In this week’s episode, host Daniel Raimi talks with Will Gorman, a research scientist at Lawrence Berkeley National Laboratory, about the interconnection queue. The interconnection queue is the waiting list for developers that hope to connect power plants to the electric grid; regulators must first study the potential effects of connecting a plant to the grid before moving forward with a project. Gorman discusses the reasons for recent growth in queue wait times, the costs that are associated with connecting a new power plant to the grid, a new federal regulation that aims to improve the interconnection queue, and additional reforms that could speed up the process of connecting new power plants to the grid.
Listen to the Podcast
- Two trends are associated with backup in the interconnection queue: “The first macro trend on the grid today … is that, as a society, we’re probably trying to undergo one of the largest—and definitely fastest—energy transitions that we’ve ever undertaken. Of course, this is driven by the environmental challenges posed by climate change and the various public-policy pushes … but it’s also being driven by the incredible cost declines and corresponding economic competitiveness of wind, solar, and storage … The other big trend that I’d want to mention here is the lack of substantial transmission build-out of the electricity network over the last decade or so.” (8:14)
- Wait times have gone up: “It used to take roughly one and a half years to get through this interconnection process. Today, it takes three years to do so.” (12:57)
- A new federal regulation can help improve the queue: “This rule was an important one. It signifies to the country that the top regulators know that interconnection is a big issue to work on … But I think the emerging consensus, which I tend to agree with, is that this is an incremental step in the right direction, but it’s not going to get us to the pace of interconnection required to really fully unleash decarbonization.” (28:27)
Top of the Stack
- “Improvements to Generator Interconnection Procedures and Agreements” from the Federal Energy Regulatory Commission
- “Queued Up: Characteristics of Power Plants Seeking Transmission Interconnection” by Joe Rand, Will Gorman, Seongeun Jeong, Fredrich Kahrl, Julie Mulvaney Kemp, Ben Paulos, Dana Robson, Jo Seel, and Ryan Wiser
- “Generator Interconnection Costs to the Transmission System” by Jo Seel, Will Gorman, Fredrich Kahrl, Julie Mulvaney Kemp, Dev Millstein, Joe Rand, and Ryan Wiser
- “Beyond FERC Order 2023: Considerations on Deep Interconnection Reform” by Tyler H. Norris
- Energy at the Movies television program
- “The Art of Energy Efficiency” by Arthur H. Rosenfeld
- The Parable book series by Octavia E. Butler
The Full Transcript
Daniel Raimi: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I'm your host, Daniel Raimi. Today, we talk with Dr. Will Gorman, a research scientist in the electricity markets and policy department at Lawrence Berkeley National Laboratory, about a hugely important but quite technical topic—the interconnection queue.
In recent years, the interconnection queue, the line that power plant developers have to wait in before they connect their plants to the grid, has grown dramatically. This might sound like a wonky bureaucratic process—and it is—but it's also hugely consequential for decarbonizing the US power sector, because unless we shorten the interconnection queue and lower associated interconnection costs, it's going to be that much harder to clean up the power grid and achieve our climate goals. So, stay with us.
Will Gorman, from Lawrence Berkeley National Lab, welcome to Resources Radio.
Will Gorman: Happy to be here. Thanks for having me.
Daniel Raimi: Yeah. It's great to have you. And Will, we are going to talk today about the interconnection queue and interconnection costs.
Don't be afraid, listeners. I know these are large words, and it's a complicated topic, but Will's going to help us understand this issue and why it's so important.
Before we dive into our subject matter, we always ask our guests how they got interested working on energy or environmental issues, whether there's some inspiration when you were a child or whether you came to this field later in life. So, Will, what drew you into this world?
Will Gorman: It's a good question. I like that you guys are opening with this one. I feel like it's a nice way to personalize our very technical conversation, presumably, that we're going to have.
So, my path to energy and environmental issues did not really start with some transcendent childhood experience or memory. It was rather through inspirational mentorship in community and college. I grew up in Texas, and in my childhood, I was more interested in playing the bassoon in orchestras and playing basketball with friends rather than anything professional.
