Breaking down FERC's interconnection reform plan with AEE managing director Jeff Dennis

Up until a few days ago, Congress had been a frequent disappointment to clean energy advocates. Even the current optimism around budget reconciliation is... cautious. 

But a few blocks north of Capitol Hill, seismic change has been underway.

In June, FERC laid out a set of proposed rules to address what possibly is the biggest threat facing clean energy deployment goals in the US: interconnection delays.

The notice of proposed rulemaking (NOPR) identified ways to tackle widespread challenges that have led to years-long interconnection request backlogs across the country.

Jeff Dennis, managing director for the advocacy group Advanced Energy Economy, and a former FERC policy staffer, joined Episode 9 of Factor This! to break down what's in the FERC interconnection NOPR and what comes next.

Show notes:
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Transcript

Jeff Dennis, Advanced Energy Economy  00:05

It's big. FERC has teed up probably arguably the most aggressive agenda. I've seen a commission tee up, and I think that that's been by necessity.

Host: John Engel  00:20

Congress has produced quite a bit of disappointment for clean energy advocates over the past year. Even with Senator Joe Manchin agreeing to $369 billion for clean energy and climate change in the budget reconciliation package. Optimism is cautious to say the least. But let's not only focus on Capitol Hill. Just a few blocks north seismic changes underway. The Federal Energy Regulatory Commission, FERC, has over the last three months proposed reforms to transmission planning, and more recently interconnection policies with potentially significant positive steps for clean energy deployment. I'm John Engel, Content Director for Renewable Energy World. This week on factor this I'm joined by Jeff Dennis, a former FERC policy staffer, and the managing director of the trade group advanced energy economy to break down everything you need to know about the FERC notice of proposed rulemaking on generator interconnection. This was recorded a few days before Manchin decided to change his tune and back the budget reconciliation measure. So, keep that in mind. All right, now that that's out of the way here's another episode of Factor This!. Green hydrogen is versatility offers potential answers to some of the energy transition's most challenging questions. When produced from renewable energy sources, hydrogen can provide clean fuel for shipping, long duration, energy storage, and other areas that are difficult to decarbonize. But factors such as scale, scope, and affordability remain daunting challenges. Can green hydrogen conquer these obstacles to become the energy transition's secret weapon. The RENEWABLE +Series from Renewable Energy World tackles all of those issues on August 17 by bringing together green hydrogen developers, researchers and investors to discuss the state of green hydrogen and the path forward. Click the link in the show notes to register today for Renewable Energy World's free RENEWABLE +Series on green hydrogen. Okay, well, Jeff, from Advanced Energy Economy. Thanks so much for joining us. You are the general counsel over there and pretty much involved in anything docket related with FERC, it seems, at least that's my connection to you, Jeff. Great to see you.

Jeff Dennis, Advanced Energy Economy  02:30

Good to see you, too. Yeah, for lots of dockets at FERC these days. So hardly a moment to take a breath.

Host: John Engel  02:36

We're starting with the interconnection NOPR or the Notice of Proposed Rulemaking at FERC. And this is on the heels of the transmission NOPR not so long ago, both of these topics have huge impacts for not just solar, but the broader clean energy, landscape, energy storage wind. So walk me through what the NOPR is and what it does in the in the landscape of how FERC works for those who don't know.

