Dysfunctional grid interconnection processes leave most ISOs swamped

Connecting new electricity generation and storage projects to the United States power grid is far from easy. But a new report from grid industry association Advanced Energy United found that ISO-specific processes can make the dysfunction even worse than it needs to be.

• The top line: The report, which took the form of a scorecard, ranked the interconnection processes of the nation’s seven RTOs — and though CAISO and ERCOT had the most successful interconnection processes, they’re far from perfect. Both RTOs struggled with pre-queue information sharing, and ERCOT in particular had trouble integrating regional transmission planning into its system. Their peers, however, received comparably dismal scores, which bodes poorly for a resolution to the interconnection backlog.
• The market grounding: Over 2,000 gigawatts of generation and storage projects remain stuck in the American grid interconnection queue, despite rising electricity demands. That’s more than the grid’s total installed capacity of roughly 1,300 GW as of early 2023. The longer those projects are left in limbo, the AEU report found, the higher the risk of system unreliability.

The report analyzed data on generation interconnection costs from the Lawrence Livermore National Laboratory and interviewed 12 engineering firms and generation developers. Ultimately, speed, consistency, affordability, and price reliability were the biggest predictors of high ratings — and high upgrade costs and slow processes were the biggest inhibitors to success.

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ERCOT boasted high processing speed, reasonable costs, and the ability to scale up total capacity in a short time period — combined, these provide consistency to its interconnection process despite challenges posed by network construction. 

And though CAISO’s process was relatively productive and effective before 2020, its efficiency plummeted following the pandemic, due to a rapid increase in new generator interconnection applications. However, cost transparency (and relative stability) bumped CAISO’s grade up, despite average interconnection prices that are on par with other RTOs.

Both CAISO and ERCOT completed interconnection agreements for more new generation capacity by the end of 2022 than any of the others.

MISO outperformed all but CAISO in its use of regional transmission planning, but was less successful in its study process design and overall study criteria and replicability, unlike NYISO, which performed highly on study design but little else. SPP scraped a B for the usefulness of its interconnection alternatives, but faltered otherwise. And both PJM and ISO-NE struggled across the board. 

The authors said that “problems in any one part of the process can negatively impact the overall result,” making comprehensive reforms essential to improving generator interconnection. The overwhelmingly mediocre ratings — though not unexpected given increasingly severe and unpredictable grid stress events caused by extreme weather — underscore just how steep a climb the RTOs are facing when it comes to interconnection. 

Still, the report notes, the fact that certain regions have effective interconnection elements is one reason for optimism. These “best practices” can be shared between RTOs to improve overall quality and effectiveness — and quickly.

The scorecard can also serve as a baseline for measuring progress and improvements in the interconnection process, which will be particularly useful under FERC Order 2023, which requires RTOs to implement reforms.