Unpacking DOE's proposal to transform data center interconnection

Latitude Media, covering the new frontiers of the energy transition. I'm Shale Khan, and this is Catalyst. 23 years ago, FERC issued Order 2003 to standardize large generator interconnection. We've now had two decades of experience. experience of the problems and the solutions which have been kind of haphazard and piecemeal over time to get at this explosion of requests for supply to interconnect to the system.

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All right. So this is wonky, but it is super important. We've talked innumerable times at this point on this podcast. about connecting large loads, particularly data centers, the electricity grid, and how that has become like the epicenter of a huge challenge both in AI world and in energy world. And just recently, the US Secretary of Energy, Chris Wright,

wrote a letter on this topic that could have really huge impacts. It's a letter to FERC, the Federal Energy Regulatory Commission. And it is a combination of asserting FERC authority in a way that has not happened historically. over large load interconnection, but also just as or maybe even more importantly, trying to set a process to get those loads interconnected faster, particularly when they are combined with generation. We've talked before about co-location of generation in data centers.

And or if they are flexible loads and curtailable. Another thing that we've talked about before. So it ties together a bunch of stuff that um I've been interested in, that everybody in the energy world has been monitoring. And it's gonna play out pretty quickly because uh Secretary Wright requested this to be done with an an actual order from FERC by April, which is basically lightning speed from a federal regulatory perspective. So we'll see if that happens.

Um, but it's one of these things that like is very, very important. For many folks downstream of this on both the energy side and the AI side, but that I think is actually poorly understood other than the headlines. So in order to parse out what's actually in this letter in this proposed order, I brought on two folks who are wildly knowledgeable on the subject. One has been on the show before, Tyler Norris. Uh Tyler is a PhD student at Duke University.

Um, and you know, wrote I think what is now considered to be kind of the seminal paper on data center load flexibility. And the other is Allison Clements. Allison was actually a FERC commissioner from 2020 to 2024. So she has deep experience inside the agency itself. She's now a partner with digital infrastructure advisory firm ASG and the principal of 804 advisory. Here are Tyler and Alice. Alison Tyler, welcome to you both. Thanks for having me. It's great to be here. Great to be your show.

All right. So excited to talk to you about this letter and notice of proposed rulemaking that Secretary of Energy Wright sent out very recently. Alison, I want to start with you since you have the procedural knowledge here. Like technically speaking, what is this? What did Secretary Wright send? Technically speaking, what Secretary Wright did was use a provision in the Department of Energy Organizing Act.

Provision four oh three B, which is why people are referring it to the f as the four oh three B letter. He sent a letter to then Chairman Rosner at FERC and all of the commissioners and said, I, the Secretary of Energy, direct you to consider issuing an advanced notice of proposed rulemaking or an A NOPER. Around large load interconnections.

And it's a fourteen page kind of bare bones document that con it that in the eyes of the secretary constitutes an advanced notice of proposed rulemaking. Um that's the process and now FERC can say Okay, great. We're gonna consider it and they either move forward and issue the advanced notice of proposed rulemaking, which there has been some public indication already that they are eager to do, or they could decide not to issue the rule, but they would have to justify that decision.

Historically speaking, when the Secretary of Energy does something like this, would it be common or uncommon for FERC to say no thank you? Well it hasn't happened very often. Um the one time that people remember is under the next provision or the previous provision in that act, four hundred three A. Uh in 2017, the uh administration sent over a letter of propo with a proposed rulemaking to then Chair Chadnial Chatterjee and the FERC.

uh requesting them to subsidize coal and nuclear plants with some uh uh you know uh on-site fuel supply benefit. Uh and that FERC unanimously rejected moving forward with that proposal. Okay, so there's some possibility it doesn't move forward, but I mean reading the tea leaves, maybe Tyler, you can comment on this because I've seen you say it publicly, it seems generally, maybe outside of FERC, but in the public domain, this has been pretty well received.

Broadly speaking, which I mean, I think does run in contrast to I remember that previous letter about coal with ninety days of storage and so on. So your your sense is that the vibes here are good, Tyler? So so far, I you know, let's not discount that there will likely be other perspectives that have not yet been represented. But no, look, I think it was very significant that um you know, Commissioner Rosner came out of the gates expressing

you know, an eagerness to to work on the proposal. You know, on the other side of the aisle you had, you know, Senator Mike Lee that came out, you know, strongly supporting it and a variety of different Stakeholder groups, at least I've seen, and companies that are involved in this space, seem to view it generally favorably. I think.

