U.S. Clean Energy Grid Connection Backlog Reaches 2.5 Terawatts, Innovative Solutions Seek Breakthrough
The backlog of projects awaiting grid connection in the U.S. transmission system has exceeded 2.5 terawatts. Regions such as California, Texas, and the Southwest Power Pool are introducing innovative interconnection processes to address the backlog and meet growing load demand.
The backlog of generation and storage projects in the interconnection queues of U.S. transmission system operators continues to grow, but a range of emerging innovative solutions may help alleviate this pressure. According to an April 2024 report by Lawrence Berkeley National Laboratory (LBNL), the proposed generation and storage projects awaiting interconnection are roughly twice the size of the existing U.S. generation fleet (estimated at 1,280 GW). The report also notes that projects started before 2015 took an average of about 17 months from application to operation, while those completed between 2022 and 2023 took nearly five years.
To address this challenge, the U.S. Federal Energy Regulatory Commission (FERC) approved Order No. 2023 in July 2023, and transmission providers and system operators are developing new solutions accordingly. LBNL energy policy researcher Joseph Rand stated that the order introduces several important new requirements to the interconnection process, updating a 20-year-old process, prioritizing more viable projects that meet readiness criteria, and using financial penalty mechanisms to push transmission providers and system operators to improve efficiency.
However, regulators and stakeholders alike believe that FERC's order is only a beginning and is not yet sufficient to fully streamline the interconnection process to meet growing new load demand. Former FERC Commissioner Allison Clements wrote in her concurrence that Order No. 2023 is an important step in addressing the interconnection backlog, but transmission providers, interconnection customers, and other stakeholders should treat the rule as a solid baseline rather than a ceiling and continue to advance reforms.
Analysts point out that Texas's "connect and manage" streamlined interconnection option may be viable in its energy-only market; the Southwest Power Pool (SPP) is advancing work to link system planning with the interconnection process, which, if completed, could be a breakthrough in reducing queue backlogs. Stakeholders believe California, with its newly approved interconnection enhancements, is at the forefront of innovation because it directly links transmission planning, generation procurement, and project interconnection processes. However, some argue that scoring projects on viability, commercial readiness, and system value may not balance utility and developer needs and could hinder load growth goals.
California's Innovative Enhancements
The California Independent System Operator (CAISO) board voted 5-0 on June 12 to approve a proposal that identifies and prioritizes project interconnections in areas where planning shows "available transmission capacity or approved new transmission." The enhancements aim to prioritize interconnecting projects with the highest operational readiness, commercial value, and system value. Danielle Mills, CAISO's head of infrastructure policy development, said the proposal delineates "areas with available or planned transmission capacity," and this zonal approach is the cornerstone of the entire reform effort, with other procedural reforms designed to support the new method. The proposal guides developers into "transmission plan deliverability" areas where CAISO planning has identified available transmission and incentivizes utilities and other load-serving entities (LSEs) to procure these projects.
In the total project score, 35% is based on viability criteria (such as site control and engineering design completeness), 35% on the project's value as a system-level or local resource adequacy resource, and the remaining 30% depends on the commercial interest shown by LSEs in the project. CAISO and stakeholders acknowledge this may give LSEs leverage, as developers need LSE interest to achieve higher scores. Mills added that within each area, CAISO will select the highest-scoring projects for detailed study; if scores are tied, the project's value to the area's local distribution system serves as the primary tiebreaker; if still tied, "the developer offering the higher bid in a sealed-bid auction will qualify for interconnection study and enter the study process."
CAISO stated that developers of generation and battery system projects can also apply for interconnection in areas without available or planned transmission capacity, but they must bear all necessary grid upgrade costs at their own expense, and only a portion of upgrade costs can be recovered. Mills noted these procedures limit CAISO studies to "the most viable projects" but will include projects equivalent to 150% of available transmission capacity to ensure LSEs have sufficient options. She believes this is the most original part of the new process, ensuring enough new generation to meet state goals while limiting the interconnection queue to prevent backlogs. The CAISO board, in its unanimous approval, acknowledged these enhancements bring significant but not perfect changes, and the process urgently needed reform to manage the interconnection queue and achieve state energy transition goals.
Two Controversial Issues
In the early stages of developing the enhancements, LSEs and developers debated the fairness of LSE influence in commercial interest scoring. Susan Schneider, advisor to the Large Scale Solar Association (LSA), which represents large solar developers, and principal of Phoenix Consulting, said LSEs could use their influence to gain exclusive rights or lower power purchase prices by expressing commercial interest. She noted CAISO encourages stakeholders to communicate about projects but lacks guidelines or regulatory rules for LSE scoring. Comment letters from the American Clean Power Association and the Clean Energy Buyers Alliance supported Schneider's concerns.
