Grid interconnection: The bottleneck holding back renewables developers

A clean energy future is coming. As the world is set to add a record-breaking amount of renewable energy to electricity systems within the next year, according to the IEA, solar and wind are leading the rapid expansion. However, there’s one major bottleneck holding back the clean energy transition, and more specifically renewable energy developers: getting renewable energy projects through the interconnection queue and online.

The reality is that without adequate electric grids and processes in place to connect this new wave of electricity supply with demand, it will be hard, if not impossible, to reach our clean energy goals. And given the fact that at least 3,000 GW of renewable energy projects are waiting in grid connection queues, the interconnection process clearly needs to be fixed and fast.

Developers facing interconnection delays

As the volume of renewable energy projects increased in the past few years, it quickly became clear that the existing processes and procedures in place were inadequate to handle the influx in requests. As such, developers have become accustomed to projects getting stuck in the interconnection queue and waiting nearly four years for approval to connect to the grid. Unfortunately, during this time the costs for materials can go up, purchase agreements can fall through, land options can expire and customers can pull out. As a result, developers are forced to walk away and cancel projects entirely. This not only upends the business model for developers but also threatens the billions in federal subsidies that are intended to translate into large emissions reductions to meet our clean energy goals.

Further clogging the queue

Another challenge for developers is that when one project is canceled, it often triggers the cancelation of other projects—further clogging the queue. For example, when one project goes away, grid operators tend to have to redo studies for other pending projects and ultimately shift costs to those other developers. Those developers then find themselves facing additional costs, say for network upgrades, and are more likely to be forced to walk away from a project.

On top of that, some developers submit multiple project proposals without any intent to actually build those projects, with the idea that one of those projects will come after another developer has already taken on additional costs. In short, the lack of suitable interconnection infrastructure and industry collaboration is resulting in a nonefficient, chaotic interconnection process.

Interconnection reform can and must be done right

So, how can the interconnection process be fixed? For starters, the Federal Energy Regulatory Commission (FERC) reform is a giant step in the right direction. Enabling a more streamlined interconnection process, FERC’s ruling implements the notion of “first ready, first serve,” allowing projects to proceed through the queue in a more predicable fashion and preventing projects from being stuck behind others that may not be ready, nor will they ever be. The ruling also puts a firm obligation on the transmission owners to meet schedules and milestones or they will incur penalties. These incentives will ultimately shorten timelines and reduce delays.

While many questions remain, such as the treatment of existing queue projects versus new projects, this reform will benefit not only developers, but society as a whole. The bottom line is that if developers can’t get through the interconnection process and get steel in the ground quick enough, we won’t hit our clean energy goals.