Just to parse out a a key distinction, right? There's this jurisdictional question. And on that one, I think there's obviously gonna be a variety of perspectives and there will be concerns on the part of especially of some state. Uh commissioners, officials, and certainly the investor owned utilities.

But with respect to the substance, that's where I've seen the most excitement. Uh, and I and it we'll get into it, but in terms of the what what this would actually do to sort of improve the interconnection process, that's where I think there's been the most positive reception.

All right, so let's dispense with the wonky jurisdictional stuff first, because I do think it's important to talk about, but then we'll get into the meat of the substance here, which I think is where what's more interesting. Allison, back to you. What is distinct here about what the Secretary of Energy is proposing in terms of the shifting of power and authority between FERC and state? It's wonky but fun, Shell. Uh the

Uh, Federal Power Act gives FERC the federal regulator jurisdiction over the transmission system, right? The high voltage poles and wires and the s wholesale sales of electricity, whereas the states reserve power for generation uh as well as the distribution system. And there is a little bit of a fuzzy area as relates to whether or not FERC has jurisdiction over the transmission aspect.

Of bundled rates in vertically integrated states. So if you live in a state with a vertically integrated utility, The state commission has jurisdiction over not only your generation charge part of your bill and the distribution portion of your bill, but also the transmission portion of your bill. And FERC has never exercised authority. exercised its authority um to to take jurisdiction over that piece. The reality is though it's hard to imagine anything

uh, you know, FERC has jurisdiction over practices affecting transmission rates. It's hard to imagine anything more directly affecting transmission rates than new loads hooking up to the transmission system and the costs that those loads impose. And so

I think the legal arguments are very strong in favor of the the Secretary of Energy's position here, and in favor of the position FERC would take. I'm not sure if it's by tradition, um, by culture, experience, or practice that it actually hasn't been been asserted in the past. But so in practice then, is what's the question at hand here? Say I'm a large load, say I'm a data center or I a, you know, prospective data center, and I wanna go get sited in a regulated utility territory.

Is the question who has authority over the tariff that is in that is offered to me or the interconnection queue and how it is managed? Or like what is the actual balance of power that's in question here? There are two parts of that hookup, right? If you're the lo if you're the data center in Georgia or in Oregon and you go up to hook up to the grid, your utility has authority to go take you through that study process and hook you up.

And tell you what it's going to cost. But the state has jurisdiction over that decision when you hook up to the grid in vertically integrated states. Right, even if it's hooking up to the transmission system. Whereas what this this large lo this Anoper is saying is known FERC is gonna now have jurisdiction. So FERC could standardize rules.

For that piece of the hookup across all utilities or some set of principles that these utilities must follow in a way that they could they have not done before. Sorry, the second piece of the jurisdictional question is who who has authority over the sale from the generator to the data center as the retail sale. And that piece remains with the state.

Yeah, Shay, I'll just say, you know, as someone who originally came into this as a developer and an analyst, um, it was always a puzzle to me, right, why we had standardized interconnection procedures. Uh that were promulgated by FERC for generators. But nothing for loads. And setting aside all the concerns around rate regulation or even really anything that happens after you're already hooked up to the system, but just the process leading up to actually getting connected.

Um it was always a puzzle to me and of course, you know, s Allison sort of articulates how it plays out in terms of the the legal and jurisdictional dynamic. But I think and of course in the letter itself, um, you know, the Secretary references the fact that look, we've had long established standardized generator interconnection procedures, and part because FERC recognized that

Um interconnection is inherently part of open access to the transmission system. And it it sounds like they're they're making a similar argument. Okay, so it sounds like the I don't know. The key thing here is if uh if this goes through the just jurisdictional shift.

Then if a large load wants to interconnect to the transmission system, the utility will still be the one who has to manage that interconnection and introduce the tariff and all that into regulated territory. But the oversight might shift from the State Public Utility Commission to FERS. If this is true, and that would allow FERC to do something that is more standardized and sort of national versus it all being piecemeal. That's basically the gist of it. Yeah, that's right.