In college at the University of Texas, I became a chemical engineering intern at Chevron after my sophomore year, which I'm sure folks probably all know as the major international oil company. I was working on environmental remediation issues, and it was really the exposure to geopolitics and the scale of the energy sector that sent me down on my first but not my last YouTube rabbit hole journey. I discovered this public TV program titled Energy at the Movies, which was put on by a very charismatic—at least what I thought was charismatic—professor named Michael Webber, who happened to also be based at the University of Texas at Austin.
This TV program really captured my imagination. First, because growing up I really liked movies in my youth, and I still do when I find the time for them. But I also thought it was just really interesting to have this historical depiction of the energy sector told through the lens of Hollywood that showed how critical energy was to society’s cultural development. Obviously, it's important to society’s economic development, as well. All that being said, I didn't have any overlapping skills, but I did pester Webber with a lot of emails. A year and a half later, he let me into his group.
What I worked on with him wasn't really that important, so I won't repeat it here, but it was really the passion of his grad students, I should give a shoutout to Josh Rhodes, who was my mentor at the time, and it was that passion for the impending environmental climatic challenges that we'll need to solve during my lifetime that really inspired me to learn more. So, I've been hooked. I haven't left the field since, and that's the story.
Daniel Raimi: That's great. Yeah. I know Michael and Energy at the Movies, that's a really great idea, so people should totally check that out. And we should really have Michael on the show. I don't think we've ever asked him to come on, so that's definitely a gap that we need to fill.
Will Gorman: I would like to hear his answer to that question, for sure.
Daniel Raimi: Okay, cool. So, let's get into our subject of the day, which is interconnection queues and interconnection costs. Listeners probably know that this has really become a big issue with respect to decarbonizing the power system in the United States, but let's start off just by defining these terms. “Interconnection costs” and the “interconnection queue”—what do those terms mean, Will?
Will Gorman: I think when talking about interconnection, it's important to first start by basically understanding the two high-level approaches that we have in the United States to developing new generation. In a little bit more than half of the country, we've opened up generation development to competition. Private entities can pursue and generate our development and participate in a variety of electricity markets. In the other half of the country, we have these vertically-integrated utilities that go through a more intentional procurement and planning process, where they're deciding to build new generators.
Describing that upfront is just important, because, regardless of those two institutional structures for project development, basically all new generators that want to come online and provide power to people have to go through what you have termed as this interconnection process. That's where the organizations that control and operate the transmission network ensure that, when that new generator is trying to get onto the electrical grid and provide power to our homes, our businesses, and what have you, it can do so reliably without negatively impacting safe operations.
That's a little bit of a roundabout way to get to your question here, which is basically that the interconnection queue is the line that new generators have to wait and enter into as the transmission network operators that I just mentioned undergo a series of fairly technical studies to try to better understand what that system impact will be, what that new facility will have, and whether or not we need to undergo certain amounts of transmission network system upgrades or investment to ensure those reliable operations.
The last thing I'll say is that if that system operator and that transmission provider need to make upgrades, they will ultimately pass those costs onto specific generators that cause those system impacts. So, that's why you have these interconnection queues and the resulting interconnection costs. But, as with a lot of things in the electricity sector, the devil is definitely in the details when it comes to how efficient that process is and what the appropriate cost assignment and allocation might be. I'm sure, as our conversation unfolds here, we'll get into some of those details, but I think that's probably the right place to stop and keep the conversation flowing.
Daniel Raimi: Yeah. That's perfect. So, now that we have a general sense of what these terms are, some listeners may have heard that the interconnection queue has been getting longer in recent months and the interconnection costs have been going up pretty dramatically. What's going on with that? Why are the queues getting longer? Why are the costs going up?
Will Gorman: From my vantage point, I really see two big factors that are somewhat interrelated that have led us to where we are today. You're definitely right, costs have gone up, and the size of these queues have gone up. So, for the first macro trend on the grid today, which probably comes as no surprise to this audience, especially if you're active listeners of this podcast, is that, as a society, we're probably trying to undergo one of the largest—and definitely fastest—energy transitions that we've ever undertaken. Of course, this is driven by the environmental challenges posed by climate change and the various public-policy pushes, like the bill that was passed by the Biden administration last year. But it's also being driven by the incredible cost declines and corresponding economic competitiveness of wind, solar, and storage.
