Fixing generator interconnection | Factor This Policycast

Speaker A: Foreign. Policy people. Welcome back to another edition of the Factor. This policy cast, presented in partnership with Advanced Energy United. We had so much fun doing the show for the first time on competitive transmission that we thought, you know what, Episode two, let's take this thing out of the home offices and get out on the road. Let's make it as difficult as possible. I digress. We're in Washington, D.C. where the infocast, uh, Transmission and Interconnection Summit, one of the preeminent events on the circuit for people who are trying to get projects on the grid and the power infrastructure necessary to support them. We have a lot to talk about, including an update to the generator interconnection scorecard that Grid Strategies and Advanced Energy United, in partnership with the Brattle Group, have recently issued an update to showing how each of the jurisdictional rtos is performing when it comes to generator interconnection. We're going to dive deep into that on the show in just a few minutes, but we've got to start with some of the most pressing news in the industry. Um, I'm joined on the program, just like last week by Managing Director of Advanced Energy United, Kaitlyn Marquis, as well as president, uh, of Greek Strategies, Rob Gramlich. Really appreciate both of you for finding some time at this busy event to talk about this important stuff. I alluded to it. Let's get to it. The FERC show cause orders. If you didn't catch this news recently, um, you know, the big jurisdictional entity, the regulator upon regulators, who has a thumb on these jurisdictional RTOs said, hey, um, in no lesser terms, you guys need to figure out generator interconnection and get these processes right. They sent out six show cause orders, one to each of the jurisdictional RTOs, giving them pretty tight timelines to either justify what they're doing or figure out new processes. I want to start by, uh, diving into those from a bird's eye view. Let's start at the top. Caitlin, what exactly do these show cause orders do and what are we expecting to come out of them?

Speaker B: Yeah, so the process that culminated in the show cause orders that FERC issued last Thursday, as we're recording, um, to all of the FERC jurisdictional RTOs and ISOs, really started last year when the Department of Energy said to ferc, hey, large load growth is exploding. It's too slow. We need to find faster ways to connect these large loads to the grid. And DOE sent for an advanced notice of proposed rulemaking. Slightly unusual, but not unprecedented step for DOE to Say to ferc, hey, we want you to take this action. They laid out 14 principles but they really, what they were saying is FERC we want you to play a bigger role on the process for large loads to interconnect to the transmission system. Um, FERC took a bunch of comment, got lots of input on what was good and bad about what DOE had recommended and they ultimately last week issued show cause orders directing the RTOs and ISOs to do several things to accommodate large loads. Um, some of this, if people have followed the pjm, a separate show cause order that related to colocation, really borrowed from what FERC had done there and said let's create some new pathways for large loads to connect to the grid and to utilize transmission service. So let's make it easier for large loads to co locate with large generators and not be um, fully dependent on the grid but also partly rely on a co located resource. Let's also create pathways for large loads to connect on an interim basis while upgrades are getting built because we know it takes a long time to build transmission large, takes less time to build a data center. And so let's kind of bridge that gap by creating interim service options. They also, borrowing from something that SPP has done, directed the RTOs to create a uh, pathway for a large load and a generator to connect together to the grid where they're electrically proximate, which is kind of the term, but basically if they're connecting close by and the load is soaking up the generation, then theoretically you need fewer grid upgrades. So it makes sense to study those together. You can connect them more quickly. Um, they've also included a few other interesting things in there, requiring some additional transparency about the costs and the upgrades that are needed to connect large loads as well as some ratepayer protection as part of that, to ensure that these large loads are um, that the costs are flowing. Um, there's also a role for states uh, to play in that. But FERC has sort of taken the steps within its jurisdiction as part of the show cause order. They're also requiring evaluation of alternative transmission technologies as one of the things that's being evaluated to make sure that as we are uh, connecting these large loads that we're doing it sort of as efficiently as possible. Um, and they're also including some readiness requirements for large loads. I think we'll probably talk about that on the generator interconnection side. Um, I think those are sort of the broad contours. I'm sure I've, I've missed Something. So Rob, what did I miss?

Speaker C: No, that's, that's pretty darn good right off the top of the head there. Um, you know, I would say what one can draw from this, first of all, it's interesting for people who follow this space is that now we, we have an activist ferc, like, we don't always have an activist for willing to use its powers. In my day when I was working for the FERC chairman, a show cause order was a big deal. It was a tough, muscular action, um, that, you know, we're talking like the enforcement team is coming out and things like that. So that's, that's, ah, you know, that's, that's interesting that all five commissioners on a bipartisan basis are willing to use their powers, uh, in a pretty assertive way, if not non aggressive way. Um, that's number one. Number two, politically, the states were quite opposed to the original, uh, proposal that uh, Caitlin described, uh, from the Secretary of energy under that 403 order. Um, and so I think they were pretty savvy in terms of structuring this to go kind of right up to that jurisdictional line, uh, without crossing, without sort of taking jurisdiction. But on the other hand, you know, when you look into the details, there's some, um, you know, um, more, more assertiveness, uh, there to make sure, uh, that their goals are covered. And then the last thing is that the twin goals are sometimes in competition of basically, again, all five commissioners say they want to serve these new large loads and quickly. Like, not everybody in the country is saying that. There are a lot of people saying we should ban them and keep them out of our state or, you know, otherwise just make it really slow and difficult and costly to make sure everybody else doesn't have to pay any more in their utility bills. But, uh, this FERC says no, these are new large loads, which in a way sort of reflects the regulatory philosophy that all the regulators in the industry grew up with, which is, you know, your job is to serve load. You're not there to question it. Um, so this is reinforcing the load, is there? We're supposed to serve it. Uh, and a few of the commissioners talking about the national security importance of data centers specifically. Um, so there's that, but balancing that with affordability. So they all want to serve that load, but they also all want to protect existing ratepayers. That's a balance that's sometimes hard to strike. So they're still working through it. This is just one step. Um, but they clearly are all Politically committed to those twin objectives.

Speaker A: I appreciate the invocation of the ethos. Ours is not to wonder why ours is, but to do and die.

Speaker C: Exactly.

Speaker A: From the FERC perspective. Um, Rob, I'm curious, is there a stick here? Can FERC actually enforce any of these show cause orders in a way that isn't like a tsk, tsk and a head shake and like, hey, I thought we were playing nice here.