Ryan Millard, senior director of western regional regulatory and political affairs at independent power producer NextEra Energy Resources, said at the June 12 board meeting that the lack of strong LSE guidance has led LSEs to attempt to extract concessions. He cited an example where an LSE recently told NextEra that "to receive LSE score allocation, the developer must grant a right of first offer and pay a $5 per kilowatt deposit to secure that right." For a 300 MW storage project, this means paying a $1.5 million deposit 10 years before the expected start date to enter the queue. CAISO President and CEO Elliot Mainzer responded that CAISO will monitor the new process to prevent manipulation, but procurement oversight falls under the jurisdiction of state and local agencies. Pacific Gas & Electric and Southern California Edison insisted that regulatory oversight will protect developers and ratepayers.
Ed Smeloff, advisor to the Center for Energy Efficiency and Renewable Technologies, said the need to address the interconnection backlog is "urgent," commercial interest is "critical," and he believes the existing governance structure is sufficient to ensure developer concerns are heard by LSEs. Will Gorman, research scientist in energy and environmental policy at LBNL, noted CAISO has over 500 GW of interconnection requests, more than 10 times its roughly 50 GW peak load, so its focus has been on reducing the queue. But some stakeholders say available transmission capacity may not meet California's projected load growth of 8 GW per year. LSA advisor Schneider noted that 541 projects in the 2023 Cluster 15 could be lost because available transmission plan deliverability areas are occupied by over 300 projects from the 2021-22 Cluster 14, and if interconnecting in areas without remaining transmission capacity, "merchant developers would need to self-fund expensive upgrades and bear the risk of non-recovery."
Neil Millar, CAISO's vice president of transmission planning and infrastructure development, said a June 14 CAISO report showed about 30 GW of transmission plan deliverability has been allocated to Cluster 14 projects, with another 30 GW or more allocated to pre-Cluster 14 projects, totaling over 60 GW of allocations that should meet projected load growth and policy goals through 2030. He added that additional analysis will be provided in August showing available transmission plan deliverability for Cluster 15, but ultimately LSEs must procure to move projects forward. Former FERC Commissioner Clements told Utility Dive that CAISO's enhancements "reflect the reality of the queue backlog; solutions are not yet fully defined, but California is exploring paths." Observers say other innovative approaches are even less mature.
Three Alternative Innovative Approaches
LBNL's Gorman said California's enhancements "are likely the most substantive change to the existing interconnection process in the country." To comply with Order No. 2023, other ISOs/RTOs and transmission providers are also developing new methods. The Southwest Power Pool (SPP) plans to integrate planning, procurement, and interconnection; according to Steve Gaw, senior vice president of the Advanced Power Alliance and a member of multiple SPP advisory committees, the plan still needs a year before it can be submitted for FERC approval. Gaw said the plan aims to use planning and procurement results to guide the interconnection process, avoiding the time and cost of duplicative studies. He added that the concept is similar to California's approach but "more challenging" to implement across SPP's 14-state footprint, particularly as its Strategic and Creative Re-engineering of Integrated Planning Team faces the challenge of "transmission upgrade cost allocation." Former FERC Commissioner Clements believes SPP has a history of state cooperation, and during this period of load growth and new resource needs, utilities and states are more inclined to cooperate.
In the Electric Reliability Council of Texas (ERCOT) system, developers can interconnect without bearing system upgrade costs if they accept curtailment costs, known as the "connect and manage" model. A February 2024 report by Grid Strategies and the Brattle Group describes it as a "relatively fast and consistent interconnection process." The model was introduced in the UK in 2010 and helped Texas lead the nation in new generation interconnection in 2021 and 2022. However, Rob Gramlich, founder and president of Grid Strategies, noted that "proactive transmission planning is needed to manage congestion," and because renewable energy in Texas still faces significant congestion and curtailment, some developers are critical of the model. A 2023 paper from Duke University's Nicholas Institute argues Texas's interconnection success is "strong evidence" that connect and manage works in energy-only markets but may be ineffective in non-energy-only markets, particularly in multi-state RTOs where cost allocation and resource adequacy requirements make replication difficult. LBNL's Gorman said no other region currently uses the model, but researchers are studying ways to "decouple resource adequacy from the interconnection process."
Former FERC Commissioner Clements wrote in her concurrence to Order No. 2023 that these interconnection innovations are critical because "the nation faces a grid infrastructure crisis," and the order's changes "will help alleviate the interconnection backlog, but alone they remain insufficient."