More power supply is needed to meet the rising energy demand. Yet despite the better technology and workforce upskilling, building a power-generating project now takes longer than ever.

In a Nutshell

Many factors have contributed to the delay, ranging from securing the permits to procuring the equipment. Among them, the longest delay usually occurs at the stage of interconnection. For a new power generator to be connected to the grid, a lengthy study, known as an interconnection study, is performed by the grid operator, usually RTO/ISO or local utilities, to evaluate the project’s potential impact on the grid to avoid overloading and ensure system reliability. When potential problems are identified, infrastructure upgrades must be completed before the project can be connected to the grid, ensuring system stability. While it used to take 1-2 years to complete, this whole process now lasts 5 years on average in the US.

The interconnection process is getting longer for several reasons:

  • Above all, there has been a surge of new projects requesting to be brought online. The energy demand has been rising, driven by trends including the AI revolution, manufacturing onshoring, and electrification. Moreover, meeting such demand through renewable energy creates even more capacity needs due to renewable energy’s lower energy yield. Solar, for example, has a capacity factor of roughly 25%. In response, 4x the amount of solar capacity will be needed compared to natural gas to meet the same electricity demand. In the past decade alone, new project requests have grown substantially from 200GW in 2014 to 900GW in 2023, fundamentally changing the interconnection landscape.
  • On the grid operators’ side, most organizations have been relying on the same legacy process to study these projects. While differing by region, this resource-intensive process usually takes multiple steps, including a feasibility study, system impact study, and facility study, to assess infrastructure impacts, identify upgrade needs, and allocate costs. With the rapid growth in new projects, the existing process, supported by limited human resources and outdated tooling, fails to keep pace with demand. As a result, the interconnection queue has expanded from a little above 300GW to nearly 2.6TW in the past 10 years, with the backlog continuing to pile up.
  • As the interconnection process lengthens, project withdrawals increase correspondingly. In fact, less than 20% of the projects that joined the queue reached operational status. These withdrawals create a cascade of inefficiencies - each dropped project not only wastes resources but also triggers mandatory restudies of project clusters that share network upgrades and cost pools, further extending delays.

A More Nuanced Look: Why Is ERCOT Different

While the longer interconnection process appears widespread, the magnitude of delays varies. Grid operators that are regulated at the federal level, in general, experience longer delays than the rest.

Specifically, grid operators in the US fall into two categories: 7 Regional Transmission Organizations/Independent System Operators (RTO/ISO) orchestrating wholesale electricity markets by matching sellers and buyers, and over 40 vertically-integrated utilities directly selling electricity to customers, regulated at the state level. Among the 7 RTO/ISO, while 6 are federally regulated, the Electric Reliability Council of Texas (ERCOT) stands as an exception, largely due to its independent grid. Examining these operators reveals a stark contrast - the 6 federally-regulated RTO/ISOs face the longest processing times, up to 8 years, while ERCOT and non-ISO utilities complete interconnections significantly faster, averaging around 2 years.

For the RTO/ISO regulated under FERC with the most delays, their interconnection study is painfully long because it tries to do too many things at once, mixing short-term impact study with long-term transmission planning.

In terms of system impact study, many projects are studied under the NRIS framework, including impact assessment for the project as a short-term energy resource and a long-term capacity resource. While a project can opt for the alternative study approach, ERIS, and to be evaluated as an energy resource only, NRIS is the only route for the project to participate in the capacity market for additional revenue in addition to selling energy. Upon identifying concerns, the interconnection process is also responsible for developing solutions. Grid operators conduct extensive tests and simulations to determine optimal engineering solutions, assign cost estimates, and require developers to fund upgrades upfront. Completing the process end-to-end requires not just engineering expertise but also financial prowess.

In contrast, the interconnection process in ERCOT is much simpler. Its impact study focuses mainly on a project’s short-term impact as an energy resource, thanks to ERCOT’s unique electricity system design, which doesn’t rely on central planning for resource adequacy. In addition, it liberates grid operators from the burden of immediate solution development. When the problems are identified, grid operators in ERCOT make developers aware of the problems and the cost implication, which will likely occur in the form of energy curtailment during the operation. Rather than addressing problems sequentially and requiring upfront developer funding, they integrate infrastructure upgrades into a separate transmission planning process by examining the past grid performance, identifying bottlenecks at the system level, and optimizing network upgrades based on cost-benefit analysis. Such division of responsibilities promotes comprehensive system planning, enables more economical solutions, and yields benefits beyond merely expediting interconnection studies.

