Shift Key Classic: How to Hook Up More Power Plants

You are listening to ShiftKey, Heatmaps weekly podcast about decarbonization and the shift away from fossil fuels. On this week's show, a shift key classic episode. Why does it take so long in so much of the country to hook up new wind, solar, and batteries to the power grid? How can we do it faster? How is it affecting the load growth story? And why is the state that we can surprisingly learn from here, Texas? It's all coming up on ShiftKey after this.

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Shift Key is off this week for the Labor Day holiday, and so we wanted to bring you a classic episode of Shift Key, one of our favorites that we've referred back to a few times now and thought it was time to put back in the feed. A topic that I've been writing a lot about lately that we've been writing about at Heatmap and that we've been talking about at ShiftKey is the rise in electricity prices. As you may know, electricity prices have been rising.

Just slightly above inflation since the pandemic, but over the past year they have really accelerated. Over the past twelve months, electricity prices have gone up twice as fast as inflation overall. One of the drivers of higher electricity prices is that it takes a long time to connect new electricity supply to the grid.

So a year ago, almost exactly a year ago, we had on two experts to talk about why this has happened. Why does it take so long to hook up new wind or solar farms, but also batteries and power plants more generally Two of the electricity grid. Tyler Norris, he's the James B. Duke Fellow and a doctoral student at the Duke.

Nicholas Institute for Energy Environment and Sustainability, as well as Claire Wayner. She's a senior associate at RMI's carbon free electricity program where she works on the clean and competitive grids team. We'll be back soon with a new episode of Shift Key. Until then, enjoy the rest of your summer and talk soon.

Tyler, welcome to Shift Key. Great to be here. And Claire, welcome to ship. Thanks so much for having us. So uh it's a pleasure to chat with both of you. I've uh known Tyler for um approximately forty six years or something like that. No, it's not that quite that long, but um uh for much of our professional journeys. And Claire was one of my former Ace students, uh, now out there in the world making

transmission work better for everyone. So excited to have you both for this conversation. And it's one I think we've been talking around for a while on ShiftKey. Which is the challenge of connecting new electricity resources to the grid? Folks have probably heard us mention interconnection and interconnection cues.

Some of the delays and holdups there and why it's a big problem. But we really haven't devoted the time we need to unpack that. And I thought it would be great to chat with both of you on. So let me maybe start by setting the stage. The Lawrence Berkeley National Laboratory does an excellent annual update.

How many resources are seeking to connect to the US grid? And as of the end of 2023, the total stood at over 1570 gigawatts of electricity generation, almost all of that carbon-free, like nearly 100% of it. And over a terawatt, a thousand gigawatts of storage capacity, which is just stunning given that like storage wasn't even a resource we were building at utility scale four or five years ago. For context, the US total generating capacity is a little over a thousand gigabytes.

So we have like two and a half times all current US generation sitting and waiting in the queue, at least notionally, and we'll unpack what you know what those numbers really mean. But it's just a simply staggering amount of potential new clean electricity supply and storage resources that people think are economic to develop and want to connect to the US grid, and yet it's taking

years to complete these projects. You can talk to us about kind of what that timeline looks like. And many of them, you know, us I should say many of them are failing. Most of them are failing to actually move forward.

So this is a huge barrier to untapping and unlocking all of the clean electricity resources that we've sort of made economic with the Inflation Reduction Act and people are trying to build. So Tyler, you've prior to your you know doctoral studies, you were working for a major developer of renewable energy projects, Cypress Creek, and you have faced this challenge uh you know in a professional context. So can you kind of explain to us?

in you know sort of the most non-jargony way possible. If you're a developer that wants to build a solar or wind farm or a battery plant and connect it to the grid, what does the actual process look like? You can't just go out and plug in, right? What do you have to do and who do you have to ask?

Yeah, it's a very extensive process. It starts with submitting what's called an interconnection request to what we sort of call the transmission provider, which is either, you know, the the system operator or the electric utility. And then they have to do a bunch of work to sort of set up the studies that they need to run. And they have to collect a bunch of information from you and then other generators now that they're doing these sort of cluster batch studies.

And then they run a series of of studies to assess the impact that your generator would have on the grid. under a bunch of different conditions. And what they're looking at usually are these severely stressed grid conditions or what they call contingencies. to see if under those contingencies your generator could cause an overload or a disturbance event on the grid.

And what often happens in the context of these studies is that they identify the need for major upgrades to the transmission or the distribution system or both. And then you as the generator generally assigned the the full cost of of any identified upgrades and then you have to decide whether or not um you are going to pay for those upgrades and and proceed.

And there's oftentimes a lot of sort of back and forth at that point between you and the transmission provider. You may exit the queue or you may proceed. There's then another study more specific to sort of local upgrades or what we call sort of point of interconnection upgrades where you're directly connecting to the transmission line. And then you have to decide whether or not finally to execute a full interconnection agreement. But that's just the the end of the study process.

Then you actually have to go and build all the equipment and the upgrades. Um that can take, of course, several more years. So that's that's sort of a snapshot. How long does it take? Uh you're describing so many kind of overlapping series. studies and paperwork, like what is the timeline here from Entering. You know, getting in line to then starting to actually talk to the utility or the transmission operator. And then eventually you enter this final agreement with like what is the time.

