FERC Urged to Streamline Grid Connection Process for New Energy Projects
Washington, D.C., Wednesday, 4 September 2024.
Federal regulators are considering reforms to accelerate the interconnection of new energy projects to the grid. Industry stakeholders advocate for proactive planning, automation, and expedited processes to address the backlog of predominantly renewable energy projects in interconnection queues.
The Current Bottleneck
The interconnection process, crucial for integrating new energy projects into the grid, has become a significant bottleneck. Currently, 2,600 gigawatts (GW) of new low-cost energy projects are awaiting the ‘generator interconnection’ study process to connect to the grid[1]. This backlog not only delays project timelines but also escalates costs, ultimately affecting the affordability of energy for consumers.
Economic Implications
Consumers bear the brunt of these delays and uncertainties. Ted Thomas, founder of Energize Strategies, emphasized, ‘Consumers ultimately pay for this uncertainty, which is priced into the generating resources that do make it to commercial operation’[1]. The current inefficiencies in the interconnection process hinder new resources from meeting growing electricity demand and replacing older power plants.
Proposed Solutions
One proposed solution is the entry fee model, which allows for upfront, flat fees to be set based on a $/MW rate for specific geographic zones. This approach provides financial clarity for developers and eliminates speculative projects and costly re-studies[1]. Additionally, proactive transmission planning, as opposed to piecemeal expansion, can lead to significant cost savings. For example, studies show up to 15-fold savings in the cost of interconnecting offshore wind projects in the PJM Interconnection ($27/kW vs. $415/kW)[1].
FERC’s Role
The Federal Energy Regulatory Commission (FERC) has acknowledged the need for interconnection reform, issuing a landmark order last year requiring public utilities to adopt best practices[1]. FERC will host a two-day workshop on September 10-11 to discuss additional reforms in generator interconnection processes[1]. Stakeholders are urging FERC to prioritize transformational reforms and consider the strength of proactive transmission planning combined with an entry fee model to reduce the excessive uncertainty and delays currently plaguing the queue.
Industry Reactions
Various industry stakeholders have voiced their support for these reforms. Constellation Energy, for instance, supports an expedited queue for deployment-ready projects and recently announced approximately 135 MW of planned uprates at their Braidwood and Byron generating stations[5]. This is equivalent to adding 216 wind turbines, highlighting the scale of potential new renewable energy capacity[5].
Looking Forward
As FERC prepares for its upcoming workshop, the industry is optimistic that the proposed reforms will bring much-needed clarity and efficiency to the interconnection process. Proactive planning and the entry fee model are seen as pivotal steps toward ensuring that new energy projects can meet the growing demand for reliable and affordable electricity, ultimately benefiting consumers.