All right, let's get to the meat and the substance of what the secretary is actually proposing. Can you just give uh Allison just a high level overview of the sort of what you view as the key elements of the proposal? Absolutely. I mean it's 14 pages long. And you know, when we issued a regional transmission planning rule at FERC last year, it was twelve hundred pages long. So this is very bare bones, high level conceptual, and there's a lot of devil in the details.

But what the the main things that the rule does is one, it asserts the jurisdiction we just talked about, which has been untested largely. Two, it suggests that

loads connecting with new generation together should be studied together, which saves both cost and time. And three, and the exciting part that I know Tyler's gonna want to jump in on is that it suggests that if loads are willing to be curtailed, curtailable, If loads will stop when asked, stop taking power from the grid when asked by the grid operator, they should experience accelerated interconnection and that study time should last no longer than 60 days.

Can I ask though before we talk about the curtailable piece and even and also the hybrid facility piece? Is it not saying overall there should be a faster load interconnection process for these large loads? And and instead it's saying only in these circumstances we need to fix the problem for co-located generation and load and we need to introduce a faster process for for curtailable load? Is it not like an overarching we got to connect data centers faster kind of thing?

It is that. I think you see kind of an embracing of the co-location model. Um, but overall it is kind of a a cut through. the ki the confusion and the uncertainty and and hopefully the lack of transparency around how you get hooked up to the grid as new load today in this time where, you know, supply is ri i is is tightening.

And maybe that's the first that's the part of the jurisdictional thing. It's like, okay, we need to streamline and standardize this whole process to make it better across the board. And then also specifically let do something new with regard to facilities that are co located with generation or that can be curtailable. That's right. I mean, if you think back, you know, 23 years ago, 25 years ago when FERC issued Order 2003 to standardize large generator interconnection, we've now had.

you know, since that time, two decades of experience of the problems and the changes and the s solutions which have been kind of haphazard and piecemeal over time. to get at this explosion of requests for supply to interconnect to the system. And now you have an administration saying, you know, whether or not you like it, we're gonna assert this jurisdiction that we're confident that FERC has and we're gonna not

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Did it deliver? Easy enrollment creates momentum. Proven performance builds trust. That's why more than 170 utilities rely on EnergyHub to manage over 2.5 million devices, delivering 3.4 gigawatts of flexible capacity. See what that looks like at energyhub.com. Okay, Tyler, I want to ask you first, uh you're the curtailable load guy, but before we talk about the curtailable load stuff, I I am interested in the the second thing.

That Allison said is in there, which is the what um is called in the letter hybrid facilities, right? That's the co-located generation plus load. And it and my read of it is that. Part of what they're doing here is saying, look, like in in a default scenario, you submit a load interconnection request, you submit a generation interconnection request, those two things are considered independently and it's not really unified. And so this tries to unify them and say consider them together.

But beyond that, you know, These things are kind of intertwined because generation might be the mechanism. If it's behind the meter, it might be the mechanism to be curtailable. So as you think about the big picture world of data centers and their energy provision, where does generation fit in in your mental framework?

Yeah, maybe it's worth just stating very clearly up front that I think one of the things that has been revealed over the past year, you know, based on this co location docket and PJM and other considerations and other jurisdictions is that We really have an antiquated load interconnection study process and study criteria. Because, as you said, it's really divided from the generation side. And so this has very significant consequences.

If you are talking about co-located generation and load, because what you might have going on, right, is that a generator can be Um essentially offsetting the withdrawal from the grid from a given load during the most stress period, right? Which is what the utilities are actually studying to determine your network upgrades. And so if they don't consider the ability of that on-site generator to offset your withdrawal, you may be much more likely to trigger the need for major network upgrades.

And of course, that's more expensive and it can take multiple years. So that's that's sort of part of the delay. I I guess to your sort of broader question there, I mean, I suppose it's no secret that. the preferred option, right, for flexibility or we could say curtailability on the part of these large loads is, you know, either on site generation or storage. I do think

We we've heard a lot about the the the generation option, but and we hadn't really seen large scale battery storage deals, right, just until the past few weeks. I think the first one that I noticed that was in the public domain was um from Iron Mountain.

Uh which announced that they were gonna do, you know, they were gonna size battery store, two hour battery stores at a hundred percent of their facility in New Jersey and then the same in Virginia. And then just last week we saw the significant announcement from Calibrant and aligned data centers.

uh that will do also also a two hour battery um for a new data center in the Pacific Northwest and that specifically they said it was helping to accelerate its interconnection by you know on the order of of years. So this even just this, I mean it sounds very simple in a sense, just like

Instead of studying them separately, study them together. But that would be a very significant development, I think, in the way we do load planning and could mitigate the need for substantial amount of upgrades and accelerate the interconnection process.