Yeah. Well, first to start at the high level. So from interconnection requests to executed interconnection agreement, we we now finally have data. So by the way, up until the past few years. We didn't have data at a national scale to even answer the question you just asked, Robinson. So thanks to DOE funding LBNL, we finally have a robust national data set to work with. And so what it shows is that

that that timeline has increased very substantially in the past five years. And now on average across most US transmission providers, it's about three years, give or take. And in some markets it's much longer. So in the largest electricity market in the country on the East Coast, which is called PJ M for acronym, it's taking s several more years beyond that at this point. In others it takes less.

And the short the fastest of all is URCOT, which is now it's actually dropped over the past few years. It's now at about 20 months. So that's from interconnection request to interconnection agreement. And then from interconnection agreement to getting a project in service. That can take anywhere from three to five plus years depending on the nature of the easy. So that's like yeah, like a six to ten year long process that you're describing.

that you would think about it as a generator, as a transmission scale generator, as roughly five years and maybe forward if you're lucky. And now in some markets and PJM, right now generators, I mean you're expecting at least, you know, eight plus

So maybe just to put a fine point on that, if you're a project developer that was sort of waiting for all the policy uncertainty around the Inflation Reduction Act to resolve and understand what you're, you know, what economic environment you're actually building a project in. And the IRA passes in August of twenty twenty two.

And then you decide to move forward with a project, that project might not come online until if you're lucky 2026 or seven. And if you're in PJM or you're unlucky and it will requires like a large, long transmission. You might not be online until after twenty thirty. That's the current kind of status we're facing.

That's right. And there are a bunch of reasons obviously factors that are sort of contributing to that in ways you might speed it up, but I think that's uh that's an accurate characterization for most markets. So Claire, let me bring you in here.

What is the difficulty? What's the sort of the technical reason first, I guess, for why these processes take so long? And then why is this so messed up? Why does it take so long to get economic projects? I mean the main reason why we are facing such lengthy delays today is because Currently a lot of these transmission providers are still using the same interconnection methodologies that they were using ten, twenty years ago.

which was known as informally first come, first serve. So it was very sequential and if you think about the types of generation that were joining the grid a decade or two ago, it was These larger, predominantly fossil generation units, and you could just do these one off studies and get them done in a matter of What we've seen in the past five to ten years, thanks to policies like the Inflation Reduction Act, we've seen a ballooning of interconnection QA.

And it is much more difficult to process those in a speedy manner using the first coming. methodology. And so that's why we saw reforms come into place recently, like FERC Federal Energy Regulatory Commission's Order twenty twenty three, which I'm sure we'll talk about These sort of reforms are looking at fundamentally changing how we do interconnection from just these one off studies to

a more coordinated approach because when you have a bunch of decentralized, smaller size, you know, smaller capacity generators, you need to be doing it in a more coordinated manner because what happens is if Any one project chooses to drop out of the queue? that can force what are known as restudies, where you need to look at how that generator dropping out impacts all the other generators in the queue. And that works okay when you have again

To 20 years ago, just a couple of relatively large generators. But now that we have so many smaller-scale renewable generators, it just That kind of dropout process can create

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Can I interject and just ask why over the past decade, you know, w as you were describing, the interconnection queue got much longer, but also over the past, you know, decade, fifteen years The US grid did change in character and in fuel type a lot, right? Like we went from burning And that transition is often cited.

Obviously switching from coal to gas is not decarbonizing, but it is a model. It happened fast enough that it would it is a good model for what kind of decarbonizing would look like. Evidently that did not run into these kind of same interconnection queue problems. Why is that? Is that because we were swapping in within individual power plants? We were just changing the

Furnace from a coal furnace to a a gas furnace? Is that because these were larger projects and so it didn't back up in the I would say all the reasons you just gave are valid. The coal to gas transition involved likely a lot of similar geographic locations too. You know, with wind and solar, we're seeing them wanting to build on the grid and in a lot of cases in new rather remote locations that are going to require new types of Uh that the cold gr gas

If maybe to just to use a metaphor here, you know, the it's a little bit like uh traffic congestion, right? Where you're if you add a generator to the grid, it's trying to ship its power through the grid. And that decision to add your power mix to the grid combines with everyone else that's also generating and consuming power to drive traffic jams or congestions in different

of the grid, just like your decision to like hop in the car and drive to work or to go, you know, into the city for the weekend to see a show or whatever you're doing. Like it's not just your decision. It it's everyone's combined decisions that affects travel time. Now the big difference between the grid and travel on roads most other forms of networks we're used to is that you don't get to choose which path to go down if you're

sending electricity to the grid. Electricity flows with you know physics down the path of least resistance or impedance, which is the alternating current equivalent of resistance. And so it's a lot more like rivers flowing downhill from gravity, right? You don't get to choose which branch of the river you go.

You know, gravity will take you. And it's very similar. And so you adding your power flows to the grid creates complicated flows based on the physics of this mesh network that you know spans a complex.

and interacts with everyone else on the grid. And so when you're going from probably a few dozen large natural gas generators added that operate very similarly to the plants that they're replacing to hundreds of gigawatts across thousands of projects scattered all over the grid with very complicated generation profiles because they're weather dependent renewables is just a completely different challenge for the utilities.

So the process that the uh regional grid operators developed in the two thousands when they were sort of restructuring and taking over that role of regional grid operator, it's just not fit for purpose at all for what we face today. And I wanna highlight another thing you mentioned, which is the software piece of it too. It's like these processes, they are using software and corporate processes that were also developed like ten or twelve.

