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For the better part of the past century, the American electric power system evolved around large, mostly fossil fuel power plants delivering electricity to residences, businesses and industry through a network of transmission and distribution wires that collectively came to be called the electric grid.
But as the聽聽driven by carbon pollution becomes more dire and as technological advances make wind, solar and battery storage聽聽options for powering homes and business, states, corporations and voters are increasingly pushing to aggressively decarbonize the grid.
Power generation resulted in more than 1.7 billion tons of carbon dioxide emissions in 2020, according to the聽, and accounted for about聽聽of all U.S. carbon emissions. Transportation contributes another 27%, and policies to speed up electric vehicle adoption, including in the recently passed聽, rely on the electricity needed to charge all those battery-powered cars being produced cleanly.
Thirty states, including Maryland, and Washington, D.C., have active renewable or clean energy requirements, and three other states have voluntary renewable energy goals,聽. And聽聽鈥� from Amazon, Target and Microsoft to Boeing and Google 鈥� are also increasingly becoming major green power consumers.
That collective momentum has led to a flood of renewable energy development 鈥� thousands of projects,聽聽and thousands of聽聽鈥� but getting that electricity to customers is more complicated than just building solar panels and wind turbines.
Millions of American electric customers are in territories managed by entities called regional transmission organizations or independent system operators, which are tasked with managing the flow of electricity across the grid, running electric markets, ensuring reliability and overseeing new interconnections.
And while grid operators say they鈥檙e doing their best to manage the renewable transition while ensuring reliability and keeping costs stable, critics contend they鈥檝e been caught flatfooted and are only just now coming to grips with the new demands of a changing power system on their markets and interconnection queues. That鈥檚 creating a bottleneck that鈥檚 holding up thousands of projects that could help create a cleaner and more resilient grid and tripping up state clean power goals.
Running the grid
The Federal Energy Regulatory Commission (FERC) created standards for regional transmission organizations in a聽, in part to spur better regional grid management and more competitive聽.
There are currently seven regional transmission organizations or independent system operators operating in the United States right now. The biggest, PJM, is one of the largest wholesale electric markets in the world and coordinates the movement of electricity in all or parts of 13 states, including Maryland and D.C., a territory that numbers 65 million people. Roughly two-thirds of American electric customers live in an area where service is managed by a regional transmission organization (RTO) or an independent system operator (ISO), according to the聽.
In the West and Southeast, customers are generally served by traditional utilities that are typically vertically integrated (meaning they鈥檙e responsible for generating, transmitting and distributing electricity to their customers) who do their own planning and trade power with each other, but not as part of an organized market like in an RTO, said Seth Blumsack, a professor of energy policy and economics at Penn State.
The differences between an RTO and ISO are largely technical, with the FERC setting out specific requirements for RTOs.
鈥淭hey functionally do the same thing nowadays,鈥� said Jeff Dennis, managing director and general counsel of Advanced Energy Economy, a trade group that represents more than 100 companies working in energy efficiency, demand response, energy storage, solar, wind, hydro, nuclear, electric vehicles, biofuels and smart grid technologies.
鈥淭here are sort of three reasons they matter: markets, transmission and reliability,鈥� said Casey Roberts, a senior attorney with the Sierra Club who focuses on regional transmission organizations. 鈥淭hose markets and how they鈥檙e designed determine what revenue generators earn and how often they run.鈥�
Because they鈥檙e charged with managing the grid and ensuring reliability, RTOs and ISOs also oversee new connections for power generators. And across the country, they鈥檝e been buried in the past several years by an avalanche of interconnection requests, mostly from wind and solar and, increasingly, battery storage developers, in part spurred by how cheap those generation sources have become and also as a result of states鈥� clean energy policies.
鈥淎 number of these RTOs have decision systems that were designed for a bygone era of the grid,鈥� Blumsack said. 鈥淭hey were sort of designed when your market participants were transmission owners, big generation owners, utilities. As you have mandates for new technologies and all these new market actors emerging, it鈥檚 been hard for some RTOs to integrate them.鈥�
The queue blues
The most conspicuous example of that dynamic has been the interconnection queues, in which thousands of projects, mostly wind and solar,聽聽while waiting for approval to connect to the grid. There鈥檚 been little regional and interregional transmission expansion in the past decade, said John Moore, director of the Natural Resources Defense Council鈥檚 Sustainable FERC Project. For example, wind energy is聽, but it needs long-range transmission lines to聽聽that comprise the bulk of the electric load.
