- U.S. grid interconnection delays increase consumer costs and risk reliability as energy demand grows.
- Backlogged interconnection requests exceed grid capacity, delaying new generation projects.
- FERC's Order No. 2023 helps, but further reforms are essential for faster, more predictable interconnection.
- An interconnection entry fee and fast-track process could speed up new project integration.
- Supply chain and construction delays for transmission upgrades need better reporting and collaboration.
The U.S. energy landscape is undergoing a critical transformation as consumer demand for electricity skyrockets, driven by factors such as the rise of data centers and increased domestic manufacturing. However, connecting new electricity generators to the grid has become a major bottleneck, resulting in higher costs and potential reliability risks. The report "Unlocking America's Energy" outlines key challenges and necessary reforms to streamline the generator interconnection process, which has been overwhelmed by a surge of new generation requests.
In recent years, generator retirements have outpaced new capacity additions, putting strain on the power grid and prompting a growing backlog in interconnection applications. Developers face significant cost uncertainties and delays, which are ultimately passed on to consumers. Without an efficient process to bring new, cost-effective generation online, households and businesses are left facing higher energy prices. Moreover, the reliability of the grid is at risk if new generation resources cannot connect quickly enough to meet demand.
The Federal Energy Regulatory Commission's (FERC) Order No. 2023 introduced several reforms aimed at improving the interconnection process, including shifting to a cluster-based study approach and raising readiness requirements for new generation projects. However, the report highlights that these measures, while helpful, are insufficient to address the full scope of the problem. Many regional transmission operators still struggle with inefficiencies, as shown in the Generator Interconnection Scorecard, which gave low grades to several key operators, including MISO and PJM.
Additional reforms are urgently needed to improve cost certainty, speed up the process, and ensure nondiscriminatory access for new generation resources. One of the proposed solutions is the adoption of an interconnection entry fee for proactively planned capacity. This would provide cost certainty for developers by establishing fixed fees for interconnecting to the grid, reducing the number of speculative projects and improving queue efficiency. In combination with a fast-track process to utilize existing transmission capacity, these reforms could greatly accelerate the pace of new generation projects.
Another major challenge lies in the construction of transmission upgrades, which has been plagued by delays. Supply chain constraints, project management inefficiencies, and a lack of transparent reporting contribute to these delays, pushing up costs and further complicating the interconnection process. The report recommends improved reporting on construction progress and greater collaboration between industry and government to address supply chain bottlenecks.
The overarching goal of these reforms is to create a more efficient and reliable interconnection process, one that can support the rapid deployment of new, cost-effective generation resources while maintaining grid reliability. Without these changes, the U.S. risks falling behind in its ability to meet growing energy demands, leading to higher consumer costs and greater reliance on outdated, inefficient generation methods.
This article draws on findings from the report "Unlocking America's Energy" by Grid Strategies LLC and The Brattle Group, funded by the Advanced Energy Institute and the Solar and Storage Industries Institute.
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