How much visibility I mean, you mentioned those both all those projects are two hour batteries. And one thing that's not clear to me. In this uh for quarter or just in in general is how much visibility we have. And maybe this is gonna be locationally specific. But how much visibility we have into the the required duration of flexibility at any given time? I know there's a high level, you've done a bunch of great work on this, Tyler, on like, you know, over the course of a year, how much.

do you require in order to maintain like system level resource adequacy. But as we start to think about is what's going to sit behind the meter exclusively going to be generation or is it going to be storage or something else? Um how often does a two hour battery do the trick, basically? And like how often are we gonna need more? And what's gonna dictate that?

Yeah. No, this look, this is one of the questions. I mean, I think there it's widely recognized that in the vast majority of events that you're talking about that you know, the the two to kind of six hour range is sort of the sweet spot when when you just kind of look at you know most of these periods of system stress. And so even with a two hour battery, right, if it's it's sized at 100% of your nameplate.

And the goal is to reduce, you know, your draw by 50%. Well, that becomes a two-hour battery. Sorry, a four-hour battery. And then you can sort of adjust it thereafter. So we should we should also recognize like a two hour battery can become a longer duration battery if you're just, if you're using it for less than your your nameplate.

Um, but I would point there's another study that just came out a few weeks ago. It was by E3 and they used Southwest Powerpool as the as the market. And they looked at four hour duration, I think it was eight or ten hour duration. uh from either a battery or whatever the onsite option was. And I mean what they found is that even with four hours, you end up with what we'd called an an effective load carrying capability, in many cases like above 50%.

Um, which is actually pretty close to like the ELCC of some generated options or even longer duration storage options. So I think. There is substantial ELCC value that can come from even relatively short duration batteries. And in a lot of cases, again, especially if you're not trying to go all the way to zero.

But the one of the bigger questions that arises is, you know, if you're trying to spec this data center to be able to ride through, you know, some massive grid outage, right, where you're talking about over 24 hours or even out to 48 hours. Of course you can't do that with a battery. And this has become a very interesting conversation around these kind of events. Because first off, if if these are transmission interconnected loads,

You think about what type of event you'd be talking about, where you'd have an outage of more than twenty-four to forty-eight hours. I mean, what we're really talking about. are as an event on par with the largest blackouts that have ever occurred in US history that like literally led to the formation of Nurik.

And so obviously they're extremely unlikely. It's not to say that they could never happen. But the other thing, you you start to think about what is going to happen during such a historic event and the assumption that you're going to be prioritized to get. diesel ship to your data center as opposed to all the other competing needs, including, you know, serious emergency and life threatening situations. I think that's been an assumption.

uh that might not necessarily hold. And, you know, usually you ac you can't actually get more than, you know, a certain number of hours of diesel on site in storage. And if you go beyond a certain volume, I mean there actually it becomes a little bit dangerous and there's a lot of concern about that.

So yes, this is like one of the most interesting I think debates right now is like, do you really need to spec to$48? Even if you do in terms of like the size of the gen sets, can you actually get that much fuel on site or can you expect it to be delivered? Or is it sufficient to go with something that's like a two to six or sort of eight hour solution?

There's like two thing two pieces here that I think are connected to each other, but but also are distinct that that I always find people conflate, which is Using some on-site asset, could be a battery, could be a generator, um, could be curtailable load as a mechanism to get interconnected faster. And that's sort of the crux of what this for

directive is all about. And then there's the what are you using for backup power, which is the what you were just talking about, right? And you theoretically can use the same some of the same asset battery in particular has like a role to play potentially in both.

But you can easily imagine that they are distinct things and distinct assets. I mean, currently that's how it's it is, right? Like the diesel generator is just a backup asset and it probably doesn't it has runtime limits. They're gonna keep it from you know, operating too much. Um, so depending on the amount of curtailment you need to do, like that just might not work for it anyway. So I don't know, I I I I feel like

I want to be careful not to consider those two things the same thing. Does that make sense? That makes complete sense. And yeah, the diesel's meant for right absolute worst case scenario, emergency purposes. And so my my sense is that all those two-hour battery storage deals that we just mentioned at data centers, they still have Gen Set's likely diesel for those longer duration emergency events.

