Federal reforms showing success, speeding grid interconnections

By EPN Staff

Federal Energy Regulatory Commission (FERC) reforms meant to ease an interconnection backlog slowing U.S. electric grid growth seem to be helping, with interconnection agreements hitting record highs last year and on pace this year to match that surge, according to a new report from consulting group Wood Mackenzie.

Interconnection agreements rose 33% in 2024, totaling a record 75 gigawatts (GW), Wood Mackenzie said. The consulting group credited FERC Order no 2023, which was issued in the summer of 2023, with making “a considerable impact … by driving improvements through reducing speculative projects and clearing queue backlogs.” 

Through July, grid operators have secured another 36 GW in agreements this year, Wood Mackenzie said.

“It’s clear that these reforms are showing early signs of promise in accelerating the pace of interconnection studies,” Wood Mackenzie analyst Kaitlin Fung said in the group’s study announcement.

Why it matters

The U.S. power grid is a complex set of connected systems with numerous operators and power providers, and in any given year and region hundreds of additions may be proposed.

Deciding which ones to connect where and when requires study, which is made more difficult when speculative projects fall through. Interconnection backlogs frustrate grid operators and power producers alike, particularly with energy demand expected to spike in the coming years.

In December 2023, nearly 2.7 terawatts of energy – about double the size of the entire U.S. grid at the time – was proposed and awaiting an interconnection study, according to Lawrence Berkeley National Laboratory.

Most of that backlog consisted of solar and battery storage projects.

The FERC order discourages speculative projects, Wood Mackenzie said, and brought other reforms helping to clear this backlog, including “cluster studies” that look at projects in a group instead of one at a time, and deadlines with financial teeth.

“Study requirements and financial penalties for missed deadlines are designed to both accelerate grid interconnection and better distribute grid upgrade costs,” Fung wrote in a recent explainer on the issue.

The bigger picture

Solar and storage projects covered about 75%, or 58 GW, of all interconnection agreements in 2024 and “will retain a similar market share in 2025,” Wood Mackenzie said in its new report.

In fact, solar has accounted for half of all signed interconnection agreements since 2019, the group said.

Natural gas has seen an increase in interconnection requests since 2022, though, adding 121 GW of capacity, according to the consulting group. This trend continues in 2025 “with new applications for gas generation already breaking annual records by mid-year,” the group said.

Wood Mackenzie said the interconnection acceleration varies "dramatically" by region:

• ERCOT in Texas “leads in both success rates and processing speed due to its streamlined queue process through their connect-and-manage approach.
• ISONE in New England “ranks second in success rates but has the longest processing time due to its delayed transition from serial to cluster-based processing.”
• CAISO in California ranks third in approval speed “but has one of the lowest success rates, driven by a high volume of speculative projects.”

Additional details

PJM, the nation's largest grid serving 13 states from New Jersey to Illinois, has struggled with these reforms, helping to push electricity costs there to record levels.

Governors in states that PJM serves are frustrated and some recently called on PJM to streamline and speed up its interconnection process.