Jeff Dennis, Advanced Energy Economy  03:04

Sure. So, um, in the broader context, a notice of proposed rulemaking is really announces folks intend to change its regulations. And under federal law, the Administrative Procedure Act, when you change regulations, you have to go through something called notice and comment rulemaking. And so what the NOPR does is it says, you know, for we we intend to do this, we propose to do this and a final regulation, but we see comment from the public. Must be published in the Federal Register. And then the Commission must take comments. So this particular note brand generator connection that you referenced earlier was published in the Federal Register on July 5, and comments are due on October 13. The Commission also allowed for reply comments, which will be due on November 14. So then the commission will take that input on any NOPR it does. And it'll craft a final rule, a final set of regulations that will apply, and that could be it could just adopt what it proposed in the NOPR, or it could modify those requirements based on the comments received. And based on the record that it's developed. Any final rule that the Commission does, has to be supported with a factual record so this comment period is really important to help FERC build that factual record for something you want them to do, or build a record for them to do something else, or maybe even do nothing at all. So that's why these processes get so much attention is there's that kind of legal aspect to it, of setting a record. You know, the other thing I'd mentioned is is from from there, you know, then utilities, including RTOs would have to come in and comply they'd have to amend their generator interconnection procedures and compliance with those new regulations. So and when we talk I think the other thing to know up front here when we talk about the generator interconnection NOPR, it actually proposes a number of changes to a proforma set of interconnection procedures, that FERC requires every utility in the country including RTOs to comply with. It is literally a pro forma set of documents that utilities are expected to adopt verbatim unless they can approve the deviations they want to make are consistent with their superior to those pro forma requirements. So that actually makes this one a little bit different than some past rulemakings we've talked about, like the transmission planning and cost allocation NOPR that you referenced earlier, or like Order 2222, in the past where there weren't really pro forma requirements.

Host: John Engel  05:45

Okay, so this is fairly formulaic, and how it will be implemented, then it's here the set of rules and, and get in line. And you mentioned you mentioned 2222., so that's the distributed energy resources participation in wholesale markets, the reason I think you brought that up is when we were talking ahead of the interview, I mentioned that there's just so much of head banging over over the implementation of 2222 with, you know, RTOs coming back and say we'll do it by 2024. We'll do it by 2030. Maybe it'll take even longer. And so that comes with a lot of frustration from stakeholders who would like to see those aggregated DERs implemented sooner to help with, you know, further deployment. So I appreciate that clarification. Why is that different thing? Can you spice that out a little bit more?

Jeff Dennis, Advanced Energy Economy  06:34

Sure. Yeah. And and actually, I think it's helpful for folks to know to this actually will take a step all the way back to 1996. When FERC adopted its open access principles and basically sad utilities that own and operate transmission have to grant access to the transmission system to competitors on the same basis that it grants access to its own generators or to its own customers. And the way that it effectuated that is it adopted a pro forma transmission tariff. It's called their pro forma Open Access Transmission Tariff, and you'll hear people in FERC world call it a OAT, open access transmission tariff. And what that does is sets out a standard set of terms for how utilities provide interconnection, or for how utilities provide transmission service in a method that is non discriminatory, just and reasonable and open to all market participants. Later FERC adopted interconnection procedures, and a standard interconnection agreement into that pro forma tariff. This was in 2003, in an order called Order # 2003. And found that interconnection service was fundamental to achieving firms, open access goals. And so it adopted similarly a pro forma set of interconnection procedures, and a pro forma tariff that every utility around the country or I'm sorry, a pro forma interconnection agreement that every utility around the country has to adopt verbatim unless it can prove the deviations that wants to make will achieve the Commission's objectives in a way that's more efficient and cost effective, whatever arguments you want to make. So that should in theory, make compliance with a rule like this more straightforward than an order like Order # 2222, where FERC set out an overarching requirement, which is grant distributed energy resources access to your wholesale markets. But then it gave RTOs a lot of flexibility in how they went about accomplishing that goal. There is less flexibility in the proposals here. There are some areas where there's some flexibility, where utilities and RTOs will come in and explain how they're implementing that particular amount of flexibility, but much more pro forma, this is what your process will look like going forward in this role than others.

Host: John Engel  09:02

Well, and let's get into what this NOPR actually does or would do if it if it moves forward in the way that it was written initially. This is no small issue for the clean energy transition. I think LBNL study a couple of months back said there's 1400 gigawatts of generation and storage waiting to connect to the grid. And so these these interconnection queues, the time that it takes in the cost to connect to the grid are this kind of seen as the boogeyman of clean energy. You know, there's so many things you can say about Congress about President Biden about supply chains, but even just getting the projects to tie into the grid is such a headache and could be one of the biggest hindrances to meeting a lot of these decarbonisation goals. So what does this NOPR do I know it's hundreds of pages so we can't get to everything but can you pull out some of these main themes that we're looking at?