Speaker C: Well, uh, you know, it's, it's interesting in the uh, in the FERC world and with their regulation of RTOs, like they, they're usually nonprofit. Most of them are non profit entities. They don't, I don't think FERC ever, um, you know, takes, uh, away, penalizes them or discourages profits because they don't have profits. Um, but they, you know, they, I think always RTOs follow their lead. If FERC basically, at the end of the day, FERC can just lay down the law and say, nope, your tariff is this, it's not that. Um, and they have to follow, and

Speaker A: I think they will.

Speaker B: Yeah, yeah. And where we go from Here is the RTO's will will make filings, as you said. They'll either say, we think we're already doing this and, and their RTOs are in very different places on some of these things. So some of them will be able to say, hey, we're basically already doing this piece of it. Um, and then there will be a process kind of, you know, for, for FERC to say, well, no you're not. Um, so kind of passes back on paper.

Speaker A: And they could have gone about this the other way, which is the strong armed Right. Rulemaking process takes a little longer, definitely not as flexible for the regions, but could have achieved the same ends just through another means.

Speaker C: Yeah. And, but the key aspect of that is it's slower to do the nationwide rulemaking, you really have to go through the nation, the notice and comment, um, process. And that takes a long time. And when we saw that we all spent three years in order, 20, 23, and three more years in uh, 1920. Um, and so, uh, this is actually much, much more direct, pretty, you know, savvy, like procedural, uh, approach for them. Uh, and I, uh, don't think I'm speaking out of school, but, uh, I was texting my old boss, Chairman Pat Wood, and we had standard market design. And you know, as a nationwide rulemaking, it didn't succeed. Um, but we were kind of wondering, huh, maybe we should have done region specific 206s. Um, there's reasons why it didn't make sense, but, uh, it's actually a quite useful tool given where RTOs are now.

Speaker A: That was an excellent segue into FERC Order 2023, which is going to be the backbone of the conversation in this podcast episode which is titled Fixing Generator Interconnection. Obviously that's the aim of the FERC show, cause orders. I'd love to talk a little bit more about the report that you guys worked on together, if you didn't see the original one. Uh, a couple years ago, back in 2024, Advanced Energy, United Grid Strategies Nebratto Group released what they call the Generator Interconnection Scorecard. And it took a look at the six jurisdictional RT and said, what's working, what's not working, what needs to improve, and how can we get there? And although first quarter 2023 has been around for about three years, um, we haven't seen a ton of change, although there have been some bright spots as highlighted in the update, the progress report that just came out, uh, at this event here at Infocast Transmission, uh, and Interconnection Summit. I want to go RTO by RTO and talk about the real nitty gritty in the weeds. What's working, what's not, how our process is different. But I want to start with an overview. When putting this report together, what were some of the key themes? What did you notice, um, especially in terms of differences over the last couple of years?

Speaker B: Yeah, well, um, I think the overall takeaway from the report is progress is happening. It's not universal. There's some regions that are doing better than others, but also some of the driving challenges that were being raised and addressed as part of the Order 2023 uh, compliance process still linger on. So the uncertainty, especially in terms of cost and timelines for project developers entering the interconnection process, that continues to be an issue that we see as not fully resolved by Order 2023 compliance. And although Order 2023 compliance is still ongoing, many regions are just now getting into their sort of first cycles where the Order 2023 reforms will take effect. Which is why, uh, this, this scorecard reports on progress. It doesn't give new grades because we're still kind of waiting for the metrics and the outputs of the Order 2023 reforms, as well as some other reforms that, um, certain regions are pursuing across the country. So I think it's sort of a, um, you know, progress is being made. Uh, it is insufficient but helpful, uh, and a little bit of a mixed story. And I know we'll go kind of region by region to talk about what's going better and worse across the country.

Speaker A: Yeah. Rob, your thoughts just sort of from a bird's eye view?

Speaker C: Yeah, well, there's a bit of a, like a forest in the trees problem. Right. Like the people working extremely hard at RTOs, the professional staff are completing studies sometimes, you know, on, on time. PJM gets a lot of criticism. Like they're, they've processed a tremendous amount. All of them have now processed a lot. So, you know, that's good. That's certainly better than the alternative. Um, right. But you don't see in the data that like, the overall time to completion has really shrunk. Uh, or the, you know, we talk a lot about, and we hear from United's, uh, members a lot about the certainty. Because if you're a project developer and you go in and you don't know if you're going to be charged 5 million or 85 million, um, and you don't even find out till pretty far in the process, uh, and it changes from one to the other as you get to the next stage, you know, that's a huge problem and we don't really see evidence yet that that is changing. Um, the promising things, uh, Caitlin referred to and we'll get into, ah, have to do with some of the newer initiatives that are sort of just over the last year. They really try to get at the timing and the cost certainty.

Speaker A: You mentioned the time spent in the queue really hasn't improved all that much. I heard here at the event that the median time spent in the queue in 2025 for projects is still 60 months. That is a tremendous amount of time to be waiting for power. There was another developer that spoke on a panel out here in D.C. about the efficacy of first order 2023 and said, hey, did it remove projects from the queue? Yes, but it did so by probably empowering those with the deepest pockets and pushing out the smaller, less agile players. And as a developer, this individual said, I still have to have 10 projects to get two across the finish line. And the only difference from FERC 2023 until now is that everything is more expensive. You're nodding your head. Uh, do you feel like that's a common sentiment?

Speaker C: Yeah, I mean, we pulled some numbers, so this is not a surprise to hear. We've heard it here at the conference. Folks probably know David Minden with the edp. He spoke, uh, and he always is very candid about the status of.

Speaker A: I wasn't going to name him, but now that his name's. I appreciate David.

Speaker C: He spoke at one of our events a couple years ago as well. He's an expert. Yeah. And uh, he doesn't uh, hold bunches. So um. Yeah, I mean he was saying the cost has risen to, you know, the cost to participate has, has risen. And in a way that's by design from Order 2023, which was in a way trying to ration the amount of projects. And you uh, know, I think there is a, a fair perspective on all of this. That order 2023 kind of had a get off of my lawn type of feel to it. Like there were different commissioners with a different, you know, perspective on that. They all wanted to speed up the queues. But uh, you know, there was a large focus, uh, in some people's perspective of just reduce the queue size. Because the queue size is a problem. Well, the queue size is not. I mean for. If you're looking at the consumer interest and just in reasonable rates as FERC should be doing, Q size by itself isn't a problem. Moreover, the, you know, the, the developers that went in, um, with multiple projects, like, they're not the problem too. They're responding to the incentives that the regulators created.

