By Yvonne Cappel-Vickery, AAE's Clean Energy Grid Organizer
The transmission portion of our electric grid helps us keep our communities powered, but the transmission grid is also an unsung hero for the energy transition. Transmission lines allow renewable energy to be transported to population centers that otherwise could not access that energy.
To increase reliability and improve access to renewable energy, we must plan and build out transmission today so that the grid can support our future energy needs. More and more states have passed renewable portfolio standards, renewable energy laws, and net zero goals, ultimately resulting in more renewable energy development. These future renewable energy projects rely on transmission build-outs. Moreover, the federal incentives in the Inflation Reduction Act also encourage renewable energy development. With these state and national trends, it has become even more critical to have an electric grid ready and able to move renewable energy from wherever it is created to the populations increasingly demanding it. Without building out the transmission grid, we cannot implement the aggressive transition to clean energy necessary to mitigate the worst of global climate change.
Our electric grid was planned piecemeal over the last century. Because of that, the U.S. grid does not function as one big happy family, and there is no singular process to connect renewable energy. What’s more, a critical part of bringing renewable energy to power communities involves the build-out and expansion of transmission lines. But it can take a decade to build these large steel lines before they are fully operational.
Planning for the needs of the electric grid involves a meticulous balance between how much power is available and how that power can be moved in the most affordable, efficient ways possible, from where it’s generated to our homes and businesses. When experts consider the needs of the future electric grid, they attempt to strike a balance between predicted energy needs, planned retirements of power plants, and projected new energy generation coming onto the grid.
New energy projects seeking to connect to the grid must go through a lengthy approval process called the Generator Interconnection Process. This Generator Interconnection Process takes years from initial application to final approval and requires sufficient transmission wires to move new energy seeking to connect to the grid, among other requirements. The generator interconnection process varies among RTOs, ISO, and non-RTO/ISO states. Federal minimum requirements must be met for electricity planners and providers, as established by the Federal Energy Regulatory Commission (FERC).
Because there is not a standardized national process for how we bring more renewable energy onto the grid, for the last several years, the FERC has been working to develop a strategy that will reform and streamline the generator interconnection reform process to help reduce generator interconnection process timeliness and create a more uniform process nationally.
This summer, the FERC issued Order 2023, a historic order that attempts to modernize and upgrade the electricity interconnection process. The FERC Order 2023 was developed for “the modernization of the nation’s transmission grid by streamlining the interconnection process for transmission providers, providing greater timing and cost certainty to interconnection customers, and preventing undue discrimination against new sources of power generation.”
What does FERC Order 2023 mean for Louisiana?
The FERC has issued Order 2023 and filed the order in the federal register, making it legally binding. While FERC has finalized its transmission interconnection reform, MISO is working on its own interconnection reform with stakeholders. The interconnection queue in MISO (the line for projects to enter the MISO electric grid footprint) has increased tremendously. For example, the "2022 MISO cycle was 171GW, and the MISO summer peak is approximately 123GW,” which means there is more renewable energy trying to contribute to the grid, than electricity needed at the peak of summer electricity demand. However, 80% of projects entered into the queue in the MISO footprint don’t get built.
In June 2023, MISO presented their initial interconnection reform proposal to stakeholders, and now stakeholders - which includes renewable energy developers, transmission owners, utilities, and consumer and environmental advocates - must work together to develop an interconnection reform that is fair and reasonable for the various stakeholders and will also adhere to the FERC’s Order 2023.
Comparing the MISO reform proposal vs. FERC’s reform proposal
One significant component of Order 2023 is that the order requires cluster studies - grouping potential projects to conduct interconnection studies, but cluster studies are already used by MISO. One other difference between the FERC Order 2023 and MISO’s current interconnection reform proposal is that Order 2023 does not require milestone payments, payments made at specific points in the generator interconnection process. In contrast, MISO has proposed to increase milestone payments. Other differences between the federal and MISO interconnection reform are around site control, penalties for projects withdrawing from the queue, the definition of harm for developers, and caps on the number of MegaWatts a single developer can enter into the queue. (Click here for a more in-depth analysis of the differences between the MISO interconnection reform proposal and FERC Order 2023.)
MISO’s proposal is still in development with stakeholders. It's unclear how the FERC Order 2023 and MISO interconnection reform will intersect to increase renewable energy development or help streamline the process so more renewable energy projects can connect to the grid. MISO will continue working with stakeholders on their interconnection reform proposal, and it hopes to have a finalized version by October 2023. The recent reform from MISO and the FERC sends clear signs that transmission is critically essential and demands our attention to develop a modern, clean, reliable electric grid to power our 21st-century needs.
Now that we’ve discussed the various generator interconnection reforms that will ultimately impact Louisiana, another major national reform looming in the distance may help or hinder streamlining the generator interconnection process - permitting reform. The permitting process is another process that can take years to finalize but is critical because it involves environmental assessments and other important aspects of determining who is most impacted by new energy projects. National permitting reform is a complex issue that we will tackle in part II of this blog series. Stay tuned for part II, exploring the intersection between interconnection reform and permitting reform!