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Power Sector

FERC’s Interconnection Reform: Why It Matters for the Clean Energy Transition

On July 28, 2023, the Federal Energy Regulatory Commission (FERC) issued a 1,500-page rule on a seemingly obscure topic: how to improve the process for plugging new power plants into the grid.[1] Using language usually reserved for sweeping social programs, FERC chairman Willie Phillips declared this a “watershed moment for our nation’s transmission grid” and an “exciting day for all Americans.”[2]

So how did the obscure topic of connecting new generation to the grid cross over into popular media[3] and become a current hot topic in energy? Answering that question takes us into the byzantine process for plugging new electricity generators into the electric grid and draws attention to a troubling reality—the current backlog in the interconnection queue is threatening the viability of the clean energy transition.

What Is Interconnection and Why Is It Important?

Interconnection is about safely and efficiently getting power from where it’s being generated to where it gets consumed. It’s like a train with engines and stations; if one doesn’t work, it could interrupt the entire system. Here’s how the process of getting things interconnected works: a new generation project proposes where it wants to connect to the grid and the utility then conducts a series of reliability studies to determine whether the project can connect safely.[4] These reliability studies can range from a single one-page application for a rooftop solar system to an extensive modeling process for large facilities involving complicated power flow models. Historically, this process has been sufficient to ensure grid reliability and allow new generators to come online in a smooth and predictable fashion, but those policies were simply not designed to connect the ongoing torrent of clean energy investment to the grid.

The interconnection story is a classic good news/bad news story. The good news is that there are over 2,000 gigawatts (GW) of proposed generation facilities waiting in interconnection queues across the country—enough generation to replace every existing generator in the country twice over.[5] More than 90 percent of this is renewable generation, demonstrating consumers’ voracious demand for clean electricity, spurred by federal tax incentives and state clean energy policies and corporate demand for clean energy.[6]

The bad news—and it’s pretty grim—is that these clean energy programs are so popular that interconnection queues across the country buckled under the demand. On average, it now takes more than half a decade for the average proposed generator to fully proceed through the interconnection study process to commercial operation.[7] Even more troubling, the nation’s largest regional transmission organization (RTO), PJM Interconnection LLC, reports that less than 5 percent of the projects in line to connect ever get built (Figure 1).[8]

Anecdotal evidence suggests that a combination of inflationary pressures, supply chain concerns, siting and permitting restrictions, speculative interconnection positions, and lengthy interconnection study timelines are all contributing to the high rate of failures. The Non-Technical Barriers Initiative at Columbia University’s Center on Global Energy Policy (CGEP) recently launched a survey of PJM generation developers aimed at uncovering the root causes of the high failure rates.[9]

This low success rate has alarmed state regulators and grid planning officials, who were counting on new generation to replace conventional fossil fuel generation resources that are retiring due to project economics or new state and federal environmental regulations. FERC noted that “[b]acklogs in the generator interconnection process . . . can create reliability issues as the needed new generating facilities are unable to come online[.]”[10]

New FERC Rule

Against this troubling backdrop, regulators at FERC began a process to overhaul the interconnection process on July 15, 2021, culminating in the release of a national standard for interconnection two years later. Order No. 2023, as it is known, moves the system from a “first-come, first-served” methodology to a “first-ready, first-served” cluster study system (Figure 2).

Will the New Rule Be Enough?

While establishing new best practices for interconnection is a critical step forward, more fundamental reforms will likely be required. The number of projects coming through the interconnection queues in the US has increased more than tenfold over the past decade, and continues to be well in excess of the collective ability of all the RTOs to process those requests, even under the new rules adopted by FERC.

Indeed, large swaths of the country[11] have already adopted the first-ready, first-served cluster study approach and other requirements directed in Order No. 2023. These regions are unlikely to see major benefits from the majority of the new rules adopted. However, these areas still experience some of the worst delays and likely need deeper reform efforts[12] than the changes adopted in the new order.

Below the authors briefly discuss what next-generation interconnection reforms might look like and assess FERC’s proposals.

  1. Addressing Transmission Planning and Cost Allocation

Experience shows that an upgraded grid leads to cheaper and faster interconnections.[13] However, the issue of who pays for new transmission upgrades (known as “cost allocation”[14]) is highly politicized, pitting states with aggressive clean energy expansion programs against neighboring states without those policies that don’t want to pay for the upgrades. While FERC has previously proposed (but has not thus far adopted) reforms to transmission planning and cost allocation, those reforms are largely absent from Order No. 2023, thus leaving one of the most powerful levers for accelerating the interconnection process unpulled.[15]

  1. Shifting to More ‘Focused’ Interconnection Studies

A topic that FERC does not address in its final rule is the question of whether the current suite of interconnection studies needs to be replaced with a more “focused” set of interconnection studies, an approach often referred to as “Connect and Manage.” Under this, utilities focus first on what grid upgrades are necessary to allow the generator to safely connect to the grid, leaving questions around more significant grid upgrades to subsequent studies or a holistic transmission planning process. In exchange for speed, interconnecting generators effectively accept higher congestion and curtailment risk, at least until additional deliverability studies are complete and any necessary grid reinforcements built.