Speaker A: So Q size is the symptom, right? Yeah.

Speaker B: And those projects aren't necessarily speculative. They're, they're real projects. It just, they just might not all get across the line. I think in the Order 2023 process there was a. The prevailing sentiment was that the central primary problem to solve was to boot speculative projects out of the queue and if you could just do that, it would sort of be. We would basically fix it. And what we were saying at the time, and what we are continuing to say now is that is part of the problem. We weren't opposed to raising the readiness requirements and increasing the barrier to entry to the queue within, you know, within. As long as that's reasonable. But if you're not also solving for the uncertainty, ah, as you're entering the process, you're not fully going to resolve. And we need to be thinking about both of these things and for quarter 2023 did raise the bar, ah to entry to the queue and try to address the speculative process. And we have seen withdrawals increase um, as a result of that. But it didn't really address the other piece of the challenge that we've seen

Speaker A: from the developer perspective for quarter 2023. For those who haven't read it or maybe need a little refresher and believe me, I Get confused all the time. That's the one that mandated uh, cluster study process and getting away from the serial looking at these projects, um, prioritizing first ready more shovel ready project. The idea to get more projects online faster. And that's really the gist of what we're talking about here, period. Whether we're talking about cost allocation or how we build transmission or how the regions play together, at the end of the day it's about getting shovels in the ground and getting these projects online as quickly and cost efficiently as possible. I tease this for a few minutes. I'd uh, like to really get into it though and go RTO by RTO and discuss what Brattle and Grid Strategies and Advanced Energy United found in each one of these rtos. I think it's best if we start with one of the hottest button ones and start with pjm because I feel like all eyes are on pjm. I write a lot about pjm. I feel like lately I've been wanting to write more about pjm but things are changing so quickly that I feel really ill equipped to do so. I feel like by the time I put a piece out I'm going to have to change half of it. So maybe I might as well not start. So since this is live at the event and there's no way to go back and edit what we say, what we say right now actually is the truth as of today. Let's start in pjm. Um, what's going on there?

Speaker B: Yeah, well if we're talking about generator interconnection, news isn't moving quite so fast. What's happening really quickly in PJM is how they're dealing with the capacity market. They're thinking about a reliability backstop, they're thinking about how to connect large loads. Um, generator interconnection is absolutely critical to that but they're it, they're, they're sort of separate tracks in some ways. So pjm, when we're thinking about generator interconnection, they went through a four year process of transitioning to a cluster study process. Um, not great timing for a region that was experiencing explosive load growth to be pausing on accepting new interconnection requests for four years. Um, they just completed that uh, that ah, sort of transition. Well they're still working, they still have some ongoing cycles but they've just started studying their first new cluster which was an um, enormous uh, cluster and they've, they've indicated, they indicated before that that started that it would be a one to two year process. I think that's the big question in PJM right now is whether they're able to um, to achieve that one to two year process with this new cluster given the size of the cluster. Um, another thing that I think we'll see as a theme across a couple of the rtos is this uh, idea of fast track processes. So because PJM had paused on accepting new requests while they were working through this backlog and while um, load growth was exploding, they petitioned FERC and got acceptance for some fast track processes. And so that has created some other challenges that we, we can get into as well. But I think that's kind of the big picture in pjm. They have made progress on um, clearing that backlog. There were a lot of withdrawals I think partly because of the time that those projects were sat waiting and also the high network upgrades that some, the high cost to interconnect that some of these projects face because there's just a lack of um, the system can't absorb uh, all that new generation without some significant new transmission build. Um, just given that the region has not been doing a lot of proactive forward looking transmission planning.

Speaker A: Rob, any thoughts on what's happening down at Data Center Alley?

Speaker C: Right, yeah, um, well PJM definitely is um, you know, ground zero for load growth. So it has been a challenge. In fact we did an earlier piece uh, with United, uh, uh, called Pennywise Pound foolish. But you know the idea that you know we're m, you know, mess around uh, with such lengthy analysis of what, what exact costs each generator is responsible for uh, with presumably under the theory that we're trying to save consumers money and have each new customer pay their fair share. But that delay uh, led to a significant shortfall in capacity and energy. Now we have high capacity and energy prices so like wouldn't have been better to just estimate roughly what that cost is and let everybody connect and then we'd have more supply in the system. Um, that's all looking backwards. We gave um, PJM a pretty hard grade a few a couple years ago. Um, I mean recently some developments they did um, uh, get a transmission plan approved. And one theme we see across these is uh, I mean we know transmission capacity is really a big root cause of all the interconnection issues. If there's spare capacity then the interconnection analysis is really easy because you don't trigger many upgrades and then you don't have to argue about it and you don't need lawyers and your engineering firms competing, you know, debating all of it. So with the headroom, um, headroom might not be a good tour. It sounds like excess, but you know, with sufficient capacity, um, which is how utilities are supposed to be planned, uh, then, you know, you don't have um, such an issue. So they did get some planning. That's, that's um, that's helpful. Um, and then one thing, other thing about PJM that's, that's unique that I've been learning in a separate project looking at PJM governance is, you know, a lot of this. I mean across the board we're really looking at the overall performance, which is often a function of the structure of the system and the rules. It's not about the people. Right. We're not personalizing this and we didn't find any, uh, evidence of, you know, any particular RTO being slackers relative to the others. Right. They're all working hard with the laboring under the structure that they've been given. And someone of them, some of them have been given pretty bad structures. Um, the PJM stakeholder process is uniquely difficult compared to the others. And so even if there were brilliant ideas to fix these things, they have trouble just improving their system. That is really, I think choking off some of their innovation. Um, separate issue, outside the scope. But I just to note that um, you know, here again, it's not necessarily the fault of the people there. Uh, it's often a broad structure and in their case a structure that's hard to change.

