By Greg Wannier, senior attorney at Sierra Club. Reposted from sierraclub.org.
Plenty of proverbial ink has been spilled discussing problems that renewable project developers have faced trying to bring clean energy online in recent years. The culprits identified have ranged from transmission constraints and planning issues to permitting delays and supply chain disruptions. And while it’s true we need massive transmission buildout to support integration of renewables at the levels needed to avert catastrophic climate change, we don’t need to undermine bedrock environmental laws and disempower vulnerable communities to pull it off. One significant but sometimes overlooked source of delays in the transition to clean energy is the tangled, muddy, and overcrowded interconnection process.
Even after proposed energy projects have been planned and financed, many have been forced to wait years to progress from a final proposal to a grid-connected installation. Before coming online and offering power to the electric grid, a generator (such as a wind farm or solar array) has to receive explicit permission to “interconnect” from the grid operator in its region, and the wait time has become unacceptably long. The large list of projects waiting for approval from these grid operators is often called an “interconnection queue.”
At the end of 2021, there were over 770 gigawatts of projects waiting in interconnection queues across the country–the equivalent of over 2.4 billion solar panels or more than 250,000 utility-grade wind turbines. Of the projects waiting for connection, at least 90 percent were devoted to clean energy generation or storage. Moving these renewable generation and storage projects from the queue to the real world is a critical step toward creating a clean, reliable, and efficient energy grid.
Right now, the Federal Energy Regulatory Commission is weighing a series of proposed reforms that, if properly implemented, could address some of the biggest issues slowing our clean energy transition and dramatically reduce the delays project developers experience. My colleague recently discussed one such proposal in his blog on FERC’s transmission planning Notice of Proposed Rulemaking.
The other major proposal is FERC’s proposed interconnection procedures reform. Published in June 2022, this proposal calls for reforms to the interconnection process such as: increasing developers’ access to information about available transmission capacity, requiring more streamlined and timely studies of potential projects, mandating operational upgrades to better evaluate the interconnection of new and emerging technologies, and restricting the circumstances in which potential energy projects may request interconnection.
Most–but not all–of these proposals make sense. FERC has the opportunity to finalize a rule that would address serious shortcomings in the current interconnection process and help bring desperately needed clean energy online at a pace closer to what is needed. We urge FERC to focus on the real barriers to rapid interconnection of new, low-cost energy resources, rather than false solutions that erect new barriers.
Increasing Information Access
Figuring out where to locate a wind or solar farm is complicated and depends on several factors, but it need not be opaque or uninformed. Unfortunately, transmission owners and grid operators provide only limited information to renewable energy project developers and independent developers who are planning projects. This lack of transparency simultaneously increases the number of applications and decreases the quality of those applications, contributing to delays. In its proposed interconnection procedures reform, FERC addresses this issue in three ways.
First, FERC would require transmission providers to offer more public access to some interconnection information to help project developers identify broad geographic constraints. While this proposal is a welcome improvement, FERC could strengthen it by requiring even more public information about the area where an operator wants to build a facility. Knowing key facts, such as the available interconnection capacity at a site, other projects currently in the queue and their interconnection capacity, and transmission congestion that may affect a prospective project would improve the quality and accuracy of proposals, benefiting consumers and increasing the pace of the clean energy transition.
Second, FERC would require grid operators to provide an option for project developers to request an informational interconnection study before formally joining the queue. Again, this proposal is a step in the right direction, but FERC must remove significant restrictions it has proposed to layer on the process. For example, FERC would require grid operators to conduct separate studies for each iteration of a single project. Under this requirement, grid operators would not be allowed to offer renewable project developers comprehensive studies that compare a range of possible project configurations, making it harder for project developers to choose the best variation of a project.
Third, FERC would require grid operators to offer a “Resource Solicitation Study” for large batches of resources to entities engaged in resource planning. This informal “cluster study” would help planners better tailor resource siting to system needs. For example, a utility planning significant wind and solar buildout under its resource plan could request one of these cluster studies to help it determine where these new wind and solar resources should be built to maximize their usefulness to the grid. By taking steps to ensure this advantage is only made available to entities planning in good faith–without putting their thumbs on the scale in favor of certain types of resources–FERC can make this proposal even stronger.