FERC did not tackle this fundamental rethink of the interconnection study process, but in a promising sign that it remains open to a Connect and Manage approach, FERC commissioner Allison Clements noted in her concurrence that “a more ‘focused’ interconnection process that streamlines study scope and reduces the need for restudies for projects requesting energy-only service” was a “promising idea.”[16]

  1. Utilizing Grid Enhancing Technologies (GET) and Alternative Transmission Technologies

While many commenters highlighted the potential value of GETs,[17]  there are also questions about who pays for them and whether utilities should include GETs in their reliability analyses. Ultimately, FERC remains cautious about mandating their usage, giving utilities the “sole discretion”[18] on whether to utilize GETs, while requiring that utilities provide additional data on how GETs would affect the interconnection process. As FERC and industry get more comfortable with GETs, these technologies may provide a powerful new way of expanding access to the grid.

  1. Increasing Data Transparency and Study Tools

One major interconnection process improvement is Order No. 2023’s directive for utilities “to maintain and make publicly available an interactive visual representation of available interconnection capacity” (commonly known as a “heat map”), as well as provide a host of additional information about how the grid would respond to injections of power at various points.  FERC’s heat map mandate is a critical step toward requiring utilities to provide more grid transparency. Access to upfront information limits the number of speculative interconnection requests and provides interconnecting customers more certainty about the cost and scope of upgrades. Grid operators in both Australia[19] and Italy[20] are piloting advanced data management tools that could prove useful in the US as well. The data transparency and heat map requirements may be among the most significant process improvements in Order No. 2023, because the new requirements are likely to drive significant process changes within each organized market. Currently, none of the six organized markets in the country provide this level of data transparency.


Interconnection policy is a significant test of whether the US will be able to get its electric grid ready to meet the challenges of a decarbonized future. While FERC’s recent actions help, the next generation of interconnection reforms will likely need to simplify the interconnection process, incorporate better study technologies, and encourage holistic transmission planning.

Finally, the complex procedural delays hindering generator interconnection are not unique to the United States, and many European countries are exploring innovative strategies for accelerating interconnection. Many of these programs hold important lessons for the US, which will be the subject of a future Energy Explained article.


[1] See https://www.ferc.gov/news-events/news/ferc-transmission-reform-paves-way-adding-new-energy-resources-grid.

[2] See Statement of Chairman Willie Phillips, FERC Press Conference, July 28, 2023, https://www.youtube.com/watch?v=9PlWqdCj8_g.

[3] See, e.g., “Wind, Solar, and the Long Line to Connect to the Electrical Grid,” Planet Money, May 24, 2023, https://www.npr.org/transcripts/1176462647; and Brad Plummer, “The U.S. Has Billions for Wind and Solar Projects. Good Luck Plugging Them In,” New York Times, February 23, 2023, https://www.nytimes.com/2023/02/23/climate/renewable-energy-us-electrical-grid.html.

[4] Order No. 2023 includes a concise summary of the interconnection study process at p. 11.

[5] As Order No. 2023 notes, “[a]s of the end of 2022, a staggering 10,000 projects representing over 2,000 GW of potential generation and storage capacity are stuck in line to connect to the grid. That is nearly double the 1,250 GW of total installed capacity in the United States today.” (Joseph Rand et al., “Queued Up: Characteristics of Power Plants Seeking Transmission Interconnection As of the End of 2022,” Lawrence Berkeley National Laboratory (April 2023), https://emp.lbl.gov/sites/default/files/queued_up_2022_04-06-2023.pdf (“All Queued Up”).

[6] The All Queued Up study reported 1,350 GW of generator capacity and 680 GW of storage actively seeking interconnection as of the end of 2022. Most (~1260 GW) of the proposed generation is zero-carbon.

[7] All Queued Up, p. 3.

[8] “Despite the sizable nameplate capacity of renewables in the interconnection queue (290 GW), the historical rate of completion for renewable projects has been approximately 5%.”  Energy Transition in PJM: Resource Retirements, Replacements & Risks, PJM Interconnection, LLC (issued February 24, 2023), https://www.pjm.com/-/media/library/reports-notices/special-reports/2023/energy-transition-in-pjm-resource-retirements-replacements-and-risks.ashx.