Speaker A: I heard somebody here at the event say the idea when you connect a project is to leave the grid the same way as when you started the process or better provide a little extra headroom if you have to pay for that upgrade. And that's certainly the big issue in pjm. I keep hearing the words connect and manage associated with PJM more and more. They're newly adopting that process. I'm so used to hearing that associated with Texas and et. Um, I even heard someone here at the event say that they expect speed to power to be faster in BJM than ERCOT once these new, um, sort of schemes take place. Either of you have a strong take on that? Because I feel like I associate the unregulated Texas and the massive growth they've had there as being like the easiest place to plug something in. But of course the tricky part of connect and manage is the manage part. Right?

Speaker C: Right.

Speaker B: Yeah, well, PJM has kind of co opted the term connect and manage the way. Yeah, well, when we use it in ercot, uh, the ERCOT context, it refers to ERCOT doesn't have a capacity market, their interconnection process is much simpler. Um, you don't have to deal with all the network upgrades, you're just getting studied and connecting pretty quickly to the grid. Um, PJM is now referring to connect and manage for load. So let's click quickly connect a load and then sort of manage whether it needs to be curtailed.

Speaker A: We're not used to that at all.

Speaker B: After it's connected. Yeah, they're now sort of shifting. I don't even know if it's this. Maybe this is kind of a break. I'm not sure if it's being referred to even as connected manage anymore because they're now saying, well this is actually maybe really the states need to have a bigger role in um, in how we're, how we're managing that curtailment and the relationship with the load. But um, but, but it is all about how can we, how can we connect these loads really quickly, um, without necessarily the generation and the transmission, um, to serve them as full network customers who are fully guaranteed and backed by the grid. Um, so thinking a little bit more creatively and then on the capacity side, our resource adequacy side and then also relating to the FERC show cause orders, kind of on the transmission side, um,

Speaker C: I would say also broadly, sort of thematically that all of these things, the 206 orders, the connect and managed process and a lot of these generator interconnection things are more flexible services than the past where it was just plain vanilla full network capacity resource, you know, NRIS and our network resource interconnection service, um, when you know, ERCOT's Connect and Manage for generation always stood out as the flexible alternative to what The FERC jurisdictional ISOs and RTOs did. A lot of developers always liked the ERCOT approach because you can just connect and it was the ERCOT's job to manage. Um, that worked pretty well as long as ERCOT did its job of managing. They got behind on transmission planning and then guess what, managed can bite you in the butt when it's not being done well. Um, but I still think the solution to that is do the manage part, manage the grid, keep planning, have enough infrastructure, uh, and uh, on the grid side, manage the grid, let the generators plug in and offer the services they can offer. Um, but I do think really by necessity we're seeing that ferc mandated to PJM, well even well before these 206 orders, some more flexible interconnection and transmission, uh, services, uh, and the basically Interruptible load, uh, is an aspect of that where if you can be interruptible, you should get on quicker. So we're seeing, I think by necessity a number of more flexible services for interconnection and transmission. And that's a good thing.

Speaker A: Yeah, we talked a lot about flexible interconnection and what exactly that might be able to do for a grid. There was a really popular report that came out a couple years ago from Duke that showed X number of gigawatts available in the grid. If you're able to curtail in whether it's 50 hours or 100 hours and sort of come off the grid at some point. Capacity. That gnarly grid that you were talking about that was assigned to PJ in the initial report was an RTO worse. D minus, damn near failing. Um, no new grades this time around. But it sounds like there is some progress and at least some, um, forward thinking about how these processes work since we already dipped our toes in Texas a little bit. Let's go to ERCOT next. Rob, can you tell me what's happening down there right now?

Speaker C: Yeah, uh, we gave ercot, uh, an incremental progress grade also and they started out with a good grade.

Speaker A: Um, um, V last time.

Speaker C: Yeah, V. Uh, so these get degrees. Uh, uh, that's, that was my work for me.

Speaker A: Don't go asking for my transcript.

Speaker C: Yeah, confidential. Uh, I signed an NDA. Yeah, um, yeah, they, you know, I think it is still a generator. Ah, friendly, uh, place. Uh, and you know, it's all complemented by, I mean, the fact that, uh, you know, outside of the process, there's private land, there's no zoning, like you can build stuff in Texas. Right. So in a way like Texas, ERCOT gets the benefit of a very easy to develop place where, compare that to Maryland or something in pjm. Uh, right. But uh, that said, you know, ERCOT has been, has been flexible. I think the, you know, customers, uh, we interviewed were pretty happy and they expect progress. They did. You know, part of the progress that we, uh, noted there was a significant new transmission plan which again, they had gotten behind in Texas. They had used, they used to be a leader in regional planning, uh, but they, they sort of quit for five to seven years. Took a break, took a break, took a pause.

Speaker A: It's enough planning.

Speaker C: Got back, got back on that horse. And so now they're back at it. So that's helping with the congestion and curtailment that we've seen.

Speaker A: Any thoughts on what's going on in ERCOT or you want to move to another region because there's a lot going

Speaker B: on to the, we got a lot of regions to.

Speaker A: Let's go to SPP next. Let's go due north up into Oklahoma and work our way upwards. Because to me SPP was the belle of the Bell ball here at the Infocast event. Everyone was talking about how their, their CPP process and how FERC loves it and how this might be the way forward. And we're all tentative. Well, maybe, maybe not. But it sounds really good. Let's start with spp. What's happening?

Speaker B: Sure. So you, you, you mentioned the acronym. I, I will.

Speaker A: It's all acronyms all the time. You got a bunch of new ones.

Speaker B: Yeah, well I used to work on the Clean Power plan back in the day, so I'm glad that SPP has co opted CPP and I have a new. Um, so it's the consolidated planning process

Speaker A: for Southwest Power Pool and do all

Speaker C: the round two or three with. Most definitely.

