EP.223 Tyler Norris on Interconnection Processes in the US Power Markets
Dec 10, 2024
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Tyler Norris, a James B. Duke Fellow at Duke University specializing in electric power systems, shares his insights on U.S. power market interconnection processes. He discusses the increasing complexity of interconnection queues and the challenges developers face, particularly with 'zombie projects.' Tyler contrasts 'invest and connect' with 'connect and manage' approaches, and delves into the implications of upcoming U.S. elections on the energy transition. His expertise sheds light on the delicate balance between innovation, reliability, and market dynamics.
The significant rise in interconnection queues, now exceeding 2,600 gigawatts, highlights the urgent need for reform in U.S. power markets.
Diverse interconnection approaches, like 'Invest and Connect' versus 'Connect and Manage', impact project feasibility and market efficiency critically.
Deep dives
The Rising Importance of Interconnection Processes
Interconnection processes have gained significant attention in the U.S. power markets due to the dramatic increase in interconnection queues, which now hold about 2,600 gigawatts of proposed generation and storage assets, surpassing the total installed generation capacity. This situation has emerged amid a backdrop of aging infrastructure and the retirement of coal plants, which exacerbates the urgent need for new capacity to meet increasing demands. Factors such as electric vehicle adoption and the rise of data centers have further intensified load forecasts, creating an environment where timely interconnections are critical to support growing energy needs. Consequently, the Federal Energy Regulatory Commission has prioritized this issue, signaling its importance in the energy transition narrative.
Challenges of Zombie Projects in Interconnection Queues
Many projects in the interconnection queues are labeled as 'zombie projects,' which refers to speculative applications that developers submit to reserve an option without the obligation to proceed. This practice results from asymmetrical information regarding project viability and costs associated with network upgrades. Developers often diversify by queueing multiple projects in favorable markets, contributing to bloated queues that make processing interconnections increasingly difficult. This phenomenon illustrates the complexity of managing interconnection requests and highlights the need for reform to streamline the process and prevent speculative inflations in queue numbers.
Comparing Interconnection Approaches: Invest and Connect vs. Connect and Manage
Different U.S. markets employ distinct interconnection approaches: the traditional 'Invest and Connect' method, predominantly used across the country, involves developers fronting the costs for significant network upgrades before interconnection. In contrast, Texas utilizes a 'Connect and Manage' approach, allowing for faster interconnections without requiring upfront payments for extensive upgrades. This dichotomy influences how projects are assessed, as developers examine energy market conditions and potential profitability before deciding on interconnection. The implications of these approaches are significant for market efficiency and project feasibility, especially in states facing rapid load growth and the urgent need for renewable energy sources.
Integrating Reliability Standards and Interconnectivity
The balance between reliability standards and interconnection requirements presents a complex challenge. As interconnection processes are tied to capacity resources' deliverability, stringent reliability criteria can hinder timely project rollouts in markets experiencing fast load increases. Current practices, particularly in PJM, set high standards that require substantial study and upgrades before new generators can be interconnected. Moving forward, discussions around separating interconnection agreements from reliability standards could provide a pathway for integrating new generation capacity without compromising grid stability, as the system adapts to evolving demand and resources.
In this episode of Energy Unplugged, we are thrilled to welcome Tyler Norris, James B. Duke Fellow at Duke University’s Nicholas School of the Environment. Tyler joins our Managing Director for North America, Oliver Kerr, to discuss the interconnection processes within U.S. power markets.
Tyler's PhD research at Duke University focuses on electric power systems. His background includes roles as VP of Development at Cypress Creek Renewables, Director at S&P Global Platts, and Special Advisor for Tech-to-Market at the U.S. Department of Energy. Tyler has also served as an expert witness in multiple utility commission proceedings, with his insights featuring in prominent publications such as The New York Times and Foreign Affairs.
Key topics in this episode include:
What are interconnection processes, and why are these increasingly relevant in the US?
“Invest and connect” vs “connect and manage” approaches to interconnection
What will the results of the US election mean for the energy transition in the country?
