What Is Interconnection Queue Backlog?
The interconnection queue backlog refers to the substantial number of proposed electricity generation and energy storage projects awaiting approval and physical connection to the electrical power grid. This phenomenon is a critical issue within energy finance and the broader energy sector, particularly impacting the transition to renewable energy. Projects, primarily wind, solar, and battery energy storage facilities, must undergo a series of studies by grid operators to ensure they can safely and reliably connect without negatively affecting the system. The "backlog" represents the queue of these projects and the associated delays in processing their applications and studies.
History and Origin
The rapid expansion of renewable energy generation, driven by decreasing costs and policy incentives, has significantly outpaced the development of necessary transmission lines and grid infrastructure. This imbalance is a primary cause of the interconnection queue backlog. Historically, the process for connecting new generation sources to the grid was designed for a smaller number of large, centralized power plants. However, the influx of numerous, often geographically dispersed, renewable projects has overwhelmed this existing framework. As early as 2023, reports highlighted that electric grids were a hidden weak spot in global climate plans, with vast amounts of renewable energy awaiting connection due to infrastructure bottlenecks16. The Federal Energy Regulatory Commission (FERC) has acknowledged this challenge, enacting reforms like Order No. 2023 in an attempt to streamline the interconnection process and reduce the backlog14, 15.
Key Takeaways
- The interconnection queue backlog represents a growing list of proposed power projects, mainly renewable energy and energy storage, waiting to connect to the electricity grid.
- It is a major bottleneck impeding the pace of the clean energy transition and grid decarbonization.
- The backlog leads to significant delays in project commissioning, increased costs, and project withdrawals.
- Regulatory reforms and substantial infrastructure investment are crucial to alleviating the backlog.
- Most projects in the queue are wind, solar, and battery storage, indicating a strong developer interest in these technologies despite connection challenges.
Interpreting the Interconnection Queue Backlog
A growing interconnection queue backlog signifies a critical challenge for the energy sector. A large backlog indicates that proposed project development is outpacing the capacity of existing grid infrastructure and the administrative processes of grid operators. As of late 2023, nearly 2,600 gigawatts (GW) of generation and storage capacity were actively seeking grid interconnection in the U.S., which is more than twice the total installed capacity of the existing U.S. power plant fleet12, 13. This volume implies that while there is strong interest in building new energy capacity, especially renewables, the actual connection of these projects faces significant hurdles, leading to lengthy delays and potential project cancellations. The substantial amount of capacity in the queues underscores the urgent need for comprehensive transmission planning and regulatory overhauls.
Hypothetical Example
Consider "Sunshine Acres Solar," a hypothetical 500-megawatt (MW) solar farm proposed in a rural area. To connect to the national grid and begin selling its power, Sunshine Acres must apply to its regional grid operator, a type of Regional Transmission Organization (RTO) or Independent System Operator (ISO). Upon submission, Sunshine Acres enters the interconnection queue.
In a scenario with a significant interconnection queue backlog, Sunshine Acres might face a waiting period of several years just to begin the necessary interconnection studies. These studies, which assess the impact of the new solar farm on grid stability and identify required upgrades, could take additional years to complete. If the studies determine that extensive new transmission lines or substation upgrades are needed, the costs could be substantial, and the construction of these upgrades could add further delays. During this prolonged period, the project faces increased financial risks, including rising equipment costs due to supply chain issues, changes in tax credits or other incentive structures, and financing uncertainties. Ultimately, the long wait and high upgrade costs might force Sunshine Acres Solar to delay operations or even withdraw from the queue, despite its readiness to produce clean energy.
Practical Applications
The interconnection queue backlog has widespread practical applications across several domains:
- Investment Decisions: Investors in the energy sector closely monitor the backlog as it directly impacts the timelines and profitability of new power generation projects. A long backlog can deter investment in new facilities due to extended development cycles and increased uncertainty.
- Market Analysis: Analysts use interconnection queue data as an indicator of future energy supply trends and the health of the energy transition. For instance, data from Lawrence Berkeley National Laboratory shows that solar, battery storage, and wind projects accounted for over 95% of all active capacity in U.S. interconnection queues at the end of 2023, highlighting key growth areas and bottlenecks10, 11.
- Regulatory Policy: Regulatory bodies like FERC are actively implementing new rules to address the backlog, such as shifting from a "first-come, first-served" to a "first-ready, first-served" approach for processing requests9. These policy changes aim to prioritize projects that are more likely to be completed, thereby optimizing the queue.
- Grid Planning: The backlog underscores the urgent need for proactive, long-term transmission planning rather than relying on a reactive, project-by-project approach8. Experts suggest that doubling investments in transmission lines and infrastructure, reaching $600 billion per year by 2030, is necessary to support renewable energy goals7.
Limitations and Criticisms
Despite efforts to manage it, the interconnection queue backlog faces several limitations and criticisms. One significant concern is the sheer volume of projects that ultimately withdraw from the queue. For instance, among projects seeking connection from 2000 to 2018, only 14% of the capacity has been built by the end of 2023, indicating that many applications may be speculative or "ghost projects" that further clog the system5, 6. These non-viable projects consume valuable time and resources from grid operators that could otherwise be dedicated to more mature proposals.
Critics also point to the inadequacy of historical regulatory hurdles and processes, which were not designed for the current scale and type of energy development. The average time projects spend in queues has significantly increased, with the typical duration from connection request to commercial operation rising from less than two years (for projects built in 2000-2007) to over four years (for those built in 2018-2023)3, 4. This extended timeline exacerbates financial risks for project development and can lead to increased costs for consumers2. While recent FERC reforms, such as Order No. 2023, aim to introduce stricter timelines and penalties for delays, their effectiveness will depend on consistent implementation and addressing underlying issues such as the lack of adequate transmission infrastructure and the allocation of upgrade costs1.
Interconnection Queue Backlog vs. Grid Congestion
While often related, the interconnection queue backlog and grid congestion are distinct challenges within the electricity sector. The interconnection queue backlog specifically refers to the list of new generation or storage projects awaiting the studies and approvals necessary to connect to the existing grid. It's a procedural bottleneck, a waiting line for permission and technical assessment.
Grid congestion, on the other hand, describes a situation where the existing transmission infrastructure cannot physically deliver all the electricity that generators are capable of producing or that consumers demand, due to insufficient capacity on specific transmission lines or substations. This leads to curtailment of power (where generators are asked to reduce output) or higher electricity prices in constrained areas. While a large interconnection queue backlog contributes to future grid congestion by delaying needed new generation and upgrades, grid congestion can also exist independently, even for already connected power plants, due to inadequate existing transmission capacity or unforeseen demand patterns.
FAQs
What causes the interconnection queue backlog?
The primary causes include the surge in proposed renewable energy projects, insufficient investment in expanding and upgrading transmission lines, and an outdated administrative process that struggles to handle the volume and complexity of modern interconnection requests.
Who is most affected by the interconnection queue backlog?
Project developers of solar, wind, and battery energy storage facilities are directly affected by the delays and increased costs. Ultimately, consumers can also be impacted through higher electricity prices and slower progress toward clean energy goals due to the delayed integration of lower-cost renewable power.
What solutions are being pursued to address the backlog?
Solutions include regulatory reforms by bodies like the Federal Energy Regulatory Commission (FERC) to streamline the interconnection process and introduce "first-ready, first-served" cluster studies. Additionally, significant investments in new grid infrastructure and proactive regional transmission planning are considered vital to alleviate the backlog and support the ongoing energy transition.