FERC reforms interconnection, speeding critical renewables delays

On July 27, 2023, the Federal Energy Regulatory Commission (FERC) issued Order No. 2023, improving electric grid interconnection rules nationwide by setting firm standards and deadlines for interconnection review. It places fines on transmission operators that fail to adhere to the standardized deadlines.

FERC Chairman Willie Phillips called the ruling “a watershed moment for our nation’s transmission grid.”

The problem of interconnection is huge. By the end of 2022, over 2,000 GW of generation and storage projects were trapped in interconnection queues, often waiting for approval by utility transmission providers. Average wait times in these queues are around five years, a sluggish process that has been highlighted as one of the most important obstacles for the clean energy transition to overcome.

Solar, wind and storage projects in the interconnection queues make up nearly 94% of the total capacity in the queues, with solar constituting over half of that amount. Lawrence Berkeley National Laboratory and FERC said about 1,730 GW of utility-scale solar, wind and storage projects are now active in the interconnection queues of transmission system operators.

The new order from FERC includes some reforms that developers in some regions are already accustomed to, like stricter site control requirements, increased financial security milestones, and also withdrawal penalties.

Some markets had also allowed for multiple generating facilities to use a single interconnection request, and now the FERC ruling makes this a nationwide standard. This is particularly beneficial to renewable energy projects, as they are often dispersed over several project locations, rather than being large, centralized power plants like gas or coal plants.

Furthermore, FERC recognized that transmission operators were failing to approve interconnection in a fair and timely manner. These organizations acted like gatekeepers holding make a tide of clean, reliable energy with delays and ever-increasing fees to renewables developers.

Now, FERC has ruled that transmission operators must adhere to specific, time-constrained interconnection studies, or they will be assessed with penalty fees.

The ruling includes proposed uniform standards for evaluating and coordinating with “Affected Systems,” another primary source of delays.

“FERC’s Order No. 2023 does two things simultaneously—it catches much of the country up to interconnection procedures that have been in use in organized markets for the past 10 years, while also pushing advanced markets forward by imposing sets of firm timelines and standards,” said Jason Johns, partner, Stoel Rives Energy Development. 

“Today’s rule is an important milestone. But there is so much more to do. The Commission is working diligently on how to address the key issues of regional transmission planning and cost allocation,” said Phillips.

The ruling will take effect 60 days after publication in the Federal Register.