I think it's interesting to note that the electrical grid we have today was, of course, built out over almost a century, if not more. Now, we are asking for a pretty substantial transformation of that system to happen over a matter of decades. I think in my mind that definitely poses some serious institutional challenges, and that's one of the reasons why we've seen these cues.
I think the other big trend that I'd want to mention here is the lack of substantial transmission build-out of the electricity network over the last decade or so. So, there really are only a handful of ways that we build out this grid and expand this grid in the country. The first is large-scale regional and interregional transmission planning processes. Then, the other is what we're talking about today: this more piecemeal interconnection process that does build out the system but does it incrementally with one generator at a time. Though we have had large transmission expansions in the past—I think a good example of this, if listeners don't know about it, is in Texas, we had a big, $7-billion expansion in the late 2000s to integrate a bunch of wind resources—we haven't really had a lot of that over the last five to 10 years. So, when you fail to build new lines through this transmission-planning type of process, you will start to rely more and more on this interconnection process, which is obviously the focus of what we're talking about today, and that becomes a challenge, because it really wasn't designed to do that.
Daniel Raimi: That makes sense. So people have a sense of the timescales and dollar figures that we're talking about here: When we say the queue has gotten long, and the costs have gotten high, can you give us some metrics to help understand the general time frames that certain projects are facing? I'm sure there's wide variation around the country, but can you just put some general numbers on this trend?
Will Gorman: Yeah. So those statistics that you are asking about—here are some of the key research efforts that we're leading at Lawrence Berkeley National Lab, and I think they'll be helpful to contextualize this problem: For much of the decade between roughly 2000 and 2010, we were averaging anywhere from 500 to a 1,000 new requests. This is new projects that were applying to join this interconnection queue. That roughly equated to 150 to 200 gigawatts of new power-plant capacity each year.
Over the last decade, however—so, 2010 through the modern times—we have started to average 2,500 to 3,000 requests each year, representing anywhere from 400 to 600 gigawatts. If you're not tracking this here, that's roughly three to five times in expansion, so that's a lot. Another way to contextualize this is, in 2010, there were about 500 gigawatts of capacity waiting in that line. Today, that number has quadrupled to 2,000 gigawatts. Just so you are aware, there's about 1,300 gigawatts of total generating capacity on the US grid today. So, 2,000 gigawatts are trying to apply a system that's currently only made up of 1,300 gigawatts.
I think one of your questions was, “What does that mean for wait times and the length of how long people are waiting to go through this process?” That number has also doubled. It used to take roughly one and a half years to get through this interconnection process. Today, it takes three years to do so.
Now, we're going to talk a little bit about the cost. Collecting data on interconnection costs, I think it’s first important to mention, is incredibly challenging. Especially because the Energy Information Agency—one of the leading data providers of energy sector data in the country—stopped collecting this data themselves roughly a decade ago, which obviously poses a challenge.
Our R&D team had to take a massive research initiative on and got thousands of individual interconnection studies that we were tracking via PDFs. What we found, somewhat surprisingly, is that, for projects that come online and ultimately complete the interconnection process, their costs to interconnect have been relatively flat or stable. So, it hasn't changed that much.
What was surprising, and an important finding, was that projects that ultimately withdraw from these queues—we haven't talked so much about what happens at the end of the process. Well, one of the end points could be that a project decides they don't want to get built and so they withdraw. Costs for those projects moved from roughly $100 to $200 per kilowatt to $200 to $600 per kilowatt—so, doubling or tripling in some cases.
I think, for us, it was hard. We didn't do any type of serious causal or empirical econometric study here, but one of the things these results raised for us is that maybe it's not much of a surprise that the total amount of withdrawals—projects that have stopped trying to be developed—that have occurred each year have grown significantly over time.
Daniel Raimi: For sure. That's great. And, so people, again, have a sense of the magnitude here, you put those costs in terms of “per kilowatt of capacity.” But if you imagine, let's say, a large wind farm that's trying to get on the grid, and it's facing high costs as a project that's a 100-megawatt wind farm, what types of costs might a large project like that be facing? Just so people have a sense of the magnitude of these ultimate dollar amounts.