And they're not at all mutually exclusive. And in fact, it may be that the uh predominantly we see that kind of arrangement going forward where we do have battery storage. You know, the you know, it's uh at a at a high level, if you're if you're going to stop taking energy off the grid as a large load customer, you can curtail and just stop. You can go to your backup diesel gen sets or your gas rice sets, which are which are emerging, but you can face limitations in either case.

You can decrease the intensity of your compute, which you know your guests in the past have talked about uh companies trying to do that. You can transfer your compute. You've had other guests on your show trying to talk about that, right? Or you could have a third-party uh curtailment on your behalf.

some sort of contract, whether it be the virtual power plant or otherwise, um that would provide the the the their decreased uh stress on the grid. And I think these the kind of service of curtailment service and where it's coming coming from, uh and the kind, whether it's energy, uh, whether you're offering capacity curtailment and for how long and and how you're getting paid, those are all really important details that haven't been defined anywhere.

And so when you think about the bucket of of um issues that are going to arise in this proceeding, those are some that rise to the top for me.

Yeah, I've been I'm curious to get both of your take on this. I've been starting to conceptualize a little bit of a framework in my head for for data center flexibility or large load flexibility in general, which is like a resource curve. sort of. It's a little different from your traditional like oil resource curve kind of thing. But as you said, Alison, there's a a bunch of things you can do. And the way I think about it is the the x axis is how much

flexibility you can deliver, how much capacity I guess, or like hours times megawatts probably. And then the y-axis is cost, basically. And you know In principle, your lowest cost thing to do, assuming you can stay within your customer SLAs. is is just load flexibility straight up. It's managing compute differently, either shifting geographically or shipping shifting temporally, right? But there's only so much you can do of that. It's gonna be limited.

So it's, you know, low end of the resource curve, but not that wide on the chart. And then you start moving up the chart and you get, you know, batteries and generators and all this other stuff. And I guess the question, Allison, is um Do you think that FERC in this proceeding will is FERC going to be in the position to have to sort of distinguish amongst these resources the the mechanisms to get to?

curtailment or flexibility and offer ELCC type metrics for them and things like that, and then define all those rules? Are they gonna leave that to the utilities and say, look, you know, utility, you define what curtailment looks like, what curtailable load looks like. Um, but if there is a curtailable load in your territory, then you need to run this procedure to get it interconnected.

Yeah, I mean I'll give you w the within kind of the FERC box answer and then maybe the political context in which this conversation is taking place and what that means for it. I mean within the political uh the FERC box answer, uh It is rare that FERC regulates down to that level of specificity, right? I mean you have seen on the supply side capacity accreditation methodology and

f uh come in from the various RTOs, for example, and FERC largely defers subject to kind of uh any potentially discriminatory impacts. And so I the Historically, the agency has also really been uh kind of a thousand flowers blooming type place and been ever since um standard market design failed in two thousand, been the f the agency's been really skittish about

s requiring standardized anything across the board. It t it often does principles. Satisfy these six principles or when you're thinking about the types of flexibility, ensure that you value this, this and this. Um so it M my instinct my my instinct without getting into the politics is they're not gonna get that specific on first take. And then you layer on the fact that the the four oh three B letter from Secretary Wright suggested this should be done by April.

So it's it's uh the end of October. An A noper means you're gonna take comments on an A noper, then write a Noper, then take comments on a Noper, then issue a rule. That uh would be um rocket speed in in in fork world. So I think

There's no way they can get to that level of specificity on so many of the details of these questions. And that's my biggest concern here. We don't want something rushed that ends up failing to really take advantage of the opportunity that these flexibility alternatives provide and incentivize them in a way that works for the providers.

Yeah, and and maybe I'll just dive in there for a second because I think one of the good news stories is that we actually arguably have a little bit of precedent for this type of what we might call quasi-firm service. Um, it was really more meant for generators and it's actually called conditional firm transmission service. It's really, to my knowledge, hardly ever been used outside some cases in the Pacific Northwest.

But it was actually a service, I think it was created in the sort of late 2000s. And the whole idea was right where you couldn't get fully firm transmission service. uh and you didn't want to go fully non-firm, could you get something that was conditional firm? And and actually I should sh shout out to Rob Gramley because I think he was actually representing the the American Wind Association at the time after he had Les FERC to get this done.