And we all know that you know software and computing techniques have gotten quite a bit better in over a decade or two. And in rare, you know, rarely have you. Yeah. Yeah. Can I just say I've heard that in some regions interconnection consists of still sending back and forth Excel files. Right. And to Tyler's point earlier that we only just now are getting data

on the interconnection queue nationwide and how it stands. That's one challenge that developers are facing is a lack of data, transparency and rapid processing from the transmission providers and the grid operators. And so To use an analogy that my colleague Sarah Toth uses a lot, which I really love. You know, imagine if we had a Domino's pizza tracker for the interconnection queue and that developers could just log on and see how their projects are doing in many, if not most, regions.

They don't even have that visibility. They don't know when their pizza is going to get delivered or if it's in the oven or et cetera.

Well that raises a another challenge, which is the Q stacking or or shopping, right? The number so we you know, that massive number of generators that I mentioned before. There's no future in which all of those projects actually get built, right? That many cases developers submit multiple projects to the grid because of that uncertainty. I mean Tyler, can you kind of talk about that project? compounds itself by adding even more workload and then Yeah, for sure.

Well Because of the way that we're studying the projects and the way we're applying all these severe system conditions and contingencies. It is very difficult to predict on any given point of interconnection to the grid what the results of those studies will show. There is some amount of information that can be provided to help identify those points. But every study is going to ultimately show different results, especially when you're studying a lot of projects together.

And so it's very unpredictable. And for this reason it makes sense as a developer, of course, to pursue as many positions as you reasonably can manage. Just'cause you don't know what you're going to hit. It's almost analogous to being sort of a venture capitalist, right? Like only if you're lucky, right, maybe five to ten percent of your portfolio ends up with a return, but that makes the portfolio it's kind of similar as a developer with project development.

So then you have five times as many projects from each developer, right, in the queue because of that risk, right? Because you need to have five or ten. portfolio, you know, a couple of them in your portfolio across the finish line. And then that adds to the workload because the system operator doesn't know which of those five or ten is actually gonna move forward. And so they have to study all of them as if they could be uh re It it's such a classic like they're spamming.

Yeah. I I mean does this mean that we should think of these projects in the interconnection queue as being Forty percent real, fi sixty percent real. Should we apply some discount rate to the projects in the interconnection queue? Because if we magically waved a magic wand and and resolved the queue tomorrow, not all of these projects would actually go.

Or if we magically waved a wand, they would all go through and we'd just have So I I think a helpful way to think about it is that it's a market signal that's being sent to grid operators. As to where land positions are available for new generation capacity, because these are real land positions, right? They generally do have to have a lease in place. So they have to have site control.

And so it's sending a signal to the system operator that, you know, this is where a power plant could be developed. Now there may still be some risk on certain permitting aspects, right? But it's sending a signal And and then the question to the grid operator is ultimately, you know, does it make sense to upgrade this portion of the network in comparison to other portions of the network? And that's a detailed cost benefit analysis, and that's exactly what

uh we're hoping to do in the proactive transmission planning process. I mean I think spam would be the pejorative or speculative might be the pejorative term, but I think it's better to look at it as a market. Do we have a sense and uh this is either Tyler or Claire, do we have a sense of

We're talking about renewables in relatively broad terms here. Do we have a sense of this wind is this solar who's mostly getting caught in the queue? I know there's been some scuttle but that wind is slowing down because we've kind of run out of places with capacity to to build new onshore wind farms. But do we have a sense when we look at the whole queue about whether we're talking about mostly wind, mostly solar, mostly storage? Is it 33, 33, 33%? Like what's the deal?

The the largest growth has been in solar and there are different reasons for that, but I I think the simplest is just to to realize that you know solar is just much more modular, right? Like it can be sized at at much different scales and it can interconnect at different voltage sizes on the transmission and distribution system.

So before we go on to some of the fixes here that you have both been exploring and studying, I want to just underscore like what the cost of this is for people because we're kind of talking in abstract terms. Like, okay, so if you're a developer and you want to add your project to the grid, like this is certainly a problem for you because it Makes it harder for you to run your business. More uncertain, more challenging.

But what's the cost for like all of us who pay for electricity or would like a cleaner grid that reduces air pollution and tackles climate change? How do we sort of get a sense of what this failure to develop a process that actually is fit for purpose? Claire, you want to talk about PJ M? I mean yeah, I I was just about to bring up PJ M. Um I d I mean, I don't know if anyone it would be great to see a figure on the national scale, but obviously as you said.

Slowing down the energy transition and you know, cheaper, cleaner. For everyone, but the recent PJM capacity market clearing prices are a clear. of what kind of a a delay in interconnection can cause. So for those who don't know what a capacity market is, it's a type of electricity market that PJM in the Mid Atlantic runs to procure generation capacity three years in advance.

grid reliability. And this past in the past couple of weeks, we just got the latest auction results and the prices had skyrocketed compared the auction prior to that. And I I'd have to go back and look at the exact numbers, but I mean, this has had right pairs of fourteen. And f it was gonna cost PJM customers fourteen point five billion. capacity in this single year, which is like five Right.

Just significantly higher. And when capacity market prices rise, that's an indication, right? In basic economics, when prices rise, it's an indication. Not enough supply entering the auction. And what we've kind of pinpointed that as is uh kind of tracing back to interconnection cue delays, because if the significant, I mean hundreds of gigawatts of generation and P J M's interconnection queue had been

Put through the queue faster, those predominantly clean energy projects could now be interconnected to the grid and could now be bidding into the capacity market and lowering costs for consumers. So I think the PJM capacity market is a direct example. What slower interconnection cues can do There's also a really important reliability implication here and I think one of the clearest examples of this is in ERCOD, right? We know that they've had reliability challenges in the past.

