FERC Rule Will Get Clean Energy onto the U.S. Power Grid Faster 

December 18, 2023

Surging demand for clean energy from wind, solar, and batteries, declining costs, and public policies that support the transition away from fossil fuels are driving the growth of U.S. renewable power beyond expectations, bringing the dream of decarbonizing the electric grid closer than ever to reality. But while economics and public support have shifted dramatically in favor of adopting renewables, the byzantine process for plugging new electric generators into the power grid stands in the way of delivering a green energy revolution. These delays slow the adoption of clean energy, prolong the life of dirty fossil fuel plants, and saddle ratepayers with unnecessary costs.

Reforming the interconnection process is critical to advancing clean energy, and in July, the Federal Energy Regulatory Commission (FERC) took an important first step by adopting Order 2023, the first major overhaul of national interconnection standards in two decades. The Order is being challenged in court, but NRDC stands with FERC to defend it. Here’s why. 

The story begins with some good news: Across the country, there are more than 2,000 gigawatts of planned generation—more than 90 percent of which is renewable—waiting in lines called interconnection queues. That’s more than the total capacity of all generators in service today. Now the bad news: It currently takes more than five years for the average generator to move through the interconnection process to even begin construction. Even worse, many projects wither on the vine while waiting. For example, fewer than 5 percent of projects proposed in PJM Interconnection, the nation’s largest Regional Transmission Organization (RTO), ever get built.

Under the current system, project developers must apply to an RTO or utility to add a new power source to the grid. Applications are placed in a queue for review and approval. In many areas, the queue process was designed for a bygone era when large generating facilities, typically located near cities and towns, could rely on existing transmission to deliver energy to their local customers. And the process was designed only for a leisurely pace of change to keep up with population growth and replace worn-out power plants.

But the energy world has evolved, and it’s past time for the interconnection process to catch up.

Over the past decade, requests from solar, wind, and battery storage developers to get onto the grid have swelled while the amount of available transmission capacity has declined. As a result, costly upgrades are often required to bring new power sources into service. That’s led to a huge backlog of interconnection requests, uncertainty over the cost and timing of projects, and developers canceling clean energy projects.

By the end of 2022, there were a record 10,000 active interconnection requests in queues across the country, more than four times the number in 2010. Overburdened interconnection queues and protracted wait times are now a feature in every region of the country. 

While we wait on solutions to the underlying problems with transmission planning, Order 2023 begins to address the administrative side of interconnection delays. It requires all utilities to catch up with best practices and use a “first-ready, first-served, cluster study” approach for reviewing interconnection requests in place of the first-come, first-served, one-by-one process still in use by many. It requires developers to secure financing and land rights before adding projects to interconnection queues and imposes tough financial penalties on grid operators and utilities that miss deadlines. It also requires transmission operators to consider technologies that expand the capacity of existing lines to accommodate clean energy resources. 

Unfortunately, the reaction to Order 2023 has been uneven. Large corporate buyers of renewable power such as Amazon, Google, and Tesla largely support FERC’s effort. RTOs and other grid operators, on the other hand, have asked FERC to overturn or clarify aspects of the order and have uniformly challenged proposed penalties should they fall behind interconnection study deadlines. That’s deeply troubling. RTOs say they are concerned with grid reliability because of retiring fossil fuel power plants. But the renewable energy and storage we need to replace those plants is stuck in those same RTOs’ bureaucracy. Despite this, these RTOs are challenging FERC’s long-overdue effort to improve reliability by getting more wind and solar power and battery storage onto the grid faster.

Last month, RTOs and other utilities petitioned the courts to overturn Order 2023. The Order isn’t perfect and much will depend on how FERC handles objections from grid operators, but overall, it’s a positive step forward that NRDC supports, not least because it makes the RTOs accountable for delays. In response to the RTO’s petitions, we filed a motion to intervene in the case on the side of FERC, to help ensure the rule is not shelved or rendered ineffective.

Delaying the adoption of renewable energy has real-life consequences. Time and again, renewables have shown they can bolster grid reliability under the most challenging conditions while lowering costs for consumers. The latest example was Winter Storm Elliott in December 2022, as renewable generation held up when frigid temperatures knocked nearly 40 percent of gas-fired power plants in PJM offline, along with several coal plants. 

Order 2023 on its own cannot solve the overriding challenges facing the bulk power system today—including a dramatic slowdown in building new transmission lines since 2015. But it does address a critical snag slowing the addition of renewable and energy storage projects that enhance reliability, lower costs, and bring us closer to our climate goals.

Image by Dennis Schroeder/NREL, 58020