Will Gorman: Yeah. The magnitude here is in the millions-of-dollars range. So, you can imagine that 100 megawatts, if you are on the upper end of the costs that I was reporting, is $20 million—something along those lines, maybe even more. So I'm reporting averages when I responded to the question, but there's outliers here, of course. I mean, we've seen projects getting charged $100 million or more. Those are the ones that definitely drop out of this process. So, it's important to know that magnitude, because when we're talking about efficient or inappropriate cost allocation and whether or not we should be building out large sections of the transmission network via the interconnection process, I think people really think about those large costs getting assigned to individual generators and are wondering, "Well, why are we doing that?"
Daniel Raimi: Yeah. One of the motivations for having this podcast is some news report that I was reading about. A large wind farm that several Native nations have been trying to build for probably over a decade in South Dakota that's called the Oceti Sakowin Wind Project—and it's a really interesting project—but my understanding is that they've basically dropped the project, because the interconnection costs were so high—in the tens of millions of dollars and maybe even higher, if I remember correctly from the reporting.
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Daniel Raimi: This raises one question for me. At the beginning of our conversation, you said one of the causes for these lengthy delays is the speed and scale of the energy transition that we need to undertake to reach our climate goals, as well as the declines in costs of renewable technology—especially wind and solar. I'm wondering, is there anything different about wind and solar projects that make them more challenging to interconnect to the grid? Does it require longer interconnection studies or additional build-out that we didn't necessarily require from fossil-fired generators that are more dispatchable like natural gas or coal-fired power plants?
Will Gorman: Great question, and I would say it's a little bit of both. There's no doubt that what we've just been talking about—this massive increase in the total number of projects being planned—is leading to a strain, just the sheer number. The institutions of these transmission providers and the workforces and their processes were based on a different paradigm and different speed and different size. That is no doubt a factor here.
An anecdote I like to share, especially when trying to cut these transmission operators some slack, is that a lot of the smartest staff members at those companies or those regional transmission providers—they’re getting poached and hired by the developers because of the problem. And the private developers can pay more for those valuable skills, because they need help interconnecting their projects, and so that all relates to the scale of the problem.
I do think there are some qualitative differences. It's not just about the length of the queue. Maybe the first and maybe most important one to point out here is that renewable projects are oftentimes much smaller on a capacity basis than traditional fossil-fired power plants. What I mean by that is that, if you want to replace one large coal plant or one large natural gas facility, you're likely going to have to develop multiple wind farms, multiple solar farms, perhaps a few storage plants to make sure that you have the capacity. That just says something about the relative gigawatt size of those plants related to the fossil fuel plants. And so, more applications, more individual developers, which means more studies these organizations need to do and more time needed to then process any one study, because that's just the sheer numbers. That's a little bit what's driving some of the length.
At the same time, and I think you were maybe getting to this in your question, is that renewable power potential is driven not really by where humans may want to put a project, but where the geographic solar and wind resources are. Unfortunately, that's not typically correlated with where society has built out current transmission infrastructure over the last century. So, oftentimes, these studies can find quite large investments similar to the case study that you had just cited in South Dakota for that tribal resource.
Oftentimes, they're not sited close to a transmission line. What that means is that the studies don't necessarily take longer but the probability of a study showing those really high costs can go up. And if there's really high costs, developers might ultimately withdraw from the queue. We haven't gotten to this feedback loop issue yet, so I think it's good to mention now. If you withdraw from the queue, that has downstream consequences for everyone else. This is a single-file line: someone above you withdraws, that can lead to cascading restudies. So, it's that chain reaction that can happen when one project withdraws—maybe because there's a high cost to it. That can really impact everybody else and extend the time that it takes. So, there are some differences that are worth noting to build some intuition, I guess, for what's happening here.
Daniel Raimi: Absolutely. So I think we have a pretty good sense of what the problem is now, the scale of the challenge, and some of the drivers of the challenge. Let's talk now about approaches to address the problem. So the Federal Energy Regulatory Commission, or FERC, recently finalized a new rule that makes some changes to the interconnection process. And I don't know the details of it, so I'm hoping you can help us understand it. What's the rule? What's it trying to do?
