FERC Final Rule on Interconnection Queue Reform Seeks to Speed Up Interconnection Queue Processing

Facing more than 2,000 gigawatts of energy generation and storage waiting in transmission system interconnection queues, the Federal Energy Regulatory Commission (FERC) has voted to adopt a final rule, Order No. 2023, to revise its pro forma generator interconnection procedures to speed up the nation’s interconnection processes. The final rule is aimed at increasing queue efficiency and alleviating the current five-year average wait time for projects to connect to the grid.

Foley Hoag’s Energy and Climate team will be sharing additional thoughts and analysis regarding what this new final rule means for renewable energy and storage developers in a free webinar planned for August 8, 2023, at noon Eastern Time (registration information forthcoming).  In the meantime, below are some key takeaways from the final rule:

Key Takeaways

  • “First-ready, First-Served” Interconnection Cluster Studies

The final rule mandates that transmission providers conduct interconnection studies on multiple proposed generating facilities at once, in contrast to the current linear study model most common among transmission providers that subjects each proposed project to its own individual study.  Projects will be expected to demonstrate readiness through financial deposits and site control prior to moving forward through key phases of the interconnection process. This “first-ready, first-served” cluster study model is aimed at minimizing delays and ensuring ready projects can move quickly through the queue.

  • Increased Financial Commitments to Remain in the Interconnection Queue

To promote only viable projects to stay in the queue, the final rule includes higher study deposit requirements, stringent site control requirements, and commercial readiness deposits. Additionally, withdrawal penalties will be imposed on customers who withdraw their requests, discouraging speculative and commercially non-viable interconnection applications.

  • Firm Deadlines on Interconnection Studies

The final rule establishes firm study deadlines for transmission providers, eliminating the previous “reasonable efforts” standard for completing interconnection studies. Penalties will be imposed if these deadlines are not met.

  • Incorporation of Technological Advancements

The final rule requires transmission providers to evaluate alternative transmission technologies as part of their cluster studies, and to include operating assumptions in interconnection studies to properly reflect the specific charging behavior of each electric storage resource seeking interconnection.  The final rule also establishes modeling and performance standards for inverter-based resources.

  • Streamlining the Queue for Multiple Generating Facilities

The final rule also requires transmission providers to allow multiple generating facilities to co-locate on a shared site behind a single point of interconnection and share a single interconnection request, and will allow interconnection customers to add an additional generating facility to an existing interconnection request under certain circumstances without it being deemed a material modification.

  • Transition Process

The final rule will allow projects that have already received facilities study agreements from their transmission provider to choose to proceed through the existing linear study process or proceed through a transitional cluster study.  Projects that are already in the queue but have not yet received a facilities study agreement will be eligible to participate in a transitional cluster study.  Projects that are not yet in the queue will be subject to FERC’s full complement of new interconnection procedures.

The draft final rule builds on FERC’s Notice of Proposed Rulemaking (NOPR) issued in 2022. Notably, FERC has declined to adopt the NOPR proposals pertaining to informational interconnection studies, shared network upgrades, the optional resource solicitation study, and the alternative transmission technologies annual report. The draft final rule also does not adopt the proposed non-financial commercial readiness criteria from the NOPR, instead requiring only financial demonstrations of commercial readiness.

The final rule will take effect 60 days after its publication in the Federal Register, and compliance filings from transmission providers to implement the requirements of the final rule will be due 90 days after publication.

We will be monitoring for any additional updates as the final rule is set to be published in the coming days. Stay tuned, and please join us for our upcoming webinar.

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