Research Commentary: FERC Order 2023: Will it Unplug the Bottleneck?
Les Armstrong, Alexa Canaan, Christopher R. Knittel, and Gilbert E. Metcalf
The average wait for a new generation project to interconnect to the grid continues to rise, with the median time from interconnection request to commercial operation hitting five years for projects completed in 2022. Wait times are even longer for wind and solar projects. These delays significantly increase the costs and timelines associated with decarbonizing the grid. In this commentary, we discuss the policy landscape for reducing interconnection delays. FERC Order 2023 is a good first step towards addressing the problems that have arisen over the past two decades. It should reduce cost uncertainty to some extent and also reduce the number of speculative projects. Questions remain, however. Given the public good nature of interconnection and grid investments, how should the costs of network upgrades be shared among all grid users (on both the supply and demand side of the grid)? The current practice of shouldering all the costs on new generators connecting to the grid cannot be optimal. How can the interconnection process be made more of a forward-looking and proactive process that starts from a premise of achieving certain long-run goals of stability and reliability, while moving the United States on a path to a zero-carbon grid? Related to that question is the question of how best to link transmission planning with the process of connecting new projects to the grid.