And so one of the big debates in that proceeding became Can the transmission provider define a certain number of hours that would be needed over the course of a year and and or that you could be curtailable, right? Such that you could qualify for this conditional firm service.

And of course there was significant pushback from the transmission providers and they said, you know, it's it's too hard to offer a certain number of hours a year. So instead we're just gonna tell you what the what the system conditions would be, when curtailment would be likely to occur. And the so that sort of gave an out. But I think the the really the the holy grail here that we're sort of talking about is it has to be, you know, bounded flexibility or bounded curtailment, terms of like

defined maximum number of hours in a year and then something with respect to like the duration of the events. And if you look at, for example, like Google's comments in the PJM, this this big process they have, this critical issue fast path process, trying to figure all this out.

They say, look, we we might be willing to actually participate in the demand response program. Um it's just that right now it's it's unbounded, right? So there's just like no limit on the number of hours that could occur. And so that I think is what we're getting at. And by the way, there are other models to look at too. The UK has this whole Cretailable Connections program and they actually remarkably if

If they end up curtailing either the generator to the load more than what their sort of guarantee uh says, that they actually compensate the customer. I I don't know that we're gonna get to that. extent in this kind of um this kind of program offering, but at minimum, right, it would seem to make sense that we have that as a voluntary option for, you know, the flexible loads that are able and willing to use it.

Another thing that comes to mind that you didn't mention yet is the you know, we that we've talked a little bit about behind the meter and what the hybrid facilities might look like, but we also want to make sure that front of the meter opportunities to provide this type of support don't get left out of the conversation.

I I heard um someone say at a conference yesterday, you know, behind the meter, in front of the meter is gonna evolve into around the meter, right? Close to the meter. And I think That's a concept that we need to be careful doesn't get lost. So if you have a, for example, frontometer storage solution that might be able to provide curtailability close to but not behind the same point of interconnection as a new large load that that this proceeding contemplate those opportunities as well.

And that that within the the way that the letter is written would like when they talk about hybrid facilities, are they talking about exclusively behind the meter, exclusively on site or potentially near site, you know, like in the same zone or whatever. Is it clear? I read it to say, you know, withdrawal and injection behind the same point. It's i it doesn't suggest elimination of op other opportunities. It just doesn't speak to them. What do you think, Tyler?

I don't think they went into that level of specificity, but um, you know, for example with what Southwest Powerpool is proposing, I think the metric they use uh the I'd have we'd have to check the final version, but I think it was like it needs to be within two substations. uh of you is is sort of like if if you're s gonna be somewhat co-located or have certain benefits from an associated generator with the load. So yes, I think there's a lot of opportunity to get creative there.

And one other thing I just wanna say about this, you know, almost um inevitable proceeding that seems to be about to happen is that Look, like even if it doesn't lead to a final rule, and even if, right, there are significant such can significant concerns about the jurisdictional dynamics that FERC doesn't want to go there. And I by the way, I want to respect that there are some legitimate jurisdictional concerns. It's just I want to respect those.

Um I think just the the substance that this will hopefully elicit in terms of how to make this kind of service work is gonna be incredibly valuable. And even if it doesn't lead to a final federal rule that existing jurisdictions can sort of take that content and take that back to to their ISORTO or at the state level to to hopefully get these kind of offerings in place.

Yeah, that's a great point. And I don't want, you know, I there's a lot in the negative bucket. Uh there's lots of positives and opportunity here. This is a giant problem. This is a path forward. Let's not let perfect be the enemy of the good. Let's let's make progress. Uh, you know, there's lots of concern about independence of the commission, about jurisdiction, et cetera, et cetera, that um uh uh must be acknowledged as we go down this path.

