Energy Transition – An evolving journey

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Read time: 5 minutes

In keeping with the Biden administration’s efforts to modernize the U.S. transmission grid and to support efforts to fight climate change, in August 2021, the Department of Energy (DOE) announced efforts to support transmission development in the West and on federally owned land in native communities.

To facilitate the construction of high-voltage transmission lines, DOE is offering two financing mechanisms:

  • A $3.25 billion fund through the Western Area Power Administration Transmission Infrastructure Program to support project development and provide access to low-cost capital for transmission projects
  • $5 billion in loan guarantees through DOE’s Loan Programs Office to support innovative transmission projects along with transmission projects owned by federally recognized tribal nations or Alaska Native Corporations

The second offer focuses on high-voltage direct current systems, transmission lines to connect offshore wind, and facilities sited along rail and highway routes.

At the same time, the Department of Transportation (DOT) announced that it would develop guidance to facilitate the use of public highways and public rights-of-way that will assist in the development of transmission infrastructure and renewable energy projects and will also aid in the deployment of broadband and electric vehicle charging stations. This opportunity would ultimately spur interstate transmission project siting and permitting, which has been challenging at times. In April 2021, DOT issued guidance to provide clarity to state transportation departments in furtherance of supporting infrastructure development to spur clean energy development, among other national policy goals.

Interconnection reform

On June 17, 2022, the Federal Energy Regulatory Commission (FERC) issued a proposed rule on interconnection reform in Docket No. RM22-14 that follows up on a July 2021 advance notice of proposed rulemaking (ANOPR). This is the second proposed rule to result from the ANOPR, as FERC issued another proposed rule on transmission planning and cost allocation earlier this year in Docket No RM21-17. FERC approved the interconnection proposed rule in a unanimous vote.

By December 2021, there were more than 1,400 gigawatts of electric generation and storage pending in interconnection queues nationwide. On average, it takes more than three years for a project to become operational in most regions. To help address this backlog, FERC has proposed a series of reforms under Federal Power Act section 206, including the following.

Implementing a “first-ready, first-served” cluster study process. Current interconnection procedures employ a first-come, first-served serial study process in which a project is studied individually based on the order in which it submits a completed interconnection request. Under the proposed reforms, a transmission provider would enact a cluster study approach whereby the transmission providers would conduct larger interconnection studies covering multiple projects. Furthermore, the notice of proposed rulemaking would require interconnection customers to provide additional financial commitments and readiness requirements (such as increased study deposit amounts, site control demonstrations, and required commercial readiness milestones) to enter the interconnection queues. The proposed rule also suggests the imposition of withdrawal penalties to exit the interconnection queue process.

Key takeaways
  • Biden administration and FERC strive to upgrade U.S. electric transmission grid
  • DOE and DOT finance and streamline construction of transmission lines
  • FERC proposals aim to speed up the process of generator interconnection to the transmission grid