Jeff Dennis, Advanced Energy Economy  09:59

I'm sure absolutely. So the commission is really all kind of talk about maybe four or so key areas that FERC has proposed reforms to existing generator connection practices. And these are all aimed at really eliminating, as you said, these backlogs that are caused by delays in the process. Maybe taking just one quick step back, obviously, the biggest cost source of delays in the interconnection queue is lack of transmission capacity, right. That's why you saw it first take the first step several months ago, and proposed new regulations to govern transmission planning, and to make transmission planning more forward looking, and more reflective of the changing resource mix, right? Because ultimately, you are you need more, you need more highways to deliver product to market, right. So the first thing you got to do is you've got to have planning processes in place that will build more transmission to accommodate this generation resource exchange. But then there are flaws in the interconnection process itself, that are contributing to these delays and require reform. And so the commission, that's what the commission is tackling in this particular NOPR. So for example, today, in most regions in the country, and under the Commission's pro forma rules, it's a serial process to interconnect to the grid. So you get in line and you are processed by the transmission owner or the RTO, based on when you got in line first come first served. And that creates problems when generation projects who are higher in the queue withdraw from the queue for some reason. Often, and we can talk about this maybe later... often, it's because they are studied and the transmission owner or the RTO says you're going to have to build a massive amount of upgrades to the transmission system to accommodate your request, and that bill is too high. And the generation project is effectively killed at that point. But when that generation projects that's higher in this serial queue falls out, then every project behind it gets re studied. And that starts to create significant delays as you see churn in the queue. So the commission is proposing to resolve that by moving to what are called a first ready, first served cluster study process. So instead of studying these things, one at a time, it's going to study clusters, it's going to require that projects be studied in clusters. So clusters who come into the queue in a particular window, have similar impacts on the transmission system, they were all be studying together. So that's kind of the the cluster study process that FERC proposes. This is in place in some regions in the country today and has proved successful.

Host: John Engel  12:59

And likewise, just jump in here, Jeff. So the problem is that when a when a project falls out, the whole queue gets screwed up effectively. In this cluster study process that would would be implemented under this proposed set of rules, if if one in the cluster fell out, like that prior example, what would happen to the overall cluster? Because that's, that's obviously an issue.

Jeff Dennis, Advanced Energy Economy  13:23

It should, the idea is that that will cut down on the number of research studies that are required. Because imagine a scenario I'll come up with a slightly up, sir, but not totally off the wall scenario. Imagine you're first in the queue. And you get tagged with $250 million of transmission system upgrades that are identified in the studies as necessary for you to interconnect to the grid, those $250 million in upgrades could are then sort of accounted for when the projects behind it are studied. And so those projects behind them probably have less than that, though, right? Because the upgrades that were made to support that first project support the ability of projects behind them to come into the queue. And so once that first one drops out, then you have to re study in the second one without the assumption that that first project is going to build all of those upgrades, or find all of those upgrades in order to come into the queue. So that's the problem is you don't have to have all of this restudied. So in a cluster, you're looking at all of these projects together and so one project leaving a cluster should have less of an impact. Certainly one thing that our industry has highlighted is making sure that within those clusters, the projects are not so tightly interconnected together in terms of how they're studied, that one dropping out, will require the same problem. And that's certainly something that I think you'll see folks in the clean energy industry, commenting on at FERC. Folks are kind of still looking at the details but but that's the idea around the cluster study to resolve that interdependence between projects in the queue.

Host: John Engel  15:04

And there's some levers in place within the NOPR, as well that, um, give some financial security to the transmission owner or RTO. Right.