Speaker B: Ah, yeah, yeah. So the consolidated planning process, which actually is a, is a great concise description of what the process is. It's consolidating, bringing together the transmission planning process and the generator interconnection process and it's solving uh, uh, a bunch of issues at the same time. And I think what's exciting about it is it's taking some of those root causes that we were talking about earlier that are challenges in the generator interconnection process of lack of transmission capacity, uncertainty in terms of cost and timeline to interconnect. And it's trying to solve them all through this one process. And the reason that there's this sort of excitement and trepidation is that's a lot to do. That's a big ask for one process. So how it's implemented will really matter. Um, but they're doing this by putting together uh, a long term plan that takes into account expected generator additions as well as other uh, drivers of transmission need. They're identifying more efficient transmission upgrades by doing that. Because the generator interconnection process sometimes might be a little bit more piecemeal. You're identifying a few upgrades here and there associated with certain projects. Um, and a lot of the times those upgrades have benefits to load as well as to generation. So you're sort of combining that all in one process and then you're saying, so let's share those costs in a way that follows. Beneficiary pays, you know, bedrock FERC principals and assign some of those costs to generators. Trying to interconnect some of those costs to Load as a generator, you know, that cost up front, uh, when you're entering the queue. So that can, that can reduce the, the need for putting in 10 different bids to get, to get 10 projects built, um, and reduces some of that uncertainty that you're facing as a generator, uh, and then on the back end, uh, load. Ultimately uh, customers benefit from both a more efficient build out of transmission and more efficient build out of generation that they are ultimately paying for. And you know the costs of interconnection ultimately get bundled into power purchase agreements and costs that get passed down. So hopefully it's a much more efficient, much less uncertain uh, process that just makes it easier for projects to move forward and transmission to get built. I think the big question is what does that cost? If you've got this, the key part is you know, your cost up front, um, and so we're waiting on that. And then how much certainty is there in this process? Is it sort of delivering on that promise of uh, um, greater certainty?

Speaker C: Yeah, so that's the promising uh, upgrade here from like promising improvements uh, for sbp, there's some other things they're doing. They have an intermediate planning process that's more focused on the one to three time, three year time frame where, which is the time frame where advanced transmission technologies can, can come in. And certainly they have a more focused new process. Again also sort of unproven so far, but promising uh, in terms of helping to create some, some capacity. And the, you know, the theme again the root cause is really the lack of capacity in all these regions. Lack of capacity, lack of certainty. And I think these efforts in SPP really go at both of those things.

Speaker A: It sounds like that upfront cost is something you were teasing out a few minutes ago, even if it's not exactly the right number up front just to have an idea and charge that one fee instead of in PJM just picking a name out of the hat and maybe getting three or four years into the process and realizing you triggered a multimillion ah, dollar grid upgrade that you are in no business to handle and you bail.

Speaker C: Right. Well that's uh, you know, in the 2024 Interconnection, uh, report, uh, scorecard that Katelyn and I and uh, Hannes and Mike and the others at Brattle worked on. We did this whole review and we decided that really the best way to do it was what we called an entry fee. Like just fix the charge based on you know, estimates of roughly what generators tend to uh, you know, costs or you know, contribute or uh, to the System, Um, uh, you know, and you can do it by zone because not all zones are the same. But the idea was just fix it. Just get it more certain so we don't argue about it forever. Um, nobody else really picked up the entry, entry fee term. That's fine. CPP is now, now the thing. Um, but it is the basic idea and you know what a radical idea that you go to purchase a product as a customer and there's a price. I mean, name one product you bought in the last year that didn't have a posted price. Right. Like it should be that way. And it's also that way with public utility regulation. You know what your water bill rate is. Yeah. Right. So it kind of seems radical, but it's like so basic. It's just, uh, again, it's a forest for the trees thing. If you're deep in the world of this participant funding, but forecast, assign the incremental cost to the next generator in the queue mode. And you believe that to be your job. And everybody at the RTO started working there long after that decision was made by somebody long ago. It's not your job to question again. Uh, it's just what you inherited. And you know what, there's another way to do things. And so that's what we're trying to pull the scope back out here and say, look, this is another way to do it. And um, you know, this SBP CPP thing actually was like seven or eight years in the making. It's not like it just popped out. Um, a lot of people put in a lot of work on that.

Speaker A: You know, I hear over and over again that the consolidation of transmission and generation interconnection is like the magic wand in the industry, the silver bullet. That math is tricky. It's not quite as easy as your water bill. Right. And maybe that's one of the reasons one of the other regions hasn't tried to jump on the screening previously. Do you think that that's a fair assessment and do you think that SPP is going to get it right or close enough to right

Speaker C: that we can

Speaker A: at least will about it moving forward?

Speaker B: Yeah, I mean, I think that's the definition. The CPP is sort of a creative new novel idea that came out of new, as in they've been working on it, as Rob said, for seven years. Um, I do think the other regions are, let's wait and see how it goes in spp. I think we would like to see them start having those conversations now that it's been approved by FERC and SPP is working on it because it is going to, you know, it's not going to be a direct copy paste to other regions. Um, but it took a lot of, you know, it was a collaborative I think process in SPP of different entities that are involved in the interconnection process, really listening to each other, listening to each other's pain points. Um, so I think part of the reason other regions haven't, haven't done it is just that SPP was the one who was cooking it up and uh, developing the solution. So hopefully now that it's, now that it's out there, um, and I think the key, the entry fee is still key to it because you can do better integrated planning but actually then tying that back to the generator interconnection process and it's helpful to have um, generation additions, uh, incorporated into your transmission planning process and, and to have that feedback loop into having those upgrades reflected in the, in the generator interconnection models. I think what's really innovative about what SPP is doing is then taking that next step and saying we're also going to tell you upfront what your costs are.

Speaker A: And they're also um, pioneers in the acronym game Large Load Interconnection.

Speaker C: Totally winning. And we know whatever it is, yeah,

Speaker A: there's a whole bunch of chills held together.

Speaker C: They're killing it.

Speaker A: We've got four other regions to get to that all have their own acronyms to worry about. So we got to keep moving. Let's go a little further north into miso. Um, what's the Mid Continent Independent System Operator up to?

Speaker C: Yeah, I mean they've been uh, you know, they used to win all these races, right? Proactive multipurpose transmission planning and things like that. And those helped and they, and they helped, you know, uh, trickle down into the interconnection process. Um, interconnection's still slow there, so they didn't get a whole, I mean we just didn't see a lot of evidence of a whole lot of progress there. Like everybody, they're working hard. Um, but yeah, I think um, you know, there have been minor delays and we haven't talked about the, you know, the Taylor Swift aspect of all this.

Speaker A: I've been waiting to get Taylor Swift into this conversation.