In fact, many countries outside the US with faster interconnection processes follow a process similar to that of ERCOT. Many European countries connect renewable projects to the grid once the basic feasibility study is completed and manage delivery risks during operation. In contrast to the US, where a new project can take years to connect, many European counterparts can achieve grid connection within months.

Path Forward: Combining Policy and Technology

While it’s obviously not practical to expect the entire country to replicate the ERCOT model, which bears its own challenges, the federal policymakers are taking note.

Federal Energy Regulatory Commission (FERC), the federal entity that regulates the six federally regulated RTO/ISO, issued a regulatory proposal in 2023 (FERC order 2023) to reform the interconnection process, the first proposal on this topic in the last 20 years. While most of the measures are still patchwork on the existing systems, this 1500-page-long document was one step in the right direction.

Among all the measures, the most impactful change replaces the current sequential, first-come-first-served studies that process one project at a time with cluster studies that process projects in groups. It also recognizes the importance of standardization, requesting sharing unified forms across public transmission providers to communicate system impacts and the action steps for network upgrades. The rule further imposes a penalty on transmission operators in the case of delays, although the meager amount required may not be sufficient to enforce the timeline. Other notable changes target speculative projects by raising the application bar to accept only projects with exclusive land rights, requiring study deposits, and enforcing withdrawal penalties.

Reforms that can be especially impactful in the long term are around data transparency, including producing “heat maps” and publishing available “headroom” on the grid on a location-by-location basis. These changes should help developers make data-informed decisions about where and when to develop a project and join the queue rather than flying in the dark and wasting indefinite time in the queue.

Yet, to truly unleash the potential of data, the whole technology stack needs to be upgraded. A significant shortcoming of FERC Order 2023 is its weak stance on new technology adoption, particularly Grid Enhancing Technologies (GET). Despite requiring transmission owners to “consider” such technologies, the lack of firm mandates makes widespread adoption unlikely. Under the current business model, not only is the risk too high for the risk-averse utility companies to stomach, but they can hardly reap any rewards from the improved efficiency unless the additional productivity can somehow count towards their rate bases.

Thankfully, other policymakers have stepped in to fill the gap. In April 2024, DOE published its first Transmission Interconnection Roadmap, focusing on improving data and technology adoption to speed up the process, shave costs, and enhance grid reliability. California has taken stronger steps toward mandating Grid Enhancing Technologies through recent CPUC (California Public Utilities Commission) actions. Having been at the forefront of adopting solar technology through its net metering policy and then EV through the Zero Emission Mandate, it’s possible that California is pioneering another new wave of technology penetration through this mandate.

Grid Enhancing Technologies offer particular promise for interconnection by unlocking additional capacity within existing grid infrastructure, potentially eliminating unnecessary upgrades. Many of these technologies have reached maturity and are ready for large-scale deployment. Dynamic line rating, which updates grid thermal limits in real-time based on weather conditions, and Power-flow control devices, which help reroute power automatically to balance loads, are two of the lowest-hanging fruit that can be deployed in the US at a reasonable cost. Other technologies, such as advanced conductors, which reduce energy loss during the transmission process, and advanced inverters, which are ‘grid forming’ rather than ‘grid following’ in response to renewable energy penetrates, are still at the peak of their cost curves. Strategic partnership with utilities is critical on their path to commercialization.

On the software side, adopting analytical tools such as smart sensors, meters, and monitoring devices to collect data can not just help grid operators make informed decisions and respond quickly to grid changes but further kick off the innovation flywheel, enabling additional technology upgrades in the future. Developing a digital twin to mimic the grid isn’t just a moonshot idea but is happening in certain parts of the world. Singapore, for example, has brought the entire country online and is working on developing the digital twin of its underground grid system. By developing this technology, not only will the real-time data be displayed through a 3D digital map, but any potential change to the system, including new generators, can be measured more quickly and accurately. The interconnection study process will likely be shortened to weeks, if not days.

Reimagining the Future

The interconnection bottleneck represents more than just a procedural challenge—it’s become a critical barrier to America’s energy transition and economic growth. While the current delays are concerning, the convergence of policy reforms and technological innovations offer hope. The contrast between ERCOT’s streamlined approach and other RTOs provides valuable lessons for reform, suggesting that simpler, more focused processes might be more effective than complex, all-encompassing ones. FERC Order 2023 marks a significant shift toward modernizing the process, and pioneering thought leadership from DOE and efforts by states like California in mandating grid-enhancing technologies could set new standards nationwide. As we move forward, the key to success will likely lie in combining targeted policy reforms with technological advancement, particularly in grid-enhancing technologies and digital solutions. The path to faster interconnection isn’t just about fixing a broken process—it’s about reimagining how we integrate new power generation into an evolving grid system.