They've seen very substantial load growth in the past few years. And yet they've had no major outages during record summer peak events over the past two years. And one of the clearest reasons for that is that they've been able to interconnect. far more solar capacity and more so than any other market. But so their ability to interconnect this solar that shows up very robustly right during these summer peaks has been

And storage, right? They're they're really cranking on batteries now in in Texas. The Urcot is the grid operator for Texas, most of Texas. Absolutely. So this is important, you know, from a reliability standpoint as well and and reliability and

So yeah, I mean shift key res centers have heard us talk about load growth from demand increasing from data centers and AI, from electric vehicles, from hydrogen production, right? So we we have to be prepared in the electricity sector for kind of a new phase.

Of steady demand growth. And if you can't add all of the new clean supply that's waiting to connect to the grid, it's gonna be really hard for us to meet that demand. And that's exactly what that capacity price signal is sending, because it's looking out like three years into the future and saying, you know, we need a lot more capacity.

NRC NRDC did a study that estimated that if 30% of the projects that have been stuck in PJM's queue for more than five years, so these are projects that you know entered a long time ago and presumably could be coming online in the next couple of years.

If th just, you know, less than a third of those projects, not all of them, but thirty percent of them were able to have been approved in the past few years and could come online, that that would reduce the market clearing price that we saw in the last auction by as much as sixty-three percent. Which is a savings of like$9 billion, or, you know, as a PJM customer, uh, about$165 per person for all of the 65 million Americans that the PJM grid, you know, supplies.$165 per person.

Right. So you think about that average household of four, like it's like hundreds of dollars a year that this problem is costing us, let alone the fact that it's impeding the hundreds of gigawatts of new renewables that we should be adding to the grid every year between And and we're talking to be I just wanna be clear here. Again, whenever we talk about PJM, we're talking about this giant regional grid. Yeah that That is Bands everywhere from New Jersey, Pennsylvania, Ohio.

Virginia. Parts of Illinois, the whole Chicago land area. Yeah, it's a huge grid. It's the largest by number of Americans and the amount of electricity and market prices that they clear. So not the biggest geographically, but maybe one of the things. I feel so wistful, Jesse, I'm no longer in PJM. But after so long a lifetime in PJM, I finally moved out.

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So Tyler, you've been proposing on Twitter or on X, I suppose, kind of one weird trip. one possible policy that would improve the interconnection process and kind of make us deploy a lot more clean energy faster and save people the billions of dollars we were just talking about. Please enlighten us. Yeah, so as mentioned, right, uh Texas is adding clean electricity much faster than every other market. And not just clean electricity, just every form of generation capacity you can imagine.

And the reason they're able to do that is because they're not subjecting those generators to all that those severe conditions that I mentioned earlier. and then allocating the cost of upgrading the grid to those generators up front. And instead, right, they're attempting to proactively plan the system in response to generators that that show up and send that market signal regarding, you know, where there may be opportunities to upgrade the grid.

And it works, of course, because Texas is an energy only electricity market. So they're not studying the projects for their capacity value. So there's some simplifications that make it more viable. That said, even outside ERCOT, there's a lot we could do to make this what we call energy-only interconnection option more viable for generators.

And, you know, I think it could offer a lot of benefits. It it's much lower cost. It's much faster to get projects online. It can contribute to production cost savings. It also provides sort of a reserve of generators that can be upgraded to capacity resources if and if and when network capacity becomes available.

And it can actually contribute to reliability and reduce the risk of shedding load during reliability events, even though they're not sort of formally qualified as what we call capacity resources. Can you give us an example of what you Like, what is the Texas grid operator? What is ERCO? Actually does it. Yeah, so it means that the Texas grid operator is willing to curtail generators as necessary to avoid any reliability impacts on the system.

And so they're they're basically they're managing the system in real time. And this does lead to a higher rate of curtailment on average for especially some of these renewable generators. And so that, you know, that's an important dimension of it. But there's there's a lot of nuance there too. Even the capacity resources outside of Texas can be curtailed during congestion events.

So they're not assigning grid upgrades to the projects up front. They're instead looking at where the generators show up and connect to the system and then identifying the most valuable grid upgrades. from a cost and a reliability standpoint and prioritizing those. So rather than you submitting a request for five possible projects, only a couple of which might move forward, and then having the grid operator have to treat all of those as

Real projects. Urcott's basically saying, go ahead and connect, understand that you face a market risk, which, you know, again, Tyler, you underscored like in reality, all generators face the risk of curtailment because this. number one charged with maintaining reliable operation of the grid and they will curtail you as needed to do that. But you know, you may face an economic risk there that some hours of the year when prices are non-zero, you might still be

But they say go ahead and connect. And then as you see where actual projects, not hypothetical ones, but real ones coming on the grid are connected. Then you can plan bulk upgrades in many cases, right? To accommodate many of them. And you still get the bill. The utility, you know, the principle is to send the bill to beneficiaries of transmission projects, and that includes the generators, right?

But you could actually send real project spills, right, that are already online generating and contributing to supply. And you can do it in a kind of a, you know, a bulk fashion, which captures economies of scale, which are really important in transmission. Not only because the power flows themselves contribute to joint congestions that you need to understand, but also because building one larger transmission line.

Might cost like a quarter, you know, the cost per gigawatt that you can transfer on that, then building two of this, you know, that sum up to the same capacity. There's real economies of scale.

It's so funny'cause in some ways what we're describing is like terrible urban plans. go back to the highway analogy, what we're describing is terrible urban planning, which is like you're welcome to build kind of any community you want.