Speaker C: I got it first. I beat you to it. You know, the eras, ARS approach in miso, different uh, words but same acronym in sbp, aris, and then PJM has their rri. Um, but the idea is um, more of a fast track for the capacity, uh, resources. Those that are more firm that have higher, you know, capacity accreditation. So you know, these days think of gas as usually the new generation that has the high capacity value, uh, relative to renewables which have some, but not as much. Um, so there's a little bit of a tricky ah, issue there where um, you know, there's only so much transmission capacity to go around and if you're given a fast track to new uh, folks who weren't, you know, in the queue two or three years ago like the other folks, um, then you're kind of, you know, there is scarce capacity to go around. And so the new generators kind of came in, which raises some discrimination concerns. If you've been sitting there in the queue with tied up capital um, for three, four years, which is the case for a ton of wind and solar projects and storage projects in Miso. Uh, and then this other thing happens and it certainly didn't help you out. It probably hurt your uh, you know, cause. Um, so that's, you know, that's been an issue. There's been litigation around this. But it's uh, you know, it's a challenge.

Speaker B: Yeah. And I would say it comes at. Miso is currently studying its 2021, 2022, 2023 and skip 2024, 2025 clusters and their, and their opening 2026. So that's a, it is 2026 now. They're still studying 2021. So uh, that's a huge backlog that they are still working on. And uh, they introduced some reforms for some of those later clusters that some of the things that we've been talking about, they got ahead of Order 2023 and increasing the readiness requirements. They also introduced a cap, they made some, and, and they're working on automation which are all things that should speed the process. But at the same time they have this huge backlog of projects that are continue going to continue to, to slow things down. These, these clusters interact with each other and create cascading delays. So I think that's a big concern. And then on top of that to have this fast track process that, you know, Miso, when they asked for FERC approval and got FERC approval, they assured everyone this is not going to distract and take resources away from the standard interconnection queue. But we have continued to see those

Speaker A: uh,

Speaker B: you know, at this point pretty old clusters get delayed and delayed. They keep getting the completion dates keep getting kind of pushed back. Um, so that's one concern. Uh, in Miso, and then this fast track we have a lot of uh, member companies that are independent power producers. They're trying to develop competitive projects in the MYSO region. And there's just been a much harder uh, path to participate in this expedited process. There was a carve out for those projects that's been instrumental in allowing them to have some way to play in this expedited fast track process. But that's another concern with the fast track in particular. The way it's designed in MISO is also crowding out competition and impacting the kinds of projects that are able to get access to what is a very attractive thing, which is a faster path to interconnect to the grid. Um, so I think in Miso we would really like to see more progress on, more focus on. Let's not be talking about our 2021 cluster in 2026. Let's get that cleared out and uh, uh, start to get these clusters moving faster and get to a reasonable turnaround time.

Speaker A: It sounds like Miso is dealing with a very similar situation to what I dealt with when I came back from Paternity League with my inbox. At some point you have to make a determination as to whether or not that stuff is worth going back and getting, or whether you just need to move forward with the new. Right. And, and, and that is tricky because there might be some gems in there. Um, and I don't think anyone that's been waiting since 2021 is hoping to be skipped over by miso. But one other thing I wanted to mention about that RTO in particular is it does seem like they're adopting AI in a way that maybe not all of the other regions are. I know they've been working with the software that's supposed to extract extremely speed up, expedite those timelines and get projects online faster. Anything either of you would like to share about the way they're rethinking artificial intelligence's role in making these processes a little better.

Speaker B: Yeah, sure. I, I think MISO deserves credit for really, um, being willing to invest in a new tool and try to use new tech, adopt new technology to speed up their process. And so we're excited about that. I do think they've taken an approach of sort of building the airplane while they're flying it. And so I think there's some trepidation from those interconnection customers that are currently in that in flight cluster that is, uh, you know, you don't want to be the first passenger on an airplane that is you, uh, know, being built while you're on the airplane. So I think there's uh, we still see a lot of promise in this. We want to see it be successful. I think some uh, sort of transparency, you know, PA announcements of how things are going, a little bit more communication between uh, how the tool is being implemented, just to, to increase, I think for interconnection customers being able to uh, you have to make decisions at various points along the way and you're relying on the information that you're getting and interconnection customers want to be able to replicate that. So I think some growing pains. Overall, I still think MISO deserves a lot of credit for being willing to invest and take this step. And I think they'll get there. Um, we're just sort of in the messy middle right now with that process and I think there's a hunger for um, transparency and communication as that gets rolled out.

Speaker C: Yeah, I would echo that. David Bromberg from Pearl street in Varus, uh, says sometimes the engineering or the automation that they do, it's really more automation than AI. Uh, is really just uh, when you're heading to a brick wall, it's putting the accelerator down. Right. So it gets you very quickly to sometimes an answer that makes you very unhappy. Um, so that's not always, um, you know, a thrilling uh, outcome from a customer perspective. Um, but um, you know, and I think you used the term growing pains, Caitlin. And you know, I think that's. That's right. I mean, in a way, if you shift from any one model to a different model, sometimes you're going to get different results. Right. And you know, and you know, it's always the case when uh, when there's a reliability violation or any number of different mitigation solutions. And so you can still argue about all those things. So just speeding up the actual model run doesn't necessarily speed up the resolution of disputes about what's the best mitigation and all of that. So it's a, you know, it's a holistic, uh, process and when sometimes you get different results and then the customer can use one model but not the other model, and so they can't actually verify or replicate that model, then it gets to be a difficult process.

Speaker B: Yeah, I think you're also sort of inserting this tool into a fairly rigid process too. So developers face pretty tight turnarounds to make decisions. There's a lot of money on the line when they're making those decisions and often they don't have a lot of sort of back and forth and information sharing that they're able to Use to try to get insight into the information that they're acting upon. And that's part of the process. I think it makes it um, even harder to do something innovative and creative within the confines of a fairly rigid structure that they're operating within.

Speaker A: Let's go a couple time zones left out to California and see what uh, KAISO is up to. There was a panel here at the interconnection event, um, focused just on transmission in the west. Maybe ignored in the past because of how tricky things are and how frankly large the geography is out there and how tough it is to get power from load, uh, from generation to load. Um, Rob, I'd love to hear what you think uh California is doing well and what they need to fix.

