Commentary

What FERC Order 2023 Means for the Interconnection Queue

In recent years, concerns about the lengthy interconnection queue have dominated headlines. This queue has emerged as a major obstacle to adding new generating facilities to the U.S. power grid. It is primarily caused by grid congestion, permitting issues, extensive infrastructure project delays, and the traditional interconnection study approaches used in many states.

To address this issue, policymakers and regulators have introduced new rules, mechanisms, remuneration structures, and funding to incentivize efficient grid investments. One of these new rules is Federal Energy Regulatory Commission (FERC) Order No. 2023. Order 2023 reforms the procedures and agreements electric transmission providers use to incorporate new generating facilities into the grid. This rule aims to streamline the interconnection process by addressing queue backlogs, improving certainty, and establishing clear treatment for proven alternative transmission technologies.

But what exactly does FERC Order 2023 entail and how will it contribute to reducing the interconnection queue? For starters, Order 2023 mandates several changes to reduce the interconnection queue. These include:

A move toward first-ready, first-served cluster studies.
Opportunities to co-locate generation and/or storage.
Consideration of alternative transmission technologies (ATTs) in power system studies.
More transparency and standardization of the interconnection process.
Increased financial and other commitments for project developers.

Beginning in April 2024, transmission providers must consider ATTs as potential grid reinforcements during the cluster study and report on their evaluation. Since it’s not possible to cover all of these in one article, I’ll focus on the requirement to consider ATTs.

Hold on. What are ATTs and what do they have to do with the interconnection queue? ATTs include static synchronous compensators, static volt-ampere reactive (VAR) compensators, advanced power flow control devices (which I’ll touch on later), transmission switching, synchronous condensers, voltage source converters, advanced conductors, and tower lifting. After extensive consultations, FERC determined that these technologies have “the most potential to be useful to reduce interconnection costs by providing lower cost network upgrades to interconnect new generating facilities.”

Under the new mandate, transmission providers must consider these ATTs as possible grid reinforcements during the cluster study, a crucial part of the generator interconnection process. Based on this, each transmission provider will decide whether it should be used as the whole or part of the grid reinforcement to interconnect that cluster of generation projects. The decision should be made in line with good utility practice and any reliability standards or other regulatory requirements that may apply. The cluster study report must provide an assessment of the feasibility, cost, and time-savings potential of ATTs as alternatives to traditional network upgrades to increase transparency for project developers and other stakeholders.

So, how will including ATTs in interconnection studies accelerate the queue? Conventional grid reinforcements for interconnection projects, such as new lines and reconductoring, typically take many years to construct, are expensive, and are sized to meet the entire network’s needs from day one. These grid upgrades are also subject to the possibility of further delays due to permitting issues and the availability of a suitable outage window, creating a high level of uncertainty and risk for the project developer. This often leads to significant delays in the interconnection of the new generation or, even worse, the withdrawal of projects.

The inflexibility of these conventional reinforcements can exacerbate the issue, particularly if the network requirements change during the interconnection process. For instance, if a generation project withdraws due to an external factor, such as supply chain issues, the grid reinforcement is still designed to accommodate the full initial requirements. The other project developers will then have to split this same cost for grid reinforcement between the remaining projects, which often leads to further withdrawals as some projects’ economics may become non-feasible.

These issues with conventional grid reinforcements can often lead to the entire cluster of projects withdrawing, with some projects re-submitting again at a later date. This can actually increase the interconnection queue rather than reduce it. To illustrate this point, an example of how this interconnection process often goes is:

Study. Queue generation projects grouped for combined study.
Cost Estimate. Study results indicate requisite grid reinforcements and cost allocation. Typically, new lines, reconductoring, or conventional power factor correction (PFC) equipment.
Decision by Developers. Some projects choose to withdraw due to cost allocation or other reasons.
Revised Cost Allocation. Cost allocation increases for remaining projects.
Additional Withdrawals. Additional projects may choose to withdraw due to increased cost allocation.
Back to Square One. Entire group withdraws and resubmits for future study.

And round and round it goes.

However, flexible grid reinforcements like ATTs can be adjusted in size if some projects withdraw from the process. As a result, the grid reinforcement can easily be customized to match the actual network need, thereby reducing costs and uncertainties in the process. Modular solutions, such as advanced power flow control (APFC), are particularly effective in this way. The number of devices and, thus, the power flow control capability can be readily adapted to ensure the solution is cost-effective and future-proofed.

APFC refers to modular power electronics-based devices that change the reactance of transmission and distribution lines to control power flows on the grid. These devices can easily be added to existing deployments or relocated to alternate sites. Utilities worldwide have successfully used APFC devices to balance power flows, maximize grid utilization, and resolve grid congestion to support renewable energy integration.

This aspect is particularly important since ATTs such as APFC devices usually have significantly shorter delivery timeframes than conventional grid reinforcements, allowing for earlier interconnection. Instead of the scenario above, the interconnection queue may instead look like this:

Study. Queue generation projects grouped for combined study.
Cost Estimate. Study results indicate requisite grid reinforcements and cost allocation. ATTs must now be considered in studies.
Decision by Developers. Some projects choose to withdraw due to cost allocation or other reasons.
Revised Cost Allocation. Cost allocation is updated based on actual grid reinforcements (that is, re-sized ATT deployments) needed for remaining projects.
Green Light for Projects. The remaining projects accept the interconnection proposal and these projects move forward.

In conclusion, the lengthy interconnection queue for new generating facilities has been a major obstacle to integrating more renewables into the U.S. power grid. FERC Order 2023 offers promising solutions to address this issue by streamlining the interconnection process. Considering ATTs in cluster studies will hopefully help accelerate the interconnection queue while reducing costs and uncertainties, but this is just one piece of Order 2023. Implementing this and the other changes under Order 2023, together with collaboration between developers, utilities, and industry, is expected to bring noticeable improvements to the interconnection queues and ultimately benefit our grid and communities in a relatively short period of time.

—Ted Bloch-Rubin is director of Business Development, Americas at Smart Wires Inc.