If there's demand, like if you build a lot of communities will add a big highway or mass transit to your area. But like sure, go ahead and build. And then like if there's a lot of traffic in your area and it would make sense to build a highway there, we'll build the highway. I wonder, you know, like this whole process feels very first of all

Interesting one weird trick. I don't want to move on from that too much, but the whole process does feel very reactive in a sense. Like developers propose, you know, grid operators and utilities kind of study and then propose. solutions and then there's a lot of studies then developers whether to move forward. Like Claire, is there an alternative or complementary approach to all of this that maybe is not as reactive?

Yeah, I love that you drew the parallel here to urban planning because, you know, what does proactive planning look like? We don't just have it for urban planning, we can also do it for transmission. Um and that in the long term is going to be what helps us Uh unclog. Um and I think I can point to another example from called CRES, the competitive renewable energy zone.

And that was all the way back in the early two thousands, but basically ERCOT mapped out where they expected wind generators to be building. And then they identified those renewable energy zones, built transmission to those zones, and that kind of solved this essentially chicken and egg problem that is the inner. Right. Like where is generation gonna show up? And for generation to show up, there needs to be space on the

So who has to fix this problem, right? Who has the authority and ability to actually implement some of these reforms? Is this something that like we should be expecting state regulators to be pushing on the regional grids or their utilities? Is this something that The Federal Energy Regulatory Commission can and has fixed or should fix, you mentioned FERC Order twenty twenty three, which is on

Upgrades. Maybe we should start there and you know unpack what did FERC tell the grid operators and utilities to do in four quarter 2023? And how much of the solutions we're talking about will that uh cover or and how much work? Claire, do you want to start?

So Order twenty twenty three did a lot on interconnection, but I'm sure Tyler and I would agree that there is a lot left to do. And actually, Tyler, I know you'll be at the for Interconnection Technical Conference to talk more about To kind of start with order 2023, they took a look at shifting from that first come, first serve methodology that I described to what they call first ready. Where basically they look at the same thing.

which projects are more ready in the queue in terms of the form of requiring developers now to the proper lease for their land and all the other kind of requirements and check boxes that you would need to build the project. And then only those projects kind of move into the queue. And Order 2023 also shifted to what's known as a cluster. where instead of studying each request individually, the grid operator is supposed to cluster nearby requests together, which should expedite the study process.

But Order 2023 also included some requirements for the grid operators as well. So there are strict penalties in place now, financial penalties, if grid operators don't stick. To a certain time frame. And so all that together, in theory, the time frames that Ferg set in order 2023 should cut the interconnection timeline down. A year now, with the caveat that, and this is, I think, one of the shortcomings of Order 2023.

There is no limit on the number of restudies that can be triggered if a project drops out. And since order twenty twenty three is very recent, we have yet to see actual timelines forming. But

you could have a situation where you form all your clusters and then a project drops out and you have to do a restudy. And so While order twenty twenty three kinda gets us much farther than where we were, I think that that restudy vulnerability is gonna require us to keep thinking about further reforms like kind of proactive transmission planning and that cost certainty that I mentioned earlier.

When we start to require faster time. Do they have the necessary to meet those timelines or is that another bottom Definitely that can be a bottleneck and I think we need to make becoming an interconnection engineer a sexy career or something. But uh Join the front lines of the battle for clean energy. Become an interconnection engineer today. Sign up at PJM.

That's that I mean, that's the campaign that we need, Jesse. But on the same hand, there are tools that can be deployed in parallel. So I know that both MISO and SPP are looking at contracting with a company called Pearl Street Technologies that uses uh enhanced automation and AI to speed up the processing of

requests. I think they've been able to cut times from weeks or months to days or hours. It's orders of magnitude time savings that they're seeing. You can also look at deploying solutions like grid enhancing technologies. which are much cheaper kind of upgrades to the grid that can also take less time to study and deploy. And so it's not just staff. There are time-saving techniques that can also be I'll just say I mean I think the jury is still out on whether the shift to cluster studies

Is going to re result in significant efficiencies. In some ways, it makes the task even more complicated, right? Because now you have dozens or even hundreds of projects that you're studying simultaneously, far more system impacts to assess. And you know, it's great, right, to incorporate grid enhancing technologies into those studies, but that makes it even more complex.

Right. And you're still gonna have this feedback loop with the generators, right? Where you assign them costs, they have to assess them. They're gonna come back to you proposing alternative mitigation solutions. Some are gonna drop out. You're gonna have to do a restudy. I I'm not sure. I think that the bottom line is as long as the we're relying on the interconnection process itself to identify and allocate cost for major network upgrades, there are going to be fundamental inefficiencies.

and roadblocks to getting generation on the system. So the the whole idea is as much as possible to shift this into the proactive realm, which is so much more efficient for a bunch of different reasons. And by the way,

because you have longer timelines to do those studies, you can incorporate all these other alternative transmission technologies and other techniques to identify the best solutions. And so I think that's the guiding light for all of us is like, How can we shift as much of this as possible into the proactive realm?

One thing I wanted to stress, Ryler, you've noted you've lamented a few times on Twitter or X uh and elsewhere that the permitting reform conversation that we've talked about. uh in Congress has really neglected this, you know, conversation around transmission your connection. That's in contrast to transmission planning and permitting authority where there is usually a major element.

proposed legislation that would deal with FERC's authority over transmission permitting and planning. But really there hasn't been uh as much of a focus on interconnection, which is clearly a huge bottleneck, perhaps as important, if not more important than planning as we've talked about. So what do you think Congress should do here, Tyler, if if they, you know, if you could advise the senators or whoever else crafting the next permitting reform deal What would you tell him to do?

