Interconnection queue

What Is Interconnection Queue?

An interconnection queue is a formal waiting list or process that new power generation and energy storage facilities must navigate to connect to the existing electrical transmission system or distribution grid. This process, crucial within energy infrastructure, involves a series of technical studies and agreements managed by utility companies or independent system operators (ISOs) to ensure the proposed project can safely and reliably integrate without negatively impacting the existing grid infrastructure.

The interconnection queue is a vital component of Energy Infrastructure & Market Operations, acting as a gatekeeper for new electricity sources, from large-scale wind farms and solar arrays to smaller distributed renewable energy projects. Due to burgeoning interest in new generation, particularly from emission-free resources, these queues have experienced significant backlogs and delays across various energy markets.

History and Origin

The concept of a formalized interconnection process became increasingly critical with the deregulation of electricity markets and the growth of independent power generation projects in the late 20th and early 21st centuries. Prior to deregulation, vertically integrated utilities largely owned and operated both generation and transmission, simplifying the connection process. As new players entered the generation landscape, a standardized, transparent, and non-discriminatory process was required to manage requests for grid access.

In the United States, the Federal Energy Regulatory Commission (FERC), the primary federal regulatory bodies overseeing wholesale electricity markets, has played a pivotal role in shaping interconnection procedures. FERC Order No. 2003 established foundational pro forma interconnection procedures and agreements. More recently, in July 2023, FERC issued Order No. 2023, a landmark ruling aimed at addressing the severe backlogs and lengthy wait times plaguing interconnection queues. This order mandated significant reforms, including stricter requirements for projects, enhanced accountability for transmission providers, and a shift from a "first-come, first-served" to a "first-ready, first-served" approach for processing applications.²², ²³, ²⁴ These reforms were designed to streamline the process, reduce speculative projects, and accelerate the integration of new technologies into the grid.¹⁹, ²⁰, ²¹

Key Takeaways

• An interconnection queue is the formal process for new power plants and energy storage to connect to the electricity grid.
• It involves technical studies and agreements to ensure system reliability and grid stability.
• Queues have grown significantly, largely due to a surge in renewable energy and energy storage projects.
• Delays in the interconnection queue can lead to increased costs and cancellations for project development.
• Regulatory reforms, such as FERC Order No. 2023, aim to mitigate backlogs and improve efficiency.

Interpreting the Interconnection Queue

Interpreting the interconnection queue involves understanding not just the sheer volume of projects but also the characteristics and trends within it. Data from sources like the Lawrence Berkeley National Laboratory (LBNL) consistently show that solar, energy storage, and wind projects constitute the overwhelming majority of capacity in U.S. interconnection queues—over 95% of active capacity at the end of 2023. T¹⁷, ¹⁸he total capacity seeking connection to the grid, nearly 2,600 gigawatts (GW) at the end of 2023, is more than twice the existing U.S. power plant fleet.

¹⁵, ¹⁶However, the size of the interconnection queue does not directly translate to future operational capacity. Historically, only a small percentage of projects that enter the queue ultimately reach commercial operation, with completion rates for projects seeking connection from 2000 to 2018 being as low as 14% of capacity. T¹⁴his suggests that many applications are speculative or face insurmountable challenges related to cost allocation, grid infrastructure limitations, or economic viability. Rising interconnection wait times are also a critical factor; the typical duration from a connection request to commercial operation has increased from under two years for projects built in 2000-2007 to over four years for those built in 2018-2023, with a median of five years for projects completed in 2023.

¹³## Hypothetical Example

Imagine "SunStream Solar," a project development company, proposes a new 200-megawatt solar facility in a region served by the "Regional Grid Operator." To connect its facility to the high-voltage transmission system, SunStream Solar must submit an interconnection request to the Regional Grid Operator.

This request immediately places SunStream Solar's project into the interconnection queue. The Regional Grid Operator then initiates a series of studies:

1. System Impact Study: This assesses how SunStream Solar's project, along with others in the queue, would affect the local transmission network, identifying potential thermal overloads or voltage issues.
2. Facilities Study: If the impact study identifies issues, this detailed study determines the specific upgrades needed to the grid, such as new transmission lines or substation equipment, and estimates their financial commitment and construction costs.

