Despite the rapid expansion in new energy capacity being built, a major challenge has emerged for connecting energy projects to the broader electric grid. Prior to construction, projects looking to connect to the grid are analyzed through impact studies, which determine what transmission infrastructure is required for a project to connect to the grid.
The studies also then determine the costs of the necessary infrastructure. Projects waiting to undergo these studies form interconnection queues. As much of the country continues to transition to new cleaner sources of energy, thousands of new energy projects are looking to connect to the grid leading to a dramatic rise in the number of projects waiting in interconnection queues.
Interconnection Queue Challenges
As of the end of 2023, 2,600 gigawatts of energy and storage capacity were waiting in interconnection queues. The last several years have seen a rapid increase in new energy projects, particularly renewable energy and storage projects. Solar, wind and battery storage projects account for 95% of active capacity in queues, with most of the remaining 5% being natural gas projects.
This influx of new connections requests has been accompanied by a lack of transmission infrastructure to accommodate the rising demand. In fact, the rate of new high voltage transmission lines added has declined over the last decade. As a result, new energy projects have limited access to connect to the transmission grid. While new transmission projects are planned, it can take over a decade to site, permit and construct a new transmission line.
The Lawrence Berkeley National Laboratory identified key challenges for interconnection queues. First, projects have increasingly long timelines. For projects completed in 2023, the median time for interconnection request to project completion was five years. Additionally, the cost of interconnection is rising significantly for projects in most regions due to constraints on the transmission system. The combination of long timelines and high costs are causing projects to have low completion rates and high withdrawal rates. More than 70% of total projects are withdrawn from interconnection queues. Some projects may join interconnection queues knowing it is unlikely they will connect to the grid regardless of wait times.
Federal Assistance for Transmission Development
Several federal programs and funding opportunities aim to accelerate transmission development and facilitate the interconnection of new generation sources. The Department of Energy is in the process of designating National Interest Electric Transmission Corridors, which are target areas promoting energy security or enhancing the use of intermittent energy. Proposed transmission projects in NEITCs may be subject to backstop authority by the Federal Energy Regulatory Commission. Backstop authority allows the FERC to intervene over the authority of a state to issue permits for transmission systems under certain circumstances.
The Transmission Facility Finance Program makes available $2 billion for direct loans for transmission projects within NIETCs. Additionally, the Transmission Siting and Economic Development Grant Program is a $760 million investment to expedite the siting and permitting of interstate transmission projects. Finally, FERC Order 2023 took effect at the end of 2023. This rule will require transmission providers to study proposed projects in clusters based on their readiness for interconnection rather than on an individual first-come, first-served basis.
Transmission Upgrades and Alternatives
Due to the lengthy transmission interconnection processes, policymakers are considering other pathways to implement new energy resources. Upgrades to existing transmission lines can increase transmission capacity without the need to construct new transmission infrastructure. Grid enhancing technologies can increase grid capacity and flexibility through hardware and software like dynamic line ratings and power flow control. States have introduced and enacted legislation requiring utilities to consider grid enhancing technologies in their integrated resource plans.
Non-wire alternatives also exist as options to avoid transmission buildout. For example, distributed energy resources are small-scale energy systems located near the site of energy consumption, such as rooftop solar panels. While many DERs still require some form of an interconnection process, by being located near the site of use they do not require transmission interconnection.
In recent years states have considered and passed legislation to incentivize and facilitate the implementation of DERs. Incentives include financing programs or tax credits for the installation of DERs on residential and commercial properties. States have also enacted net metering policies to allow owners of DERs to sell the excess electricity generated. Additionally, over 25 states have enacted legislation concerning community solar to expands access to DERs for renters or residents of multifamily residential buildings. (For more information on DERs, please refer to NCSL’s Integrated Resource Planning Primer).