Yeah, so I think there's a great opportunity here for the Federal Energy Regulatory Commission to streamline some of these processes by making this alternative option that we've discussed here more viable for generators. in a way that could provide a lot of relief to the rest of the study process. And it's I think theoretically conceivable that FERC could do that under its existing authority if it was motivated to do so.

And, you know, what we'll see would happen. That the general understanding right now is that there is no intention at FERC to issue to pursue another rulemaking on interconnection anytime in the near future. That could always change, right? But this is a major national priority and there's no reason that Congress as part of a permitting reform package couldn't send a signal to FERC that it would like it at minimum to initiate another rulemaking to explore these

Do does Congress need to provide more money here? We talked about the need to staff up and, you know, implement enterprise software. Is that something that we should expect like ratepayers to cover, or is this something that Congress should be thinking about? My understanding is that there's a significant staffing shortage at the Federal Energy Regulatory Commission and a need for more resources. And so yes, I think budgetary resources and appropriations for FERC should be a high priority.

And Claire, what else do you think we need to do to get us out of this mess and be able to interconnect the clean generation we need and storage fast enough to meet all the demand that's coming onto the group?

I mean, yeah, as you noted, the gold standard long-term solution is proactive transmission planning and FERC in its transmission planning rulemaking this year, in order 1920, did include a provision that requires transmission planners to look at interconnection requests, areas of interconnection requests that have been repeatedly

That'll hopefully help in the long term. In the short term, as I mentioned, grid enhancing technologies can be deployed at a much lower cost to increase capacity on the grid and interconnect. projects. Uh my colleagues Sarah Toth and Katie Signer recently released a study showing that it could help enable six point six gigawatts of new wind and solar in PJM to interconnect much more rapidly and much more inexpensively.

So that's one option. Another option that I a lot of my colleagues at RMI have been looking into is something that we're calling clean repowering.

where you basically take the location of old uh fossil plants and you swap those out for clean energy. And so making sure that grid operators what are called fast track protocols to enable those clean energy projects to quickly interconnect at the point of interconnection of retiring generators that can speed things up and doesn't require significant studies, right?

There used to be a generator there, so you could just put another generator there. And yes, solar is not the same as a coal plant, but the scope of the study can be significantly reduced. So that's another option for kind of meeting near-term load growth. I'll exercise a co host prerogative to throw one more uh one of my hobby horses into the ring here too, which is uh Claire, as you know, is one of my students in the intrado electricity course here at Princeton.

Uh that we talk about the you know guiding principle of transmission expansion and cost allocation is this idea of beneficiaries pay. So the idea is you know you've got a hundred million dollars of grid cost. you should allocate those costs proportionately to those who benefit. So if a generator benefits two thirds of that and then the demand benefits one third, then you split the cost proportionally.

And what that ensures is that if a project is identified that has a positive cost-benefit or benefit-cost ratio, meaning it delivers more benefits than the cost. And you allocate those costs to the beneficiaries in proportion to their benefits, then everyone is better off, right? Everybody's getting more benefits than what.

And one of the things that's always struck me as bizarre and in contra to that principle about the interconnection process is that these grid upgrades, not just the point of the interconnection upgrade where you connect your substation to the grid or maybe have a short spur line.

But in most cases, these deeper grid upgrades that many generators benefit from and demand benefits from, because adding more supply to the grid always benefits demand, right? That's basic economics. More supply means lower prices.

consumers of electricity, they also benefit. And yet 100% of these costs are being allocated to the generators requesting transmission interconnection. You know, and that may not sound like a problem, but if you think about it, there, that does mean there are a certain number of interconnection requests.

that benefit the grid as a whole to a great enough degree that it would be worth the upgrades. But because you're allocating 100% of the cost to the generator, it may not be profitable for the generator to connect at that price point. And so they drop out of the queue and then you have to do a restudy and and you lose projects that are net beneficial. And and so I I'm always surprised that FERC has not.

brought this principle in because in the planning process order they did bar i are clearly articulate that beneficiaries pay or cost causality Interconnection they seem to ignore that.

It sounds like there's like a hybrid approach here that also is kind coming to which is like in the short term and in the immediate term, this energy based approach where we let people come on the grid and then are willing to cur curtail them, are kind of willing to bother gets a lot more stuff onto the grid immediately and then and then in the medium to long term planning and we need proactive planning. But for now, just to clear the cue in some

We should adopt this. I I realize I described it earlier as a bad urban planning planning approach, but we should adopt this way of like let them build and When we talk about the late part of this decade, twenty thirties it's time to build out transmission capacity proactively to anticipate where we're going to be able to do that.

Yeah, and I I should you know, we come back to this conversation about the capacity markets where we're sort of trying to look ahead three years to identify how much capacity we need. You could bring a solar project online now. as an energy only resource, right? That that doesn't necessarily qualify to contribute its capacity to that market. But then looking out three years from now, you could say, I'm willing to pay for the upgrades required.

to become a capacity resource if the market price is high enough, right? And here's my bid for what that could look like. So that's another element where this kind of short-term, long-term, or immediate connection and then more proactive Is that fair, Tyler? I think there's a a deeper conversation to have here about how we think about and define capacity. Uh it's a very interesting concept. There's a very, very deep rabbit hole that we should do a law other episode on.

