wind, battery storage, and hybrid (solar plus storage) projects were waiting for approval in the PJM interconnection queue alone, enough to generate low-cost reliable power for 68 million homes and support approximately 1.7 million jobs.

In response, FERC proposes to address problems in existing interconnection processes caused by the existing practice of addressing interconnection requests on a “first come, first served” serial basis, the interdependent relationship between interconnection requests under that approach, potentially speculative projects entering the interconnection queue, and chronic delays in transmission provider studies of grid upgrades needed to get new projects online. FERC’s proposals would, if adopted, move instead to a “first ready, first served” approach to processing interconnection requests, increase requirements imposed on generators to demonstrate commercial readiness, reduce flexibility for transmission providers in the timing of interconnection studies, and update interconnection process to account for advanced energy technologies like energy storage and Grid Enhancing Technologies.

FERC’s NOPR attempts to accelerate the interconnection process and balance these considerations by proposing three major buckets of reforms:

  1. First Ready, First Served. FERC wants to change procedures used to process and study interconnection requests, proposing to replace the first-come, first-served process used by most transmission providers today to a first-ready, first-served cluster study process. Under the existing process, when a higher-queued generator drops out, time-consuming restudies must be performed for each of the generators behind it, since it was assumed that the higher-queued project would build transmission facilities needed to accommodate its request. In a cluster process, the transmission provider gathers up interconnection requests received during an open submission window and processes those requests as a group, studying the need for transmission upgrades to accommodate all of those requests. The use of a cluster study process has been identified by advanced energy companies as a best practice, and is in use by the California Independent System Operator today.
  2. Ready, Set, Go. Second, to join and remain in a cluster, projects would have to satisfy tighter financial commitment and readiness requirements, which FERC says is necessary to discourage speculative requests for projects that may not be commercially viable and are unlikely to be constructed. The financial commitments include increased deposits and withdrawal penalties. Interconnection customers will have the option of providing an executed term sheet, reasonable evidence of demand for the project (such as selection in an integrated resource plan or evidence of demand from a commercial customer), or a provisional Large Generator Interconnection Agreement (LGIA) that includes a commitment to construct the facility. In addition, FERC wants interconnection customers to demonstrate 100% site control at the time they enter the queue.
  3. Timely Studies. FERC proposes a series of new obligations for transmission providers to process the queue and perform study work in a more timely fashion. Most importantly, FERC proposes to eliminate the permissive Reasonable Efforts Standard, which requires that transmission providers employ “reasonable efforts” to complete interconnection studies and requests, but imposes no deadlines. In its place, FERC proposes deadlines for transmission provider studies with penalties for delay. FERC also proposes reforms intended to standardize and streamline the “affected systems” study process, which is required when an interconnecting generator may impact another transmission provider. FERC also proposes reforms that would require transmission providers to make information available to help resource planning entities (e.g., agencies responsible for conducting or overseeing integrated resource planning under state laws) identify cost-effective combinations of resources to meet their resource plans.

That’s not all. FERC also wants to integrate technological advancements into the interconnection process. FERC proposes to require transmission providers to allow interconnection customers to co-locate more than one resource, such as solar and energy storage, behind a single point of interconnection, and to add storage to an existing project without losing their queue position. In addition, when conducting interconnection studies, transmission providers would have to use accurate assumptions about the operation of storage resources, instead of treating them like traditional resources. This means, for example, that transmission providers cannot simply add together the capacity of a solar generator and the storage at the same location and require grid upgrades for the total amount when, in operation, the solar and storage would not be discharging into the grid at the same time. FERC also proposes that interconnecting customers be permitted to request evaluation of the use of innovative grid technologies like dynamic line ratings and advanced power flow control devices to unlock capacity on the existing grid during the study process. Finally, FERC proposes to require that non-synchronous generating facilities (i.e., solar and wind) provide transmission providers with accurate models of their behavior.

All of this is good. Much of what FERC proposes in its NOPR will help to clear bottlenecks and streamline the interconnection process for the expanding waiting list of viable renewable and advanced energy projects asking for connection to the grid.

But the rule FERC ultimately issues will need to go further. It will need to ensure that readiness requirements for interconnecting generators align with the realities of the commercial development process so that they remove only those projects that are truly not viable. In addition, to be effective FERC’s final rule must ensure that transmission providers are held to account for meeting deadlines in processing interconnection requests. At the end of the day, the goal must be to speed execution of the interconnection process, not simply shrink the queue; the reality is that with the passage of the IRA and continued implementation of aggressive state policy requirements and customer clean energy goals, more renewable and advanced energy projects will be seeking interconnection. To meet this moment, interconnection processes must speed up.

AEE will push for these and other improvements in comments on the NOPR due October 13.

Stakeholders interested in submitting comments should refer to AEE’s document summarizing the FERC NOPR. To download it, click below.

Download 'Understanding FERC's Proposal for Interconnection'

Topics: Wholesale Markets, Transmission