Tyler, I'm guessing I'm curious to get your your take on this flexibility resource curve. Not necessarily the concept specifically, but the basket of things. that will be available to provide curtailability. And in your mind is the right I guess the question is is is the right approach in your mind to say Um, you know, you need to be able to provide X hours of flexibility with the Y duration events or whatever, and then let the market figure out what how much of that is gonna be

generation, storage, and load flexibility? Or does it make sense to actually um I don't want to say put your thumb on the scale, but like try to dictate a little bit how much of what implemented there. Yeah, I know and and actually our our research lab at Duke University has been'cause you know, we we're modeling sort of the bulk power system and so

Ultimately, you want it to be as sort of generalizable as possible, right? So that you can sort of represent any load that is utilizing this type of flexibility for all these purposes. And so you want to kind of parameterize it. And make those parameters as generalizable as possible. Also, because then we can actually create a market, right, where a variety of different options can compete.

uh either on site or even um to some extent off site. I mean this gets even more interesting and complex when you start to think about You know, these large loads potentially procuring the flexibility from other loads and the same balancing authority. The kind of simplest version of it's just for capacity, right? Just resource adequacy. But then if you're actually talking about to sort of mitigate transmission congestion.

you know, think about the electrical proximity of those customers and how you sort of do that study. I think that's sort of like the the all the the very advanced version. I hope we can get there, but at minimum like let's get it in place for for those that are doing it behind the meter.

And yeah, whether it's load shifting, um, you know, actually shifting around the computational workloads or it's um, you know, it's battery storage or it's generation, um, or even, you know, just reducing operation. You know, th I think there are cases where Just from a planning perspective, like you wouldn't you wouldn't assume that a new load is going to be drawing at its at its max pull during certain types of weather, you know, weather conditions.

D is there a risk that this actually dis I mean, you know, we're we're just seeing the emergence of some of these first like Like the the bring your own VPP type of thing, right? Which is not on site, but is near site. Is there a risk that this process actually disadvantages that stuff in its nascency? Yes. There's always a risk. I mean I uh you know, w to and to add to Tyler's previous uh response, which I totally agree with, the other nice thing about not getting

speci that specific about technologies is that it'll it'll it'll it's legitimate under the Federal Power Act, which is Virk's guiding principle, right? And so to the extent that There are attempts to do things like take away the opportunity for bring your own virtual power plant, bring your own supply in other ways.

uh that that doesn't satisfy the non-discrimination requirements under the statute. So um to my mind, we need to make sure and there are guardrails in place to protect for that purpose. Yeah. And I'll just say too, you know, this is so different from the way we do kind of interconnection studies right now where

Uh the way it works right now, right, is you're basically looking at these steady state, fixed snapshots of the system, right? Like single points in time. And you might do like a winter case, a summer case, and maybe one like during the shoulder months, but it is just a single fixed point in time.

Whereas what we're talking about is like extending that out maybe not all the way to 8760, right? But at least maybe to like a thousand hours in the year. And there are a few, I think, existing transmission providers that could perform that kind of study. But we just we're gonna have to just get better and more advanced at doing this and and so I think part of this, frankly, is like we just need to like train more more people on how to do this kind of more advanced study.

And I'm hopeful that this proceeding will sort of shine a spotlight on those needs and capabilities so that we can sort of promulgate it more broadly. All right. So wrapping it up, um, I want to talk about what comes next. Allison, you mentioned the timeline. So this is all supposed to happen. There's supposed to be like a final order by April. Is that?

a firm deadline of any sort. Could FERC just take longer if they need to? Because that is remarkably fast. I'm remembering how long it took to do like I don't know, various other FERC orders historically. Yeah, it took us four years to issue um from a NOPER to final rule the transmission regional transmission planning order nineteen twenty. And then there was an order on rehearing nineteen twenty A and then nineteen twenty B.

Um it's not realistic what uh authority does the, you know, the Secretary of Energy have in that case, the bully pulpit. Uh uh uh political pressure. But I think you when when that letter came out there were a lot of FERC staffers who were thinking, Oh no, my Thanksgiving and holiday plans. Um so I think You have to imagine that if the the commission is showing good progress that that is is a satisfactory place to be. But we will See what happens on that front.

All right. Well, thank you so much for both of you for taking the time and walking me through this. This is gonna be something to monitor closely over the next few months. So we'll we'll have you back on when we know what's what. But appreciate the time. Sounds great. Thanks so much, you all.

Allison Clements served as FERC Commissioner from 2020 to 2024 and is now a partner with Digital Infrastructure Advisory Firm ASG and the principal of 804 Advisory. Tyler Norris is a PhD student at the Duke University's Nicholas School of the Environment.

This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Daniel Waldorf. Mixing and theme song by Sean Marquand. Stephen Lacey is our executive editor. I'm Shale Khan and this is Catalyst.