Uh, but you know, it's it's worth acknowledging that in most locations on the grid, if you bring on an energy only generator, it will still contribute to reducing the risk of having to cut off customers during severe grid conditions. You're just not qualifying it as capacity. So there there's a lot of interesting nuance here that we should go into further, but more to come on that.

Well, Tyler, Claire, thanks so much for uh helping us unpack this thorny issue, one of the probably most important and underappreciated roadblocks or barriers we face right now. Electricity on the grid. Thanks so much. Thank you. Thanks for having us. I thought that was such a helpful conversation.

Yeah, I I mean I I don't know if I've heard any other podcasts. Maybe there are out there that kind of give us the overview of this challenge. So I'm really glad we were able to put it together because it is one of those issues that you can, you know I heard a great discussion of the Podcast guess we I know what you're listening to. I guess I missed that one. Um

Yeah. I mean this is one of those issues that is just front and center. It's like the first point of interconnection, right? It's the first point where projects run into the grid, right? And trying to figure out how they're And you know, I think what we really unpacked here is just like We do not have a system that's fit for purpose, right? Like you you we have a system that's designed to connect a few dozen large gas generators to the grid every year. Uh

hundreds or thousands of individual wind, solar, and battery projects. And that's the challenge that grid operators Right. That's their job. And when they fail at that job. It has really severe implications for the cost to consumers, for the reliability of the grid, and for the ability of all of these new data centers and hydrogen electrolyzers and EVs and everything else we're adding to the grid to actually bring online new clean supply.

Totally. I also think it clarifies for me a hobby horse, which I find kind of intellectually interesting. I realize for grid people, this is their bread and butter. This is not new. me it's very interesting, which is this whole idea of in electricity markets. electricity planning, that we, you know, there's a there's an aspiration that how we plan the grid and how we set up these processes will be fuel neutral.

And it is kind of impossible to be fuel neutral just in practice because how you set up pro a process for a gas plant is just so different for how you set up a process you know, new solar farms that you actually do need to upgrade your property.

as fuel types change. Now, ironically, of course, who has done a really good job of it seemingly? Texas has done a great job of it, but it just gets it a common point here on Shift Key, which is the aspiration of a kind of perfect market and how that runs Yeah, I think it's another example too of just how many different processes we have to kind of tackle in parallel and reinvent to be fit for purpose for this next critical decade and beyond.

Whether it is the National Environmental Policy Act review process for projects or the way in which lacks uh permitting authority today over, you know, nationally important transmission lines or the process for deciding on loan guarantees or the process for interconnecting to the grid. We have really not, I think, in the US. Urgent kind of wartime footing, like this is a crisis we need to solve it. Um, mentality. In Europe, when they face this energy crisis, right, huge spikes in natural gas.

four or five fold increases because of uh Putin's invasion of Ukraine. Many countries did approach that as a crisis and Germany and others have implemented a a I think aggressive effort. And while it's great to see the conversation in Washington start to focus on permitting reform, it still feels to me as a very narrow conversation and and that lacks the sense of crisis and urgency that I feel.

I guess I should say in this context of interconnection, at least, it's good that we actually have institutions, these regional transmission organizations and regional grid operators. They don't span the whole country. There are parts of the country that are still where interconnection and transmission is run by virtual. But in many of much most of the country, you know, the majority of

Population served. We do actually have regional institutions that are charged with this task of doing both proactive planning and management. And so hopefully we can get them working the way they're supposed to for this current challenge in whole other areas like environmental review and siting. You know, in the New Deal, they didn't have the institutions they needed to rebuild the economy. And so they just created them, right? You know, there's sort of a period of radical innovation around.

institutions and government forms and public-private collaboration and all these kinds of things. And and we're not at the point now where we're even having that conversation, I think, in the US about fundamentally new institutions and roles that are Totally. But what that requires and what it required during the New Deal, which I think is often overlooked, is like people now want to think of the New Deal as a highly ideological project and it had Survey about what it is.

But it was a highly experiment. Right, they were just throwing a lot of pragmatic they were throwing a lot of things at the at the wall and seam. And that is what I think. Where a and I would uh say again this is a particularly democratic problem, you'd actually where you see more pragmatism emerge is in by Like Chips, let's say, like the CHIPS Act. I think a lot of policymakers in Washington feel a trade off between the kind of experiment.

But when you have a broken system not doing something causes enormous harm as well. And that's where sort of this precautionary approach breaks down. Because like if you can see a system that is currently clearly broken and not fit Like there are real costs to that and not fixing it is also Well let's leave it there. A lot a lot to pick up here.

And let's go upshift, downshift. Yeah. So we're going to take a break and come back after this. We'll have upshift, downshift, our weekly look at climate news.

And we're back. At the end of every episode of ShiftKey, we have a little segment we call Upshift Downshift. This is our weekly look at climate news from the past week. Where Jesse and I each share an upshift that something's downbeat. So I will go first. Recently I have a downshift, Jesse, so a company called Carbon Capture. I'm actually just going to read the story from Carbon Herald. It decided not to construct its first direct air capture plant in Wyoming. It's pausing the development.

Project Bison and is looking to move to another state because in Wyoming it faces High competition for renewable energy from rapidly growing data centers. This is a downshift. I want to highlight it because in the past, my coverage. And the coverage on this show has been so Skeptical that at a national level, the competition from growing data centers would displace the kind When we've looked at this question in the past, we've said yes.

electricity and in some grids that will be a problem, but at a national level that will not folks to you know burn more gas, right? I I think it's still a little early to say that that's not what's being not what's happening. However, in this one very important part of the country, which is Wyoming, the mountain west, where there's a lot of highly capitalized data centers, big tech coming in and buying up the renewable And keeping direct air capture.