Jeff Dennis, Advanced Energy Economy  15:12

Yeah. So that's kind of the first reading part of this right? What the number also does is it really, it tries to create a balance between imposing more stringent financial and readiness requirements on proposed generation projects on the one hand, and also more stringent requirements on utilities and RTOs to complete interconnection studies, on the other hand. So the NOPR proposes stringent financial and commercial readiness requirements, and that's intended to cut down on the idea on the potential the generation projects sort of hop into the queue in order to speculate. Maybe I've got a project that's viable, maybe I'll do and I'll just jump into the queue. And so instead of combat some of that the Commission fears may be happening they proposed increase study deposit. So in order to get studied for interconnection, you have to put in a financial deposit much of it refundable penalty penalties for withdrawal from the queue, and also enhance requirements and demonstrate commercial readiness. So if to show that you've been maybe selected in a resource planning process, you have an off taker, you have somebody who's committed to buy your racks, things like that. So that's the first reading part. So if you can demonstrate all of those things, then that gets you in a cluster to be studied. And to come onto the transmission system, then. But really importantly, in something that we have emphasized for the commission, is you need to have more stringent requirements on utilities and RTOs to complete interconnection studies on time. So the pro forma generator connection procedures that FERC has on file today in its regulations have deadlines, but they are not strictly adhered to, and basically, that they include what's called a reasonable efforts standard. And so they say, utilities and RTOs have to demonstrate reasonable efforts to process studies. And so far as we're aware of FERC has never found that a utility or an RTO didn't engage in reasonable efforts. Yeah, what FERC notes in the NOPR is that data submitted to them shows that, at the end of Q1 of 2021, more than 1900 interconnection studies had been significantly delayed past the timelines in its existing procedures. So FERC looked at that and said, we need to eliminate this reasonable effort standard, and impose penalties and FERC proposes $500 per day for late studies. And again, it's really FERC is trying to achieve a balance there between ensuring that RTOs and utilities are doing their job and in studies. And on the other side, when projects come into the queue, they have commercial viability, and they are ready to go.

Host: John Engel  18:14

So and we'll probably get to this in more of the implementation conversation. But so do they still have that wiggle room on the utility RTO side for the the reasonable effort, because we hear from that corner of the room that, you know, there's a shortage of engineers that we just don't have the staff that their the sheer volume of mostly solar and storage interconnection requests right now is just, you know, it's untenable to even keep up right now, because of the, you know, the workforce challenges that everyone is dealing with.

Jeff Dennis, Advanced Energy Economy  18:45

Ya, no, we definitely hear that there is far less wiggle room, at least that I see in my review of the NOPR, or we're all still, we're all still digesting the details, but I see far less wiggle room than utilities and RTOs have today. I do think there are some instances in which they can develop demonstrate that unique circumstances caused the delay or something beyond their control. But there is far less wiggle room for utilities to be delayed on studies than there were in the past. This part of the numbers interesting in recounts a lot of this data I mentioned that the utility or that the Commission received and reports from utilities and showed that some of the data they have show that 16 utilities including four RTOS reported defer that they were that more than 25% of a particular set of interconnection studies had been delayed in a given year. That's a significant number and that contributes to backlog so the commission is trying to tighten that down and put some more discipline on utilities to to find the resources to get this work done.

Host: John Engel  19:57

So beyond first ready for served what what It is what's important in this NOPR.

Jeff Dennis, Advanced Energy Economy  20:01

So a couple of the things I would highlight from the NOPR are, it also includes a number of proposed provisions that would take into account advances in technology, especially with regard to energy storage, and the ability to add energy storage to renewable projects. You know, we're seeing a ton of interest in hybrid, solar and wind projects, adding storage to help firm up their output shift from when renewable fuels wind and some are available to when that output is needed. But there have been challenges to do that within the existing interconnection process. For example, the existing interconnection process is pretty rigid with regard to making changes once you're already in the queue. So let's say you're a wind project, you've been in a queue for a couple of years, and the cost of energy storage has come down, and you want to add energy storage to your project today, often that will require you to leave their connection queue and come back with an entire new request. So for proposes to require utilities and RTOs to allow the addition of a resource such as storage, to an existing interconnection request so long as you're not asking for an increase in interconnection service, you're not asking to take the amount of service you want from 100 megawatts of input into the transmission system to 200 megawatts or something like that. So that's one key barrier that FERC is trying to address.

Host: John Engel  21:41

And on the energy storage front, there's also isn't it also that even if you come with energy storage from the get go for those hybrid plants, you don't need to, to submit two interconnection applications like you would in some RTOS.