[9] The approximately 20-minute survey is publicly available to generators participating in the PJM queue between 2017 and 2022, which have made it through the Facilities Study phase of the PJM process. For more information on the survey, please see https://sipacolumbia.co1.qualtrics.com/jfe/form/SV_8uFBXni3r6JWQce.

[10] PJM Interconnection, the grid operator for 13 states plus the District of Columbia, has identified the slow rate of completion of new generator interconnections, coupled with planned retirements of existing fossil fuel generation, as a major reliability concern. See https://www.pjm.com/-/media/library/reports-notices/special-reports/2023/energy-transition-in-pjm-resource-retirements-replacements-and-risks.ashx.  See also Order No. 2023 at p. 3.

[11] Two-thirds of American consumers are served by regional electricity markets, known as independent system operators (ISOs) or RTOs which have already implemented reforms similar to those set forth in Order No. 2023.

[12] See Concurrence of Commissioner Clements to Order No. 2023 at p. 3 (“What was perhaps considered a straightforward kitchen renovation has become more complicated. After we have removed the cabinets and taken out the drywall, we have discovered outdated wires, rusted pipes and cracks in the foundation. None of these additional challenges are insurmountable, but they are in some ways more fundamental to getting that modern, working kitchen up and running.”)

[13] See Presentation to the Midcontinent Independent System Operator Board of Directors, “Reliability Imperative: Long Range Transmission Planning,” July 25, 2022, https://cdn.misoenergy.org/20220725%20Board%20of%20Directors%20Item%2002a%20Reliability%20Imperative%20LRTP625714.pdf.

[14] Cost allocation refers to the process of determining how the costs associated with connecting a new electricity generation project to the electrical grid are distributed among various stakeholders, including developers, utilities, and consumers.

[15] “Notice of Proposed Rulemaking:  Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection,” 179 FERC ¶ 61,028 (Docket No. RM21-17-000, proposed on April 21, 2022).

[16] See Concurrence of Commissioner Clements to Order No. 2023 at p. 22 for a summary of the record evidence supporting more focused studies.

[17] Jennifer Runyon, “GETs Can Pay for Themselves with Transmission Line Savings in under One Year, Report Says,” Energy and Grid Management, Smart Energy International, April 25, 2023, https://www.smart-energy.com/news/gets-can-pay-for-themselves-with-transmission-line-savings-in-under-one-year-report-says/; Jonathan Spencer Jones, “Energinet’s Dynamic Line Rating Improves Capacity up to 30%,” Energy and Grid Management, Smart Energy International, June 1, 2023, https://www.smart-energy.com/industry-sectors/energy-grid-management/energinets-dynamic-line-rating-improves-overhead-capacity-by-up-to-30/; Department of Energy, “Grid-Enhancing Technologies: A Case Study on Ratepayer Impact,” 2022, https://www.energy.gov/sites/default/files/2022-04/Grid%20Enhancing%20Technologies%20-%20A%20Case%20Study%20on%20Ratepayer%20Impact%20-%20February%202022%20CLEAN%20as%20of%20032322.pdf; Bruce Tsuchida, Linquan Bai, and Jadon Grove, “Building a Better Grid: How Grid Enhancing Technologies Complement Transmission Buildouts.” Watt Coalition and the Brattle Group, https://www.brattle.com/wp-content/uploads/2023/04/Building-a-Better-Grid-How-Grid-Enhancing-Technologies-Complement-Transmission-Buildouts.pdf.

[18] Instead, FERC states that it “requires transmission providers to evaluate each alternative transmission technology . . .  and to determine in the transmission provider’s sole discretion whether it should be used, consistent with good utility practice, applicability reliability standards, and other applicable regulatory requirements.” Order No. 2023 at P 1578.

[19] Australia’s Energy Market Operator (AEMO), for example, recently implemented a “Connections Simulation Tool,” which will allow interconnecting customers to run parallel studies against the system operator’s proprietary interconnection process model, while maintaining data confidentiality. Network Connections, AEMO, 2022, https://www.aemo.com.au/energy-systems/electricity/national-electricity-market-nem/participate-in-the-market/network-connections/connections-simulation-tool.

[20] Terna, the Italian transmission system operator, is also piloting its “Econnextion Tool,” which centralizes all information on high-voltage connection requests from renewable plants in the country and similarly allows users to see trends and identify areas of high grid density and growth, which better equips stakeholders to coordinate future planning of energy infrastructure development and expansion. “Terna: The First Digital Platform for Requests to Connect Renewable Energy Plants to the Electricity Grid in Italy,” press release, February 27, 2023, https://www.terna.it/en/media/press-releases/detail/econnextion-dashboard-online.

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