So perhaps a downshift. You know, i i it it is still the case when you talk to developers. the growth of data centers across across the country is providing some very good background music because it is allowing Centers. However, here is a fixed case, here is a a case study and the first time. The demand from data. A direct air capture project that's a good idea.

Yeah, I'll take them at their word on this one, but I I was a little surprised to see the news given the the region we're talking about,'cause Wyoming is not home to any data. It's not a hotspot on the data center networks because it's so far from consumers, right? I mean, it's a pretty remote part of the country. And so I was a little surprised that in this particular project was facing data center owners are procuring clean electricity, which I

as well. There's quite a debate and Heatmap has covered this very well. So readers can go and and look at this sort of debate around how to do that. For data centers, but there's kind of different modes for this, some of whom are trying to buy energy that is matched to their demand and very localized, like where the data

and others who are focused on buying energy in dirtier grids because adding new renewables to dirtier grids is thought to have a larger impact per dollar spent. And that may be what's happening here is that Even though the data center isn't there, it is true. been available. I do think it's good on the other hand, the sort of silver lining here is that the Carbon Capture Inc. is thinking about where to site in a place that isn't, you know, constrained on renewables.

To go. They don't need to necessarily be on the grid, right? And so it's good to, I think, you know, that at least they're not moving forward with a project that's And this is actually something that my group, Zero Lab, has been researching over the last uh year, and we'll have Of direct air capture facilities and what drives that. You know, which parts of the grid, what designs for direct air capture?

how you operate them, what clean energy sources you use, all that can impact this indirect emissions in effect. And it is quite significant. And so it's good that developers are thinking about it. Well, there's something else interesting about Wyoming too. Cold. Yes, which does actually make it hard. And and actually which a and also saves data centers on cooling. Like data centers often wanna Side college here.

Yeah, so I have an upshift. It's maybe a solution to this problem in the long run, which is news from my friends at Fervo Energy. Fervo is the leader in next generation geothermal technology, particularly enhanced. Systems. And they held their second annual technology day yesterday. That's September 10th. So yesterday when this airs, which they highlighted progress at their Cape Station commercial scale product.

A project in Utah that they're developing, ultimately planning to build out 400 megawatts of advanced geothermal capacity. I think they have already uh all of that contracted with data center providers and others to take that power and use it to add. And they have drilled now fifteen wells that they've completed at Cape.

And they just completed a month long what's called a flow test, which is to figure out how much how much working fluid, water, or geofluid they can circulate through the artificial reservoir that they engineer. Enhanced geothermal systems drill deep into the ground and then they turn horizontal, much like uh horizontal drilling for oil and gas.

And then they use hydraulic fracturing, uh, you know, an adaptation of the technique that's been used to extract natural gas and oil all over the country, to create a series of fissures that they then intersect with another well and its series that then acts as a heat exchanger where you can pump water through these cracks from a production well or from an injection well to a production well and when it comes back up that water is very hot.

And so the key to making enhanced geothermal work, and the reason I mean this has been tried this has been tried for decades and failed, the reason it has failed in the past is because the developers have been unable to engineer a sufficient flow rate to actually get a user. Generation. And so this ability to basically take and adapt technology that was developed in the shale boom, you know, and what didn't exist 10 or 20 years ago.

geothermal and use it to unlock reliable twenty four seven clean electricity. It's now succeeding in driving the kinds of flow rates that they need. And so Fervo reported that they were able to achieve a month-long, you know, maximum flow rate of 120 kilograms per second, which enables over 10 megawatts of electricity production.

Those numbers don't mean much, probably in in out of context, but to contextualize it, that's triple the per production well output of their pilot project, Project Red in Nevada, that they built last year. So in just like 12 months, they've tripled the productivity of these wells. And they have achieved more than the 110 kilogram per second production rates that the National Renewable Energy Laboratory included in their predictions for 2050.

So NREL assumed that over time you could get higher and higher production rates, and that by 2050, you could achieve 110 kilograms per second flow. Uh Fervo has now achieved that in the year of our Lord 2024 at 120 kilograms per second. So that's really exciting. They also reported that they have cut the time it takes to drill uh their wells by 70% between Cape Station and their demo. Between Tragic Red, sorry.

and Cape Station. So just you know, they're on the learning curve, it's moving really fast. We'll hopefully see the potential for gigawatt scale development later in this decade across And it's also I think a nice counter argument to an a kind of free floating idea in the culture right now that like the US isn't good at anything and can't build anything. Here's an area where

creation that is unparalleled right now. But with that. All right, good place to leave it. Um uh thank you for listening to Shift Key. As we mentioned in the previous few episodes, we are beginning a mailbag episode. We are working on a mailbag episode. And Jesse, I don't know if you know this, but we've started to get some great questions. But if you excellent have a question for us, a question or a topic that you've always wanted us to tackle and we have not

Email us at shiftkey at heatmap.news. That's shift key one word at heatmap.news, and we might just be in your episode. Or perhaps I mean I would say some of the questions are so good they could command an entire episode. Shift key Is a production of Heatmap News. Our editors are Gilene Goodman and Nicolasella. Multimedia editing and audio engineering is by Jacob Lambert and by Nick Woodbury. Our music is by Adam Cromlow. Thanks for listening and see you next week. Jesse, see you next week.

See you next week, Rob.