Speaker C: Sure. So actually starting out of scope of this particular paper is regional uh, transmission planning, uh, or development. I mean California ISO took a big leadership role in getting transmission lines into other states. Uh, and the subscriber model which enable that to work a few states away and getting power in they just energized Sunsea. So you have uh, even a much higher penetration uh, of renewables today than last year because you got a lot of wind power coming in and serving when the solar isn't operating. Uh, it's a perfect uh, synergy, uh, kind of a beautiful wind solar synergy with storage battery wind. Uh, uh so at any rate they've been doing the transmission to do that and that of course you know, transmission always helps the cues. Right. And they've got internal transmission and external transmission. Um and then on um, interconnection they've had their IP interconnection process enhancements um, started a few years back, FERC approved uh and it was also a form of consolidating planning and interconnection. And they were doing it well before spp and it uh, was FERC approved before and it's been implemented. There were some concerns I think last time when we did this maybe a year or two ago there were concerns from independent uh, power producers, ipps about potential discrimination in their approach. So there was not like unanimous um, IPP support for that approach at the front end. But I don't, we didn't really see any evidence that uh, that materialized that there was discrimination. I mean they do do it based on the, to some extent the procurement or the sales to a load serving entity which ipps might be concerned about. But it seems to have turned out okay on the discrimination score. Uh and they are proactively planning to the zones and making the zones accommodate the amount of new generation. Uh, it's like eight or nine gigawatts a year. Uh, and they're meeting that and getting the interconnection uh, approvals in those zones, like getting the zones ready proactively and then interconnecting to those zones. So it seems to be working pretty well. We gave them a pretty good grade again. They had a decent grade before.

Speaker A: Shout out to Sun Zia we don't talk about merchant transmission very often and we know this project has been going on for a really long time. I mean 400 miles is a long way to haul transmission, don't get me wrong. But this project has been coming for a bit. I'm sure KAISO is happy to have it. Um, before we move on from them, any thoughts? We've been talking a lot about the EDAM lately. A bit different than the conversation we're having right now. They're extended day ahead markets. But I would love to touch on it in just um, like a stakeholder engagement, um, point of view and how the west seems to be coming together in some ways around the extended day ahead market. Rob, do you think that there's a future in which the west is a little less disjointed and a little less regionalized and a little more united in sharing everything from the firm Hydropower up in the Northwest to you know, the clean energy being pushed by the Sanzi Alliance?

Speaker C: Yeah, I mean I think it is definitely moving to more integrated. It's the question is it going to be a little bit more integrated or a lot. Right. And I mean we've um. So like I have a fellow on my team, Richard Doyne, used to run markets and operations for miso. Right. And so people around the west say oh, don't worry about which utility joins which RTO because we can do SIEMS agreements. You know Richard was responsible for a lot of SIEMS agreements with SVP and PJM and ah, tva and it was a reliability like he ran operations. It was a reliability issue and definitely a market issue. And turns out the seems agreements don't really work all that well. Like don't rely on the fact that you can write an agreement down with a bunch of lawyers in a conference room and then two years later the operators are trying to deal with this protocol like you really. I'm a little worried that the disjointedness will continue and when they have an opportunity to really integrate. Well.

Speaker A: All right, two more RTOs to get to. I know it's summertime school is still in session for a few more minutes on the show. I want to bring Caitlin back in to talk about ISO New England. Let's go all the way out east. What's ISO New England doing and how can we do it better?

Speaker B: Yeah, my home region. Um, so ISO New England was one of the ISOs RTOs that had not yet transitioned to a cluster study process. They were still doing serial uh, interconnection studies and they also had to kind of disentangle their interconnection process from their um, capacity, uh, accredit, uh, capacity participation. Um, so they had quite a bit of work to comply to come into compliance with Order 2023. We were very happy with um, where that compliance uh, plan landed. And they are now in the middle of their first transitional cluster. We are hearing that there are some pretty high upgrade costs as part of that cluster. So that's definitely something to watch. Um, ISO New England is also um, not directly part of the interconnection process, but they have been working on regional transmission planning. They got FERC approval for a new long term transmission planning process that the states and the ISO really worked closely together on and they've got their first procurement out. And the way that that relates back to generator interconnection is the upgrades that they've targeted um, should help to bring to make the generator interconnection, um, easier for certain resources. For example, it's long been very difficult to get new resources connected in Maine, onshore resources in Maine, because any individual interconnection customer that's going through this serial process can't shoulder the cost of the necessary upgrades. And the region is now recognizing that there's a regional benefit to building those upgrades. And so they're, they're proactively, um, they've gone out with an rfp and so the region is, is taking on those upgrade needs. Um, New England is obviously a smaller region so wasn't dealing with the same, um, same huge backlogs. Um, but we're definitely watching what happens with that transitional cluster. They're also working on some reforms um, to their surplus interconnection process which maybe we'll get into in a little bit. So I think uh, we said that they expected progress in New England because they really uh, they're you know, working through the Order 2023 compliance which involves some significant uh, changes. And then definitely the proactive transmission build out is a really promising development for the region.

Speaker A: Anything to add? Ragh?

Speaker C: No. Um, I think you covered it. I mean the long term Transmission plan has been a huge change. The states deserve a lot of credit for kind of turning through, turning that around. That's starting to pay some dividends.

Speaker A: Offshore wind an issue out there in terms of pulling that off the table. I know the Biden administration had set an ambitious goal of 30 gigawatts and we're going to get nowhere near there, probably single digits for the foreseeable future. How does that region bounce back from losing such a huge amount of generation?

Speaker C: Yeah, no, it's uh, it's tough. And that was a lot of the queue and now that, yeah, now they're gone. Um, so, um, I mean they haven't had the low growth at other regions have had. Right. So it's just not as much of an acute, tougher build there. Yeah, yeah, makes sense.

Speaker A: Um, last but certainly not least, let's stay out east and go, uh, New York ISO. Rob, what did you see there?