鈥淲ith all of those pressures on the grid, it was to some extent predictable but unfortunate that we鈥檙e at this point 鈥� with a big backlog and delays for renewable projects,鈥� Moore said.
Developers also in many cases can鈥檛 get good information on the costs of that connection and any associated grid upgrades they鈥檒l be required to pay for prior to application, Roberts and聽聽say, leading to developers filing for multiple projects just to find the best place to site a single solar array, for example.
鈥淯sually developers don鈥檛 start putting steel in the ground until they have the results of their interconnection study,鈥� Roberts said. 鈥淪ometimes the interconnection costs can be more than 50% of the project cost.鈥�
Many grid operators have struggled to manage their interconnection queues. For example, the Midcontinent Independent System Operator, or MISO, which encompasses parts or all of 15 states stretching from Minnesota to Louisiana, has聽聽in its interconnection queue that amounted to a capacity of more than 118,000 megawatts as of Sept. 19. However, MISO got an interconnection reform plan approved by the FERC earlier this year that is intended to聽.
But nowhere has the problem been more pronounced than within PJM, which is headquartered near Philadelphia.
鈥淭hey exist in many, many places in the country,鈥� said Dennis of Advanced Energy Economy. 鈥淧JM has just been the worst example in recent years.鈥�
As of early September, PJM had more than 2,500 projects in the queue with a total capacity of more than 225,00 megawatts, according to Ken Seiler, PJM鈥檚 vice president of planning. For some perspective, that鈥檚 more than the maximum output of all the power generation in the PJM region right now (about聽).
鈥淗ere鈥檚 the crazy thing about the interconnection backlog that PJM finds themselves in,鈥� said Lorig Charkoudian, a Democratic member of the Maryland House of Delegates whose district is just outside Washington. 鈥淧JM would tell you that what they do, what they take pride in, is they forecast and they plan. Here we have a situation where you could have absolutely forecast this moment if you wanted to.鈥�
Charkoudian, an economist, points to examples like PJM聽聽that have聽聽but initially penalized renewable energy sources trying to participate in PJM鈥檚 capacity market. She also criticized the grid operator鈥檚聽聽as hindering Maryland and other states with aggressive plans to聽decarbonize.
鈥淵ou knew this moment was coming, you had a structure in place that was unworkable.聽Forecasting is what you do. Fix it. And fix it 10 years ago,鈥� she said.
Reforms to the rescue?
PJM and other RTOs say they are.
鈥淭he existing planning queue was designed to process larger, centralized generation resources that were far fewer in number,鈥� said Seiler, the PJM vice president of planning. 鈥淚t was also not designed to weed out the many speculative projects that may not have the financing or other means necessary to bring the project to completion.鈥�
A new interconnection process developed by a PJM task force starting in 2021 has been filed for approval with the FERC and聽聽to a 鈥渇irst-ready, first-served basis rather than first come, first-served.鈥� The new framework also includes a 鈥渃luster鈥� approach to studying interconnection costs, reducing the number of additional studies required when projects are modified and streamlining interconnections for projects 鈥渢hat do not contribute to the need for network upgrades.鈥�
鈥淎long with the process revisions, PJM studied more projects than all other RTOs combined in 2020 leading to 30,000 MW worth of generation completing the study process and having executed final agreements in hand. Despite this, only 1,500 MW worth of generation has gone commercial in 2022 as developers face additional challenges beyond the interconnection study process,鈥� Seiler said.
For some renewable developers, environmental advocates and state politicians, though, it鈥檚 an imperfect fix. For one, PJM is proposing to聽聽its queue for two years to work through the backlog, creating delays for projects that haven鈥檛 been filed yet. (By comparison, MISO is pushing to cut its interconnection application process聽, without any freeze on new requests.) Going forward, PJM envisions processing new interconnection requests within two years.
In comments to the FERC, the Organization of PJM States, which represents state public service commissions in PJM territory, called the reforms a 鈥渟tep in the right direction鈥� and a 鈥渃onsiderable improvement to the existing processes which is hindering some states鈥� ability to achieve their policy goals.鈥�
However, while the group encouraged FERC to approve the plan, it said it was 鈥渄eeply concerned that, even under PJM鈥檚 proposed reforms, a project entering the queue today may not be able to achieve commercial operation until nearly 2030.鈥�
鈥楢 potential roadblock鈥櫬�
Aside from the queue problems, critics say聽聽like PJM鈥檚, intended to ensure there鈥檚 enough available electricity to handle spikes in load, are tilted toward fossil fuel generators and allow old, inefficient and polluting power plants to limp along rather than be retired as well as charge electric customers for聽.
