Last July the Federal Energy Regulatory Commission (FERC) finalized FERC Order No. 2023, which makes significant changes to the procedures for adding new transmission to the grid. After the issuance of the Order, the commission went through a rehearing process. On March 21st, the FERC affirmed the Order, including one of its more controversial elements: stricter timelines for interconnection paired with financial penalties for transmission providers who don’t meet them. 

The Order is being hailed by some as ensuring essential capacity to the grid. FERC Commissioner Allison Clements called it “a major step forward.” 

But there are problems already playing out. Sources waiting to come online aren’t high capacity factor sources (i.e. those with consistently reliable output). The vast majority of capacity awaiting interconnection as of 2022 was wind, solar, and battery storage. In fact, more than 95% of projects awaiting connection were of these types. Battery storage is still not sufficient to offset the intermittency of wind and solar on the grid. So, taken together, wind, solar, and battery storage are far more likely to worsen reliability than improve it. 

Focusing on wind and solar, these projects are often located much further from population centers than other types of power plants like nuclear and natural gas. As a result, they are both more expensive and difficult for transmission providers to connect to the grid.  

Therefore, interconnection of these sources poses unique challenges for the grid. Penalizing transmission providers for being slow in connecting these high difficulty, but low reliability sources is not the best path toward a more resilient grid.

This Order is expected to increase the burden on transmission providers while not meaningfully improving grid reliability because the sources being prioritized, paradoxically, aren’t reliable.

Transmission providers are best able to determine the speed at which these sources can be connected to the grid. Therefore, penalizing slow movement on the most complicated projects will be unlikely to have the desired effect.