Will Gorman: This was a rule that we've long been waiting for. The first announced notice of proposed rulemaking came out in 2021 so it's been two years in the making. At a high level, the goal of this rule was to bring the country up to a certain level of standard with how we process projects through the queue. I will say that there is a lot in this rule. This rule is 1,400 pages. I think it's one of the longest FERC orders I've certainly ever seen. We're not going to get into all those nitty-gritty details in this one 30-minute podcast. But I will say to the engaged listener—that document is public, so if you want some fun weekend reading, feel free to dive in. I'll try to provide the SparkNotes version here.
There are three main areas I'd say that the interconnection reform was trying to impact. These are going to be somewhat jargony, and I'll unpack them a bit. The first area was reforms to implement a first-ready, first-served cluster process. The second area was reforms that focused on the speed of the interconnection process. And then, the third area that they were focusing on was reforms to try to incorporate more technological advancement.
To start with this first-ready, first-served cluster idea, it's really trying to increase the efficiency of the process. What “first-ready, first-served” means is that, rather than taking the queue as given, in the sense that you have to study the first person in line, the second person after that, etc., etc. The idea is, let's prioritize projects that have more land agreements, permits, and offtaking agreements—basically, projects that have more commercial-readiness requirements. That was one part of that. The hope was that we're trying to make sure that projects that apply to the queue and remain in the queue are serious about developing, because, as I mentioned, we want to avoid this cascading-withdrawal problem.
The second process, which is this cluster-study concept, is moving beyond the serial process, which I talked about earlier with these cross-dependency issues, which can lead to those challenges of the cascades of re-studies. The cluster-study approach basically says, "No, let's take tens to hundreds of projects that may be in the same geographic zone. Let's study them all in one batched study. Let's try to take advantage of maybe some economies of scale with that batch processing and maybe avoid some of the interdependencies, though those don't fully go away.” So, that's the first-ready, first-served cluster process. As I'd said, this is probably maybe the most significant and most important element.
The second idea—how is the FERC going to increase the processing speed? That, of course, is a great goal to target. But all this reform really did was increase the financial penalties on the transmission operators who failed to deliver studies over time. Which is important. We want those transmission operators to be motivated to do these studies. I think it's unclear what the impact of that will be.
Then, the last element, which gets a little bit wonky—this is definitely going to increase the wonk meter of these questions here—is that FERC changed or tried to standardize the process of affected-system studies. When I say “affected systems,” what you should be thinking about is, maybe this generator's interconnecting in Kansas, but the way that the network is synced up, it could have an impact in New York. So, there's an affected system out there. Historically, this process was somewhat ad hoc—how New York would impact a Kansas project. It wasn't very standardized. This reform, I think, did a good job of trying to standardize that process more to avoid some of the loops when you're dealing with a lot of different jurisdictions that can happen. Those are the two elements for processing speed.
I have only one last thing. I know I'm going long here, but there's a lot of stuff in here. One last thing I'll say, and this is related to some of the reforms to increase the technologies, is grid-enhancing technologies that could be used to upgrade the transmission network to integrate new generators. The idea here is that we're not fully exploring the full suite of technologies available to make sure that we can integrate these new generation resources. If we do require that those are considered, maybe that will make the process cheaper.
Okay. So I'll stop there. That was a lot. There is more that I could unpack, but we don't have all day, so I'll stop. But again, interested readers—that document is, of course, public, so feel free to take a deep dive in it.
Daniel Raimi: Right. We'll have a link to it in the show notes, of course, so people can click on it, print it out, and take it to the beach.
Will, I think this might be our last question before we go to Top of the Stack. Can you give us a sense of how effective you think the order will be in clearing some of these long wait times and high interconnection costs? I know you don't have a crystal ball, and neither does FERC, but, directionally, do you think this is going to move things in the right direction, and are there additional reforms that you think are going to be needed be so that we, as a country, can decarbonize the grid as fast as we want to?
Will Gorman: This, of course, is the billion-dollar question here, Daniel. Everyone is going to have a little bit of a different take. My take is that this rule was an important one. It signifies to the country that the top regulators know that interconnection is a big issue to work on. Of course, we only have four FERC commissioners right now, and they're balanced between Republicans and Democrats. So, it's notable that all the commissioners agreed to make this rule final. They were all providing concurrent opinions. I think that's an important positive note to state here. But I think the emerging consensus, which I tend to agree with, is that this is an incremental step in the right direction, but it's not going to get us to the pace of interconnection required to really fully unleash decarbonization.