Streamlining and Requiring Timely Resolution of Interconnection Studies
Under existing policies, grid operators mostly study projects one at a time based on the order they arrive. These studies identify system upgrades that would be needed to interconnect a specific project to the grid, and must be completed before a project can move forward. The problem with studying projects one at a time is that modifications to one project will often have cascading effects on interconnection studies for other projects that counted on projects before them. This approach has unfortunately forced grid operators to restart some interconnection studies multiple times before completion, wasting valuable engineer time. This project-by-project strategy may have worked when energy projects were trickling in from a few dominant utilities, but it is no longer flexible enough to handle the much more dynamic marketplace of renewable energy development. Another issue with these project-by-project assessments is that one project might also be required to fund grid upgrades that end up helping several more projects come online later, who wouldn’t be required to contribute to the costs of the first project. Loading all the costs up on one project, while the others free ride, increases the likelihood that projects drop out of the queue and slow all the other studies down.
FERC’s proposal would require grid operators to study potential projects in “clusters” of several generating facilities as they become ready, increasing the efficiency of interconnection studies, eliminating incentives for developers to manipulate their position in a queue to take advantage of other projects’ interconnection upgrades, and reducing the chance a project would need to be studied again.
The proposal would also impose a financial penalty on grid operators that fail to assess interconnection requests in a timely manner, further improving the speed of interconnection review. In the current system, grid operators have allowed interconnection queues to reach unacceptable levels without facing any real consequences. If renewable developers are forced to wait for years to interconnect, they should at least gain some corresponding relief from interconnection costs as recompense.
Reforming Interconnection Studies to Better Incorporate New Technologies
FERC also proposes long-overdue reforms to interconnection procedures that will better incorporate new technologies, including:
- Requiring grid operators to holistically evaluate hybrid resources that combine multiple technologies behind one point of interconnection (e.g. solar paired with battery storage systems);
- Allowing generators to make smaller modifications to their projects, like adding paired storage, without restarting their interconnection evaluation;
- Standardizing operating assumptions for intermittent and other nonthermal resources more generally to ensure grid operators make interconnection decisions based on fair and realistic metrics; and
- Allowing more generators to take on more self-regulation of output in exchange for a faster and cheaper interconnection.
While FERC’s proposal remains a step in the right direction, it should go further. In particular, it should require grid operators to include alternative transmission technologies in their assessment of which transmission upgrades are needed to add new resources, and prohibit them from limiting which technologies might qualify. These technologies are often cheaper and faster to build, which would further accelerate the timeline for new clean energy projects to come online.
Restricting Access to Interconnection Queues
While the majority of FERC’s proposed rule addresses the interconnection queue backlog by helping grid operators process interconnection queues more efficiently, one aspect of the proposed rule would prevent backlogs by making interconnection queues more exclusive.
As proposed, FERC would require grid operators to implement a series of stringent eligibility requirements designed to “discourage speculative interconnection requests.” This anticompetitive and shortsighted proposal would significantly reduce the ability of new clean energy and independent projects to seek interconnection at a time when we need extensive renewable energy buildout.
Through this proposal, FERC is attempting to solve a problem that does not exist. FERC suspects developers submit interconnection requests for generation projects to gain more information or secure a better queue position, without serious intent to turn those projects into reality. But research from the Lawrence Berkeley National Laboratory shows FERC’s concerns are unfounded. In fact, over the last ten years, withdrawal rates of interconnection applications have remained relatively constant—the opposite of what you would expect if there was a serious increase in speculative interconnection requests.
Developing a power plant is complicated, and even developers with the best intentions may fail. Penalizing legitimate project proposals may reduce the number of projects proposed and reduce interconnection backlogs, but only by installing artificial barriers to entry at the exact moment we need to be encouraging innovation.
New generation projects are waiting far too long for interconnection, stymying the clean energy transition. FERC’s proposed interconnection reform includes several proposals that will help resolve this backlog, alongside transmission planning reform. But artificially limiting the number of projects that can apply for interconnection in an attempt to address interconnection backlog is a false solution. Instead, FERC and grid operators must create robust, transparent, and flexible systems poised to handle the massive amounts of clean energy poised to come online in the next several years.
Header photo by Dennis Schroeder / NREL