Episode 07: Interconnection Policies—The Electric Grid’s “Rules of the Road”

This episode of The Energy Optimist explores a topic that is a central focus of much of IREC’s regulatory work: interconnection. Interconnection policies can be thought of as the “rules of the road” for the electric grid. They govern how systems that produce electricity are permitted to connect to the grid. These policies are a critical factor in how efficiently and affordably clean energy can be developed, though they remain relatively behind the scenes in terms of public awareness of them. We dig into what happens in the interconnection process, some of the common pitfalls, and what defines effective interconnection policies.

Key Takeaways: 

• Interconnection rules govern how energy-generating and electrification projects connect to the electric grid. State-level interconnection rules define these processes for local clean energy projects—like community solar, rooftop solar, and home batteries (also known as distributed energy resources or DERs).

• Interconnection is something of a “hidden issue” in the delivery of climate change solutions. Few Americans are aware of the process, but it determines how efficiently clean energy technologies can access the grid to deliver climate (and other) benefits. 

• The steps in the interconnection process vary depending on the type and size of project.

• The process always starts with the customer submitting an interconnection application that provides key details to the utility about the project they are seeking to connect to the grid, regardless of the project size and type. 

• The interconnection process exists to ensure that the safety and reliability of the electric grid will not be negatively impacted by projects that are seeking to connect to it; if such impacts may result, the electric utility determines what is needed to prevent them (such as making infrastructure upgrades). 

• Smaller projects, which are less likely to cause adverse impacts to the grid, go through a simpler screening process by the utility. 

• Larger projects on the other hand, typically go through a detailed “study process” in which the utility seeks to identify potential grid impacts. If the utility identifies potential negative impacts, it then identifies needed grid upgrades and how much they will cost. 

• Common challenges in the interconnection process include: 

• Delays: Currently, many states have significant interconnection backlogs, which can add months or years to development timelines. Delays have a variety of causes, including: inefficient processes that are not suited to the current volume of projects, construction timelines, supply chain issues and delays in acquiring needed equipment. 

• Lack of clarity: Interconnection rules that can be interpreted differently by different parties result in uncertainty and disputes.

• Misalignment with new technologies: Interconnection rules need to be updated as new technologies like energy storage become more prevalent. New technologies may operate differently from technologies the rules were originally written for and thus changes may be needed to ensure the rules enable the full use of those technologies' capabilities and don’t create unnecessary barriers. 

• Grid upgrade costs: When grid upgrades are needed, costs can be another challenge. Currently, most states have policies that require the developer of the project that “triggers” the upgrades to cover the full cost of the infrastructure improvements. 

• Since these costs can be very high (sometimes exceeding the cost of the project itself), they can result in projects being canceled. This in turn can result in sections of the grid remaining inaccessible to new clean energy projects for long periods. Some states are beginning to explore alternative approaches to distribute the costs of grid upgrades. There is also a growing effort to proactively make grid investments to ensure that the grid can accommodate projects that align with policy goals. 

• Effective interconnection rules must include: 

• Transparency: Interconnection rules should provide customers with visibility into timelines, costs, and grid conditions so they can make informed decisions. 

• Visibility into grid conditions enables customers to understand optimal locations to site projects and the constraints on how much energy those projects can send to the grid without upgrades. This benefits all parties by reducing time spent on projects with a low likelihood of success. Hosting capacity analyses, which are essentially a map of grid conditions are one tool for enabling this visibility. 

• Timelines and accountability: Interconnection rules should specify exactly how long each step of the process takes and include deadlines for the relevant party, whether that is the utility or the customer. Systems for holding parties accountable for delays must be built in; this includes mechanisms for tracking key data—such as how long certain steps actually take, as well as consequences when timelines or other policies are not complied with. 

• Consistency: Interconnection rules should establish and enforce standardized processes. This benefits customers by helping them know what to expect and benefits utilities by ensuring replicable processes and greater clarity for staff. 

Resources and Further Readings:

The IREC Team has published extensively on interconnection. For more information on this topic, explore the resources below. 

Webpages: 

• Connecting to the Grid: An overview of what interconnection is and our related work. 

• See Why State Interconnection Rules! This webpage was the hub for a 2023 communications campaign we ran to raise awareness of why state interconnection rules are some of the most important policies for enabling our clean energy and climate goals! 

• It includes a variety of template materials you can use to spread the word about why interconnection matters. 

Blog Posts and Articles: 

• Interconnection Is Broken: Radical Rethinking Is Needed to Achieve Clean Energy Goals

• We Need Interconnection Reform to Unlock the Benefits of Energy Storage

• Improving Interconnection Timelines: The Need for Data and Enforcement

• State Interconnection Rules: The Gatekeepers to Energy Storage

• Efforts to Restrict Grid Data Access Can Impede the Clean Energy Transition

• Interconnection: The Series. Drawing from our on-the-ground experience in more than 20 states, IREC attorneys from Shute, Mihaly & Weinberger discussed key emerging issues and incisive areas of focus for decision-makers in this nine-part series on interconnection reform, originally published by Greentech Media from 2016-2018. The series covers a number of key interconnection topics, including queue management, timelines, data access, cost certainty, cost allocation, distribution planning, energy storage, and dispute resolution.

• Interconnection: Distributed Energy Policy Dream

• Interconnection Queues for Solar

• Enforcing Interconnection Timelines

• Interconnection and Grid Data Access

• Interconnection Cost Certainty and Predictability

• Allocating DER Interconnection Costs

• Prevent Interconnection Deadlock

• The Interconnection of Energy Storage

• Interconnection Dispute Resolution

• For additional articles on this topic, including deep dives on specific state interconnection policies and rulings, you can explore all of our regulatory blog posts here. 

Reports: 

• Freeing the Grid: IREC’s Freeing the Grid series grades each state in the nation (as well as Washington, DC and Puerto Rico) on the quality of its interconnection policies. Visit the Freeing the Grid website to see how each state’s interconnection rules stack up. 

• IREC’s Model Interconnection Procedures, 2023 includes the latest best practices to enable faster and less costly interconnection of DERs, while maintaining safety and reliability. First developed in 2005, IREC’s model procedures are a proven tool for helping states and regions achieve their clean energy goals.

Thinking Outside the Lines: Group Studies in the Distribution Interconnection Process: This paper provides guidance on the use of “group studies,” an emerging practice to streamline the interconnection of distributed energy resources (DERs)—such as solar PV, community solar, and energy storage—to the electric distribution grid.