Jeff Dennis, Advanced Energy Economy  21:54

Yes, that's another proposal. Yeah, that's, that's another proposal that FERC has in this NOPR is to require utilities and RTOs to allow co located resources behind a single point of interconnection to use a single interconnection agreement rather than coming in with multiple interconnection agreements. And again, the primary sort of use case, for example, here would be renewables plus storage. The other aspect here that's important is not only just for proposed to allow a single interconnection agreement at that single point of interconnection, but to also allow the developer to use reasonable operating assumptions when it determines how much interconnection service that project would need. So we've seen instances where projects, hybrid projects, or solar plus storage, or multiple technologies behind a single interconnection point, are basically the the utility the RTO says, okay, if I add up the nameplate of all those technologies, that's 350 megawatts that's how much transmission service I'm going to study for, and ultimately, that's the amount of upgrades that you may be asked to pay for contribute to paying for. But in reality, any reasonable operating assumption for that project, you would not operate the storage at full output at the same time, the solar project is operating at full output or something like that. You may be charging, you may be doing other things. So what FERC says is that you have to allow reasonable operating assumptions to be used when determining the amount of interconnection service you need, rather than sort of just adding up all the nameplate. So that's a, that's a really important additional piece of, of the NOPR that recognizes how technology has already changed since FERC, originally adopted all of these rules in 2003. And even how technology can change during the course of one year in the interconnection queue. So yeah, definitely important to recognize as well,

Host: John Engel  24:01

Well it's great that FERC is stepping in here and really just even classifying what storage is and its and its role, because you hear that on the development side all the time that it's very frustrating that when you're when you're putting a solar and storage project, at the interconnection site of maybe an old coal plant that was retired, it's not going to perform in the same way that the coal plant did. And so to classify that, in terms of the the interconnection request that the needed upgrades just isn't a reflection of how it works. \

Jeff Dennis, Advanced Energy Economy  24:32

Right, exactly.

Host: John Engel  24:33

You mentioned FERC world I try not to get too deep into FERC world I just like to tangentially stay connected through people like you. So I don't go to all of these proceedings or watch every webcast. You know, God bless you Jeff Dennis for doing that and cataloging it on your Twitter feed. How reflective of stakeholder input from, you know, organizations like Advanced Energy Economy and others has this NOPR been and and does it feel that FERC has listened to the concerns of the clean energy industry when when crafting these proposed rules?

Jeff Dennis, Advanced Energy Economy  25:09

Honestly, this one, I say this, you know, full objectivity. This NOPR really reflected so much of what the commission heard from a range of parties. I mean, certainly, it reflected a ton of what they heard from Advanced Energy Economy and our allies. Particularly around some of these core requirements, like a first ready, first serve process, like the need to ensure that there are more stringent requirements around ensuring that utilities and RTOs completed studies on time. These are things that we actually brought to the Commission as best practices, we said, you know, really take a look around the country and our members told us here are places where we think is a best practice that the commission could adopt, for other regions and the commission really took that from us from public interest groups from utilities that are heard from, particularly there are a number of utilities that have moved to more of this first ready cluster study type process in non RTO regions like Duke Energy, and others, who came in and said, this worked really well for us. And FERC took all of that input and really established a set of best practices that will really provide the floor nationwide. And that's really important. So we see a lot of our input and the input of others, reflected in this NOPR. And I think, I think that's also reflected in the fact that this newspaper was advanced by the Commission on a unanimous bipartisan five to nothing vote among the commissioners. That's been rare in this kind of polarized era, to see that amount of unanimity. And even Commissioner Daley has been a pretty big skeptic of the commission majority. And a lot of things they've done was pretty effusive in his praise. He said, there were a lot of good ideas in the snow brand that reflected the record that the Commission had developed last year when it did an advanced notice of proposed rulemaking on transmission planning, cost allocation and generator connection practices. So I think that they really did a pretty remarkable job of bringing all that together, finding unanimity and getting that unanimous vote, which is really important to ultimately getting to a final rule that will produce rules that are stable and long lasting.

Host: John Engel  27:31

So then next question would be what in your opinion, or AEE's opinion is missing from this NOPR, if anything. I know nothing is ever perfect and this is a pretty gigantic proposal. So does anything stick out as, you know, we wish this was in there. And then I guess the second prong would be this current period that we're in the comment period and feedback to the NOPR, how often does the commission historically, in your experience, adjust the NOPR, or to reflect a different final ruling? Does it change much, usually?