SunStream Solar will wait its turn for these studies to be completed, a process that can take months or even years. During this time, other projects ahead of it in the queue may withdraw, or new projects may join, potentially impacting SunStream's timeline and the estimated costs of grid upgrades. Only once all studies are complete, necessary upgrades are agreed upon and funded, and a formal interconnection agreement is signed, can SunStream Solar proceed with the final stages of connecting its facility to the grid.

Practical Applications

The interconnection queue is a central element in the expansion and modernization of electrical grids worldwide. Its practical applications span several areas:

• Energy Planning and Investment: The queue provides insights into future power generation trends and potential investment capital flows, guiding strategic planning for grid operators and policymakers. The massive capacity in queues, predominantly solar and energy storage, indicates strong developer interest in clean energy.
  *¹² Grid Modernization: The studies conducted during the interconnection process identify necessary grid infrastructure upgrades, driving investments in new transmission lines, substations, and advanced technologies to accommodate new generation.
• Policy and Regulation: The challenges within the interconnection queue, such as delays and high withdrawal rates, frequently prompt regulatory action. For instance, the U.S. Energy Information Administration (EIA) highlights that utility-scale electric generating capacity increased significantly, underscoring the need to address these backlogs to meet rising energy demands.
  *¹¹ Market Dynamics: The backlog affects market dynamics by delaying the entry of new, potentially lower-cost generation, which can impact electricity prices and system reliability.
• Renewable Energy Integration: For renewable energy developers, navigating the interconnection queue is a primary hurdle for bringing projects online. Challenges in the queue are a leading cause of project delays and cancellations.

¹⁰## Limitations and Criticisms

Despite its necessity, the interconnection queue system faces significant limitations and criticisms, primarily due to its escalating backlogs and the resulting delays and project withdrawals.

One major criticism is the extensive wait times. The average queue duration in the U.S. has risen from 3 years in 2015 to 5 years by the end of 2023. T⁹his prolonged timeline creates substantial uncertainty for project development and increases financing costs, making it challenging for developers to secure financial commitment.

Another limitation is the high rate of project withdrawals. A large proportion of projects ultimately withdraw from queues; only 19% of applications reach commercial operation. F⁸or projects seeking connection between 2000 and 2018, only 14% of the proposed capacity has been built. T⁷his suggests that many projects entering the queue are speculative, tying up resources and further exacerbating delays for viable projects. Some developers "carpet-bomb" the queue with applications to hold a spot, leading to inflated queue sizes.

⁶The complexity of studies and the significant costs of grid upgrades also pose considerable barriers. Identifying necessary grid infrastructure enhancements and assigning cost allocation for these upgrades can be a contentious and lengthy process, particularly as the supply chain for electrical components also faces pressures. Critics argue that the existing system was not designed to handle the current volume and characteristics of new power generation, especially the variable nature of renewable energy and energy storage, which require more complex system impact analyses. According to one report, some regions, like the California Independent System Operator (CAISO), have seen average wait times of 9.2 years for projects coming online in 2024, while others like ISO New England (ISO-NE) average about 3.8 years.

⁵## Interconnection Queue vs. Grid Congestion

While often related, "interconnection queue" and "grid congestion" refer to distinct issues within the electricity system.

FAQs

What causes backlogs in the interconnection queue?

Backlogs in the interconnection queue are primarily caused by a significant increase in requests for connecting new power generation and energy storage projects, particularly renewable energy facilities. This surge, often combined with a shortage of qualified personnel at utility companies or independent system operators to conduct the necessary technical studies, as well as the complexity of integrating diverse and geographically dispersed new generation, leads to delays. Speculative projects that later withdraw also consume valuable queue resources.

³, ⁴### How long does it typically take to get through an interconnection queue?
The time it takes to get through an interconnection queue can vary significantly by region and project type. Historically, the typical duration from a connection request to commercial operation has increased from less than two years in the early 2000s to over four years by 2023, with a median of five years for projects completed in 2023. S²ome regions and project types can experience much longer wait times, potentially exceeding nine years.

¹### What are the financial implications of interconnection queue delays?
Delays in the interconnection queue can have substantial financial commitment implications for developers. Prolonged wait times increase project development costs due to extended permitting, financing charges, and potential penalties. They can also affect power purchase agreements and the overall economic viability of a project, sometimes leading to project cancellations and losses of investment capital. Additionally, these delays can slow the transition to cleaner energy markets and impact system reliability if needed capacity is not brought online in time.