Electric transmission providers and clean energy developers offered mixed critiques of a Federal Energy Regulatory Commission proposal designed to clear a major backlog of proposed generation projects.

FERC issued the proposed rule (RM22-14) in June, citing the need for reform as approximately 1,400 GW in proposed generation and energy storage projects were actively seeking to connect to the U.S. power grid.

"From a developer's perspective, navigating the generator interconnection queue is now the single greatest obstacle to achieving commercial operation of a new energy project," a coalition of interconnection customers led by Acciona Energy USA Global LLC said in comments filed Oct. 13 on the proposal.

In an effort to reduce speculative interconnection requests, FERC's proposed rule would impose more stringent financial requirements on developers and would require transmission providers to adopt a "first-ready, first-served" approach. It would also address interconnection study delays by hitting transmission providers with the first-ever penalties for missed study deadlines.

'Punitive reforms'

The investor-owned utility trade group Edison Electric Institute stressed the importance of financial commitments and readiness requirements "at an early stage in the interconnection process." But the trade group noted that FERC's penalties for interconnection queue withdrawals would only kick in if a project causes a study delay and increases costs for other customers.

Under FERC's proposed rule, "a withdrawing interconnection customer would not be assessed a penalty if their withdrawal increased network upgrade costs but did not cause a delay, or if their withdrawal caused a delay but did not increase network upgrade costs," the Edison Electric Institute noted. "There is no justification for not imposing a penalty in these scenarios; not imposing a penalty only makes sense if there was no delay and no cost consequences."

However, a coalition of public interest organizations led by the Natural Resources Defense Council said a study by the Lawrence Berkeley National Lab covering 2010 to 2021 "does not show any obvious increase" in interconnection queue withdrawals.

"This fact suggests that difficulties arising from withdrawals are simply one aspect of the difficulties transmission providers have had in scaling up their processes to handle more interconnection requests," the public interest organizations said. They therefore urged FERC to avoid "punitive reforms" that impose undue harms on clean energy developers.

Cypress Creek Renewables LLC, an integrated solar and storage developer, said it generally supports increased site control requirements.

Under FERC's proposed rule, developers would also need to demonstrate 100% site control when they submit an interconnection request. Alternatively, interconnection customers could opt to post a financial deposit in cases where regulatory limitations prohibit the customer from demonstrating site control. The deposit would range from $500,000 to $2 million based on the size of the project.

However, Cypress Creek said FERC's proposal should "reflect development realities." The developer called 75% site control "reasonable" for proposed generation facilities, with 100% required by the time a facilities study is initiated.

Enel SpA subsidiary Enel Green Power North America Inc., another active renewables developer, recommended that FERC establish minimum thresholds for allocating costs tied to interconnection customers' proportional impacts on the grid.

"A lack of a minimum threshold will inevitably lead to more cases where an interconnection customer is responsible for network upgrades that are hundreds or even thousands of miles away, even when these interconnection customers have de minimus impacts on the constrained facility," Enel North America said.

Enel suggested that FERC adopt a 20% threshold where transmission providers require projects to shoulder the cost of upgrades when they meet or exceed that threshold. Projects below the 20% threshold could opt to have their generation output curtailed to avoid the need for upgrades, Enel said.

The developer coalition led by Acciona Energy urged FERC to clarify that interconnection customers can enter into agreements that provide for limited operations and provisional service prior to executing a final agreement.

'Not enough engineers'

American Electric Power Co. Inc. unit American Electric Power Service Corp., one of the largest transmission owners in the U.S., said it opposed penalties for missed study deadlines. Set at $500 per day, the penalties would be capped at 100% of the total deposits the interconnection customers paid for the applicable study.

Acciona Energy and other developers called the proposed penalties "a pittance, so small that a transmission provider (or owner) would have little fear of continuing to miss deadlines."

A shortage of qualified engineers is the primary cause of study delays, American Electric Power said. The company cited an estimate from the U.S. Energy Department that the U.S. will need 105,000 new workers in the smart grid and electric utility industry by 2030, but only 25,000 existing industry personnel are interested in filling those positions.

"There are not enough engineers in the workforce or educational/training pipeline to increase the number of mandatory studies to be performed," the company said.

Tesla Inc., which develops grid-scale battery energy storage systems in addition to electric vehicles, said FERC should direct transmission providers to allow third parties to perform informational studies that can help developers determine expected interconnection costs prior to executing final agreements.

"Tesla is concerned that leaving such studies solely to transmission providers and limiting the number of such studies therefore accessible to customers threatens to consume already thinning transmission provider resources and delay customer projects," the company said.

Grid operators such as the Midcontinent ISO and PJM Interconnection LLC urged FERC to avoid issuing a final rule that interferes with queue reform efforts already underway throughout the country.

Advanced Energy Economy, a clean energy trade group, said FERC needs to harmonize its interconnection rulemaking with a separate proposed rule (RM21-17) issued in April on long-range transmission planning and cost allocation.

That proposal "appropriately recognizes that effective long-term regional planning must take account of interconnection queue volumes driving the need for more efficient or cost-effective regional solutions to meet their need for transmission service," Advanced Energy Economy said.

The group urged FERC "to finalize its proposal there to require scenarios used in long-term regional transmission planning processes to consider generator interconnection requests and withdrawals."

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