Taking Aim at Interconnection Backups: Renewable energy may get a boost from new FERC proposal

Published On
Aug 15, 2022

In the category of nerdy energy news that can make a difference, a new proposed rule from the Federal Energy Regulatory Commission (FERC) promises to help clear the enormous backlog of renewable energy projects now in line to connect to transmission.

The proposal, which made it to the top of the list in June, offers new guidelines that would reform the way transmission operators queue up new projects for interconnection study and put financial requirements in place for operators and project developers to ensure both live up to their sides of interconnection agreements.

FERC is a bit like the Federal Trade Commission for the energy industry, regulating the interstate transmission of electricity, natural gas and oil. This proposed rule, or notice of proposed rulemaking (NOPR), is one effort the agency is making to reduce the costs and wait times for new generation resources—primarily wind, solar and storage—to add their kilowatts to the grid.

Traffic in the queues

The congested interconnection queues FERC’s commissioners are hoping to address have become a significant problem over the last several years. At the end of 2021, there were more than 8,100 active projects waiting in line, totaling over 1,000 megawatts (MW) of generation and over 400 MW of storage. It now takes an average of 3.7 years for a project to make it through the queue and into operation—and only 23% of projects make it through the process at all.

Currently, transmission providers take a first-come, first-served approach to evaluating applications, which has contributed to the slowdown in two significant ways. First, not every application is at the same level of readiness. Some applicants are just trying to get a feel for what their actual costs might be to see if a project even makes financial sense, while others behind them might be ready to break ground as soon as approval comes through.

Second, by looking at projects one at a time instead of in groups, transmission providers could end up overlooking ways that proposals could work together to save costs and improve grid reliability.

Fixing the congestion

FERC proposed several steps to address these issues. First, it would shift application processing to a first-ready, first-served queuing system that would place projects with land and financial commitments already in place together into clusters for group consideration on a once-a-year basis. Applicants would split the costs required to update their networks for new generation connectivity based on how much each project adds to the need for a particular network upgrade. Currently, the first project to require such an upgrade pays for all of it, even if future projects benefit from that investment.

If the new proposal passes, applicants and providers would face financial consequences for falling short on their agreements. Withdrawal penalties for applicants increase as the provider’s study progresses, to further encourage less-secure developers to pull out of the process sooner. Providers would also face penalties—a first under FERC’s regulations—of $500 per day if they miss study deadlines.

What’s to come

Those developers just beginning to consider a project’s financial viability could request a less-intensive informational interconnection study to help answer questions. FERC has also proposed that transmission providers develop publicly available interactive mapping to illustrate where available interconnection capacity currently exists in their systems, which could be another tool for prospective generation developers.

FERC commissioners also hope the NOPR will address the hurdles renewable energy developers can face when they want to include energy storage in their plans. Storage—most typically battery-based—offers numerous grid benefits, including using stored electricity to maintain a site’s capacity when the sun isn’t shining or winds slow down. However, today’s developers must often pursue a separate interconnection study for this resource, even if it’s intended to come online at the same time. FERC would reverse this approach, enabling both systems to be served by the same request.

A final important provision is the requirement for transmission providers to consider new technologies that developers could propose to solve possible interconnection irregularities at a lower cost. These could include advanced power flow control, dynamic line ratings and static VAR compensators that could address potential issues without needing new substations or other potentially unaffordable solutions.

FERC is not without its internal political battles, as members are appointed to five-year terms by the president. For example, a decision by the five-member board regarding natural gas pipeline applications split 3-2, down party lines, with Republican members speaking out against the changes.

However, the need to address the current interconnection queue backlog appears to have had a unifying effect on commissioners’ deliberations, as it unanimously passed on June 16. The proposal is now out for comments and could be in place by the end of 2022 or early 2023.

About the Author

Chuck Ross

Freelance Writer

Chuck Ross has covered building and energy technologies and electric-utility business issues for a range of industry publications and websites for more than 25 years. Contact him at chuck@chuck-ross.com.

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