FERC Order 2023 Accelerates Interconnection Reform for Clean Energy

The Federal Energy Regulatory Commission's Order 2023, which took effect this year, is beginning to transform the interconnection process for clean energy projects across the United States. The landmark rule aims to address the massive backlog of over 2,000 GW of generation and storage projects waiting in interconnection queues nationwide.

The order introduces several key reforms. First, it replaces the traditional serial study process with a first-ready, first-served cluster study approach, allowing projects that are more advanced in development to move ahead of speculative proposals. Second, it increases financial commitment requirements, requiring developers to post larger deposits earlier in the process to discourage speculative queue entries.

For solar and storage developers, the implications are significant. The new cluster study process is expected to reduce interconnection timelines from an average of 5 years to 2-3 years for well-prepared projects. However, the increased financial requirements may present challenges for smaller developers, potentially consolidating the market among larger, better-capitalized firms.

Regional transmission organizations are implementing the order at varying paces. PJM has been among the most aggressive, launching its first cluster study window with new financial requirements. MISO and SPP are following close behind, while CAISO is working to align its existing cluster process with the new federal requirements.

Industry stakeholders have generally welcomed the reforms while noting implementation challenges. The transition from serial to cluster studies requires significant changes to utility workflow and staffing. Some RTOs have reported a surge of applications filed before the new rules took effect, temporarily worsening the backlog before the new system can take hold.