鈥淚n terms of what the role is, RTOs are both critically important for the clean energy transition, but also without reform of their markets a potential roadblock to the clean energy transition,鈥� Dennis said.
RTO markets, Dennis said, were designed 20 to 25 years ago around the generation of the time, primarily coal, gas and nuclear power plants.
鈥淭he resources that we will rely on in the future have different technical and operating characteristics,鈥� he said. 鈥淭hat鈥檚 really where we are in a market like PJM. We鈥檙e trying to evolve these rules.鈥�
Seiler, the PJM vice president, said the organization is 鈥渃ommitted to a reliable energy transition as cost-effectively and reliably facilitating state decarbonization policies (and other state policies) through our competitive markets, operations and planning processes.
鈥淭his is at the heart of almost everything we do today.鈥�
鈥楽teps in聽the right direction鈥�
For renewable energy developers and advocates though, there are signs that RTOs are working better with states to help them meet their goals.
MISO recently approved more than $10 billion for 18 transmission projects comprising more than 2,000 miles of transmission line in the upper Midwest, including in Michigan, Wisconsin, Illinois, Indiana, Iowa, Minnesota, Missouri and the Dakotas. The聽聽鈥渞epresents the most complex transmission study effort in MISO鈥檚 history,鈥� the grid operator said, and will provide a host of benefits for the grid.
鈥淐arbon-free and clean energy goals set by MISO member utilities, state and municipal government policies and customer preferences continue to drive growth in wind, solar, battery and hybrid projects,鈥� MISO said. 鈥淎s the region faces both a changing resource fleet and increased prevalence of extreme weather events, the ability to move electricity from where it is generated to where it is needed most becomes paramount.鈥�
PJM also reached a novel deal with the聽聽in New Jersey, which has set an ambitious goal for offshore wind energy development (7,500 megawatts by 2035) that will allow a 鈥渇irst-of-its-kind competitive transmission process鈥� administered by PJM, which is expected to drive down costs of getting that wind-generated electricity to customers, as long as New Jersey handles the bill within its own borders.
鈥淭he provision enables a state, or group of states, to propose a project to assist in realizing state public policy requirements as long as the state (or states) agrees to pay all costs of any state-selected build-out,鈥� PJM said in a聽.
Then there鈥檚 what Dennis, of Advanced Energy Economy, called an 鈥渁ggressive agenda鈥� by the FERC itself to help smooth the renewable transition for grid operators and developers alike.
A recent聽, for instance, directs RTOs and ISOs to remove barriers to electric market participation for energy storage,聽聽to balancing the intermittent nature of wind and solar power.
And two other proposed major rules deal with聽听补苍诲听, respectively.
鈥淲ho pays for transmission is one of the biggest barriers to getting transmission built,鈥� Dennis said. 鈥淔ERC is trying to streamline that by determining who the beneficiaries are in a standardized way.鈥� The hope is the change will head off one of the most common objections by states to new transmission 鈥� that their residents are paying for it without getting enough benefit, Dennis said.
The proposed interconnection rule is aimed squarely at expediting the queue backlogs for connecting new electric generation to the grid.
鈥淎t the end of 2021, there were more than 1,400 gigawatts of generation and storage waiting in interconnection queues throughout the country. This is more than triple the total volume just five years ago. Projects now face an average timeline of more than three years to get connected to the grid,鈥� FERC said in a June news release.
The main components are:
- a 鈥渇irst-ready, first-served鈥� cluster study process in which large interconnection studies encompassing multiple generating facilities rather than individual ones,
- imposing firm deadlines and penalties if transmission providers fail to complete studies on time,
- allowing multiple generators to share a single interconnection request and co-locate on a shared site.
- better modeling for how 鈥渘on-synchronous鈥� generating facilities like wind, solar and storage will actually perform when they connect to the grid.
“They鈥檙e definitely both steps in the right direction,鈥� said Roberts, the Sierra Club attorney. 鈥淚t鈥檚 really important for FERC to set a baseline for transmission and interconnection that will work better for consumers.”