Speaker C: Yeah, so, I mean New York ISO has done decently, uh, in this. They, they have seemed to, I mean it is smaller. They're maybe they're more able to be, ah, just a little bit more customer friendly and a little bit less bureaucratic than some of the others. We hear that anecdotally from some of the developers. It's a sound. Seemed a little easier to do business, um, there, um, but um, you know, we gave them expected process. There have been minor delays, but not. Nothing serious. Nothing, uh, you know, none of the, I don't know, horror stories that we heard in other regions were really applying there. But you know, it's, it's still the basic structure of the. But for test and participant funding and you know they've, everybody's doing clustering. In fact, they're all, I think doing it by the time order 2023 was finalized. And you know, that's, that's uh, that's helping. But um, you know, it's still. None of them are super fast. And New York uh, is, you know, just uh, doesn't uh, really stick out in any particular way. But it's still laboring under that structure

Speaker A: now that we've looked at all of those regions. Uh, Caitlin, I want to defer to you. Advanced Energy United recommended a handful of policy recommendations holistically across the board. Here's how we could improve processes. What, what recommendations do you guys have for the rtos?

Speaker B: Yeah, so we, we worked again with uh, Brattle and Grid Strategies a couple years ago and put forward uh, a longer series of reforms. And what we tried to do in this report was actually narrow Those down to where we are today. Uh, what do we think are the most impactful reforms that regions could take? Um, so some of these we've already started to touch upon. Uh, it's taking the CPP entry fee model and applying that in other regions, starting to explore what that would look like for PJM for MISO to take that approach to generator interconnection. Um, looking at uh, enhancing and taking full advantage of ways to utilize existing capacity on the grid. So surplus interconnection where a new uh project is able to make use of unused capacity at the site of an existing resource. You have, maybe it's a fossil resource and you're adding storage or you have a wind resource and you're adding storage to that to be able to utilize the full um, the full interconnection capacity at that site as well as generator replacement. So you have a resource that's leaving. How do we quickly make sure that we're uh, utilizing that available uh capacity? Um it's making sure that we are. So the third one, making sure that we are um, identifying the most cost effective and efficient tools to address the issues that are identified in the interconnection process. So that's making use of alternative transmission technologies, remedial action schemes. So how do we, if we identify that there is a reliability violation as you're connecting to the grid, do we really need, need a steel ah in the ground infrastructure upgrade or could we make use of an operational tool or an alternative transmission technology to solve that problem? Um leveraging automation. We talked about some of the growing pains as part of that. We didn't talk about some of the RTOs are utilizing uh, automation just in some of the more basic functions of the interconnection process or more of the communication, customer management, how are they adopting new tools and sort of bringing that into the, that process into the digital age as well as the more modeling applications of automation, uh, or in the case of pjm they are moving more toward AI uh so continuing to iterate, uh adopt those tools. And then finally something we actually haven't talked about yet but is a huge challenge in the interconnection process is what happens after you sign that interconnection agreement. As a project developer your uncertainty and your challenges do not end there. You still have to, to um, the upgrades to still need to get built and put in service, the transmission, the grid upgrades before you can start injecting into the grid. And you also have a whole bunch of other processes you need to go out and get your Offtake, you might have your. You'd have to go through permitting, you have to go through, uh, procurement for, you know, to actually construct your project. Um, and there's just not a lot of, There's a lot of projects that, that have made it through the interconnection process, signed an interconnection agreement, um, and are getting delayed in that process to connect to the grid and fully become operationalized. And there's not a lot of transparency into the various drivers and what are the root causes. Um, and then the. And on both the timeline is also the cost. So as a generator, uh, as you're interconnecting, you've signed an agreement, you are making plans around the final cost that you got and the timeline that you got. And both of those things are still subject to change. So you can be well in the way of developing your project and suddenly you hear from the transmission owner, oh, actually that's going to take another year and another X amount of money to actually build that upgrade. And at that point you're sort of, you have no recourse with that uncertainty. And it might upend your ppa, it might delay your project, it might even kill your project. Um, so the recommendation there is really to increase transparency and get better data collection because Rob's, uh, team put a lot of effort into trying to find just what is happening. And the data just, it's spotty. It kind of exists in some places, but it really, really, uh, doesn't exist. So that. Those are, um, those are the five things that we highlighted as where we should be focused.

Speaker A: Rob, there's a lot of meat on that steak. Any fat around the edges you want to nibble at or talk about the data collection process and what a bear that was.

Speaker C: I'll just say one thing on Kaylie mentioned the advanced, uh, transmission technologies, uh, part. I mean, we've been saying, I think United's been saying the Watt Coalition, the AMP Coalition, and we and others have been telling FERC, you know, thanks for the requirements in order 20, 23 and 1920 that say consider these technologies. But that's really weak sauce. It doesn't actually necessarily require anybody to do anything. You know, please take the next step and put some teeth into that. Like require an actual model with a capable modeling tool and then, uh, study it and then report on the results and then tell us why you're not doing it. Please, ferc, do that. Well, they did it. And the, uh, orders we were talking about at the start of the show here on the 206 orders, which is wonderful. We put that recommendation, uh, uh, before

Speaker B: we knew they were going to do that.

Speaker C: That's right. I mean, it was all this, you know, is on everybody's mind. And, um, you know, but we put it in here and they put it in there. Uh, I'll take, uh, I'll, I'll take it in the four quarters in a day.

Speaker B: Yeah, but, but then how do we, how do we make that, how do we bring that into the generator interconnection process and, and really, really make sure we're evaluating and utilizing those tools when

Speaker A: we set out at the start of this conversation, I didn't anticipate that we would actually fix this data generator interconnection, but I feel like we are a couple inches closer than maybe when we began about an hour ago. Unfortunately, that's all the time we have on this edition of the fact that this Policy Cast presented in partnership with Advanced Energy United. I appreciate, speaking of listeners, you the listener, for making it this far in this conversation.

Speaker C: I hope you learn a little bit.

Speaker A: Um, have some, some firm takeaways about where the RTOs are and where we're headed from here. One last resounding thank you to Rob Kramlage, president of Grid Strategies, Bram Lick Rather and managing director of Advanced Energy United, Kaitlyn Marquis, once again for joining us on the Policy Cast. If you guys enjoyed the show, please, like, subscribe, leave a little feedback, do what you want. I'm not your dad. But we do appreciate your support. Looking forward and look forward to delivering more episodes like this on Energy Policy in the future. Until then, take care, be good people.