Why is that? The first thing to mention is that a number of the items that I just summarized in responding to your previous question have already been implemented by some of the larger, more sophisticated operators in the country. In the MISO [Midcontinent Independent System Operator]—this is the transmission operator representing a large swath of the Midwest down to Louisiana—and in the operator in California, they've been doing this cluster-study process for years, and they still have backlogged queues.
I think there's some uncertainty about what effect a cluster-study process will have, and that's true about some of the other rules that I mentioned. They might marginally improve the problem, but some of these things have already been adopted. Now, I think that all being said, there's no doubt that there are some smaller regions that would not have instituted any of these reforms had FERC not done it. There is some progress here, but I do think it's incremental.
In terms of this last question of, What should we do? What kind of next steps are there to address this gap? I will say, another opportunity for a little bit of advertisement of our work at the lab is that we are actually in the process of writing a road map with some colleagues from the US Department of Energy and other national labs to basically expand on what more reforms and what the stakeholders might need to think about doing in the next 2 to 5 to 10 years to really get us to a new interconnection paradigm.
I can just mention a few really quickly. I think one key item is that we just need better coordination between the interconnection and transmission planning process. FERC is doing this right now. They have a rulemaking open related to this, but I think there's uncertainty about when that would get released.
Second, we could use more automation in the interconnection process. That's not to say that the process right now is manual. But if we standardize what's happening across the country a little bit better, it will allow for data input, validation, and analysis to happen—we think—quicker. There is a role for technological modernization, not on the technologies that we use on the grid, but really the technologies that we use to process these cues.
Then, finally, this notion of moving towards the energy-only interconnection. For people who may be even following this, this is also known as “connect and manage,” and the idea is that we're focusing or we should focus interconnection more on reliability and stability of the grid without focusing as much on deliverability and upgrading the network—basically, the notion that you can manage transmission constraints and real-time operation via some type of curtailment process, and we don't need to upgrade the grid so much. I'll say that there's a really good white paper that was just released on this by a guy named Tyler Norris over at Duke, and I would recommend that. I can link that for your show notes, as well. Anyways, those are the three big ideas I would mention here.
Daniel Raimi: Excellent. Thank you, Will. That's great. And we certainly will have links to Tyler's analysis and all the other analyses that we've been talking about today, including your own from Lawrence Berkeley National Laboratory.
This has been great, Will. I'd love to close us out with the last question that we ask all of our guests, which is to recommend something else to print out and bring to the beach with you or maybe to watch on your TV or listen to on your phone. What's at the top of your literal or your metaphorical reading stack?
Will Gorman: Yeah. So I recently read an autobiography that was written by Arthur or Art Rosenfeld and that was entitled The Art of Energy Efficiency. For those who don't know him or aren’t aware of him, Rosenfeld is this guy who's sometimes been dubbed the godfather of energy efficiency. He wrote this, I think, sometime in the '90s, and it documents his professional life. He ultimately moved into the world of environmental research, ultimately becoming an energy-efficiency pioneer, and it documents that and how he developed some of the first energy-efficiency standards, and those saved billions of dollars.
I will really quickly say, because I know that maybe is a little bit high on the nerd meter, the second recommendation, for those who have not already read them, are the books by Octavia E. Butler in her Earthseed series, starting with Parable of the Sower. I'm a huge science fiction nut, and I recently reread these books a few months ago. They focus on themes of climate change and social inequality. These are apocalyptic stories, and they're very heavy at times. For me, rereading them with talk about the environmental struggles and the human condition, it was somewhat of a sobering reminder that we've known about these problems that we've been trying to solve for quite some time. I think the first book was written in 1993, so I was just a kid, and I think that it's an important motivator for why I'm doing the work that I'm doing.
Daniel Raimi: Awesome. Thank you, Will. Really interesting recommendations—both sound like great additions to the stack.
Once again, Will Gorman from Lawrence Berkeley National Laboratory, thank you so much for joining us today on Resources Radio.
Will Gorman: Thank you for having me, Daniel.
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