2024 TOP 10 BLOG
Backlogged Projects May Actually See [and Use] the Light of Day in the Near Future
VJEL Staff Editor: Laura Arboleda Bowie
Faculty Member: Chester Harper
FERC’s Final Rule: E-1 – Order 2023 – RM22-14-000 / 18 CFR Part 35 / 184 FERC ¶ 61,054
Improvements to Generator Interconnection Procedures and Agreements / Issued July 28, 2023
Introduction
The total amount of power from solar, wind, and battery storage awaiting interconnection, totals more than the amount currently generated on the nation’s grid–but the projects that have long-awaited review may begin to see the light at the end of what has been a lengthy permitting process.
The time frame for the connection approval process has increased since 2008, and the volume of proposed projects is overwhelming the grid connection process. The Federal Energy Regulatory Commission (FERC) promulgated Order 2023 – RM22-14-000 (the “Rule”) to address the backlog caused by the prior generator interconnection queue process. The promulgated Rule seeks to reform FERC’s standard interconnection procedures and agreements to ensure that customers seeking to connect to the transmission system do so in a “reliable, efficient, transparent, and timely manner.”
The History of This Rule and the Previous Version
Clean energy developers have long-awaited this rule, citing the grid connection process as a significant impediment to meeting states’ renewable energy policies.
Three major categories of energy for electricity generation are: fossil fuels (coal, natural gas, and petroleum), nuclear energy, and renewable energy sources. Developers are required to submit a FERC interconnection permit to connect any new electricity source to the existing transmitting system (the “grid”). Given all the possible models for energy generation, a backlog can grow quickly if the corresponding permitting system is inefficient. The interconnection permitting process begins before a generating facility supplies electricity. The first step, which requires a project developer to apply to interconnect to the transmission system, is the source of the substantial delays. And it’s at this step, through numerous updates in the process, that the promulgated Rule endeavors to fix.
Three Key Areas to Follow From This Rule
The promulgated Rule highlights three “key areas” that were updated in the permitting process, meant to provide improvements to the interconnection queue process.
The first update involves transitioning from a “first-come, first served serial process to a First-Ready, First Served Cluster Study Process.” Some major components under the first update of the promulgated Rule include:
- Facilitating interconnection information access;
- Replacing serial studies with cluster studies;
- Allocating cluster study costs;
- Allocating cluster network upgrade costs;
- Increased financial commitment and readiness requirements of permit-seekers; and
- Transition process that offers existing eligible interconnection customers a couple options to ease into the transition.
The second update involves increasing the speed of the interconnection queue processing. Some major components under the second update of the promulgated Rule include eliminating the reasonable efforts standard and seeking feedback on related issues.
The reasonable efforts standardrequires transmission providers to complete the interconnection process within a specific timeframe but without the financial consequences of failure to meet those deadlines. The Notice of Proposed Rulemaking (“NOPR”) seeks to eliminate the reasonable efforts standard, impose firm deadlines, and establish penalties that would apply when transmission providers fail to meet those deadlines.
An example of a topic that the Rule may seek information on includes affected systems and resource solicitation studies. Affected systems studies analyze the impact of proposed interconnection requests on neighboring transmission systems. Standardized affected systems agreements can provide consistency, transparency, and timely cost information during the interconnection process.
In addition to affected systems studies are Resource Solicitation Studies (the “Resource”), in which the NOPR further attempts to modify the interconnection process to better accommodate state energy planning processes. A resource planning entity can facilitate and organize interconnection requests consistent with their policy objectives. The Resource allows state agencies to gather information about potential interconnection costs affecting state-level energy initiatives.
The third update involves incorporating technological advancements in the interconnection process. Some major components under the third update include:
- Increasing flexibility,
- Incorporating alternative transmission technologies,
- Modeling, and
- Performance requirements for non-synchronous generating facilities.
Negative Implications From the Promulgated Rule
This Rule is new, and there may be implications or possible impacts. Specifically, there are questions about how the Rule willaffect current Regional Transmission Organizations (“RTOs”).RTOs manage about60% of the U.S. electric power supply. RTOs and Independent System Operators (“ISOs”) can propose tariff provisions that would require the submission of requests to recover or allocate the costs of specific interconnection study penalties.
There is also a concern about whether the 90-day compliance directive is unrealistic. Because the Rule is new and there are likely reforms in the works, complying with one Rule within the allotted time frame may be difficult if there is a pending change around the corner.
It is difficult to know for sure, and time will tell. Still, it is crucial to consider the implications of this Rule, especially if those considerations prompt reforms that could get ahead of potential issues.
What Does This Mean for the Future?
FERC recognizes the importance of the promulgated Rule and cites the aforementioned updates as necessary to address the current backlogs and long processing times, which historically prevented the much-needed generation from reaching the transmission grid, and those are often renewable energy technologies. However, many in the environmental and clean energy fields indicate that this rule should be the first step. If the nation is planning to reach 80% clean energy by 2030, then FERC would only benefit from creating more constructive steps.
When looking to the future, it is important to mention “grid enhancing technologies.” Implementing technologies that contain sensors provides cost savings and extracts more from the existing grid systems. As an article by Utility Drive puts it, implementing the sensor technologies is a relatively small effort for the magnitude of the return.
FERC has laid the path, but the integration and development of the promulgated Rule will ultimately determine if the backlogged projects will see the light of day.