Flood of Clean Energy Projects Drives Interconnection Delays

By Christian Roselund and Anjali Joshi

A new report by Lawrence Berkeley National Laboratory (LBNL) has found that the
capacity of U.S. renewable energy and battery projects awaiting interconnection – including 923 gigawatts of solar and wind -is now greater than the existing capacity on the nation’s grid. The April 2022 edition of “Queued Up” found that as the queues have grown, the average time from filing for interconnection to commercial operation date nearly doubled from 2.1 years in 2000 – 2010 to 3.7 years in 2011 – 2021. This report comes as the nation’s largest grid operator has approved a plan to reform its processes that includes halting new projects for two years to catch up.

Even under normal circumstances, not all the projects that apply for interconnection get built; LBNL puts this number on an historical basis at 23%. For solar and wind, the rates are lower. Queued Up reports that among projects entering the queue from 2011 through 2016, only 20% of wind projects and 16% of solar projects got built by the end of 2021.

The interconnection queue data analyzed by LBNL shows several other significant trends. One is that solar, wind, and battery storage projects are no longer concentrated in California and a few other regions and are increasingly being planned across the United States. The two grids that cover most of the Midwest, PJM Interconnection and the Midcontinent System Operator, currently have the largest volume of solar projects, despite lower levels of solar resource than California or the Southwest.

Fixing the Queues

LBNL’s report is yet one more analysis that underscores that grid operators’ existing mechanisms for planning and approval of projects are not keeping up with the pace of the energy transition in the U.S. electricity sector. In 2016 the Midcontinent System Operator (MISO) underwent reforms which it says were aimed to improve timing and certainty around interconnection approvals. In 2019 Southwest Power Pool (SPP) also made changes to its interconnection process to clear a backlog of projects.

The latest grid operator to approve changes to its queue is PJM Interconnection. On 27 April, PJM’s Member’s committee voted in favor of a new proposal that will make several changes to the way it approves projects, including moving from a “first come, first served” basis to a “first ready, first served” basis. However, the new process will also involve a 2-year moratorium on new projects entering its queue, which has been criticized by clean energy advocates.

PJM plans to file its plans with the Federal Energy Regulatory Commission (FERC) in May, but it may be challenged on some aspects of the plan by an agency that is taking a more active role in interconnection. Last summer FERC started a new rulemaking process to overhaul both transmission planning and the interconnection process nationwide. Concurrent with the LBNL queue report, the U.S. Department of Energy has also released recommendations to build out the nation’s transmission network and speed interconnection.

Battery Boom

Energy storage has grown faster than any other resource in the queues and batteries are the most common “storage” project, comprising around 98% of all projects. The remaining 2% includes pumped storage hydro, compressed air, gravity rail, and fuel cell projects. In particular, the past few years have seen a surge in the capacity of battery projects in the queues, which rose from around 50 GW at the end of 2019 to 420 GW of at the end of 2021. Although energy storage proposals have been mainly focused in California and the West, PJM has also witnessed a strong growth in energy storage proposals.

LBNL’s study also shows a growing interest in hybrid plants that combine generation and storage. At the end of 2021, 42% of solar projects in the queue were proposed as hybrids and solar+ storage was by far the most common hybrid configuration proposed, with 281 gigawatts of solar projects paired with storage. But although developers plan for around 72% of storage capacity (both hybrid and standalone) to come online by the end of 2024, only 9% of storage projects had an interconnection agreement by the end of 2021. This suggests that not all of the planned storage will come online, and that timelines will be adjusted.

Installation Forecasts Are Rising

These massive volumes in the interconnection queues come as analysts are predicting an increasingly large share of renewable energy in the United States in coming years. In an analysis released last week, The Institute for Energy Economics and Financial Analysis estimated that large-scale renewable energy could represent 30% of U.S. generation in 2027, with distributed solar adding another 6%. This is up from around 20% in 2021.

This is much faster than the Department of Energy (DOE) expects; in its February Annual Energy Outlook DOE’s Energy Information Administration (EIA) forecast that it will take until 2050 for large-scale renewables to reach 41% of U.S. generation. However, while all analysts have under-estimated future growth of renewable energy, EIA’s analyses have been among those that later contrasted the most sharply with actual installed volumes.

But to achieve this transition, renewable energy plants must be approved and interconnected to the grid. Until further reforms are made, this process will be a limiting factor to the speed of the energy transition in the U.S. electricity sector.