Jeff Dennis, Advanced Energy Economy  28:07

Sure. So let me take those in order in terms of what's missing from so the numbers really focused on interconnection practices and processes. One piece that is missing from the NOPR and the commissioner has acknowledged this at the open meeting last month when they announced the rule. So it's not as if they aren't aware of it and are thinking about it. But a big issue that is continues to drive delays and uncertainty in the interconnection process is the issue of how cost for those transmission system upgrades I talked about that are identified in response to an interconnection requests are shared among customers. So as I mentioned, you know, you can you can have situations where a generator connection process gets a bill in get you know, they they come into the study process, the study identifies significant upgrades to the transmission system itself. So we're not talking about the timeline that you may need to build between your project and the main transmission grid, or your sort of substation facilities and things like that. We're talking about upgrades to the transmission grid itself that's used by others. Sometimes those studies reveal the need for significant transmission upgrades. And those upgrades will benefit not just the interconnecting generator, but generators behind it, or other users of the transmission grid, and in several of the RTOS in the country, including PJM most notably, those transmission system upgrade costs are assigned 100% to the generator who's interconnecting to the grid. Even though they as I mentioned, those transmission upgrades may benefit other users. Those costs are unpredictable, they can be extremely high and they can even kill projects. So the Commission chose not to tackle that funding issue in this particular NOPR. But as I mentioned, the chairman and the commissioners acknowledged that it was an issue that we're still working on. And they were still looking at. So, you know, I think that we'll see the commission take some action on that in the future as well. But, you know, I think they're continuing to work through that issue. Recently, two senators, Senators Hickenlooper and Kane, have also asked for to look at the issue as well. So there's a lot of momentum behind looking at that issue in the future. And I think we'll see something on that soon. So that's kind of what's missing. You know, in terms of my experience with what happens, post comments, the Commission often tweaks the details of its proposals, in response to comments. I can tell you from my over a decade of working at FERC, around the rulemaking process, I was director of policy. So you know, I kind of manage a lot of the rulemaking process, the comments are delved into deeply by commission staff. And they really do look to those comments to refine and perfect, what they've proposed. And I think most importantly, and something I always personally thought was important and, you know, I, I always attributed this to the staff that worked with me, and I think others as well, is making sure that those who are actually out there in the world building energy projects, or building transmission or operating interconnection queue, taking into account their real world experience, it's really, really important for you know, your audience of solar and renewable and storage developers to get in there, work with your trade association like us, or get in there on your own and give a commercial reality viewpoint on what the Commission's proposed because, as I said, the Commission works hard to take input, it worked really hard to take input here. And that's reflected in the NOPR. But it can be hard to get a full sort of commercial reality when you're inside a regulatory process, you're inside an agency. So bringing that to the commission is really important.

Host: John Engel  32:13

Is there any kind of sense of urgency at FERC? We've been talking about the transmission, NOPR, or the interconnection NOPR, you mentioned, this cost sharing issue is, is one of its own, and it's a very big deal in and of itself. You know, we there's a Democrat in the White House, President Biden, you know, has has authority to appoint for commissioners, and a majority politically on the FERC commission, is is very advantageous for clean energy advocates and developers, given that we've seen, you know, stalled legislation in Congress with with reconciliation, and, you know, clean energy tax credits, and all of these things, a lot of frustration at the federal and legislative level. So FERC presents this opportunity to release a NOPR like this, that really changes the landscape very quickly, and doesn't require a bunch of members in Congress to fight over their home districts and other things. So is there I guess, I'll go back to the question that I lead off with this this preamble with, but is there a sense of urgency at first to strike while there is a Democrat in the White House?

Jeff Dennis, Advanced Energy Economy  33:26

Well, I'll take that in a couple of different way. I'll answer that question a couple of different ways. One, I think in this is hard to do. People listening is gonna laugh at me. But putting the politics aside, right, and putting, do their hard, but I'm gonna try. Putting the politics aside for a minute, there is a sense of urgency, because we are seeing this incredible shift in the Generation mix. State policies are driving that shift customers directly are driving that shift. Even if you're not in a state with a 100% clean energy policy or with a significant RPS policy, you got customers who want to switch to clean energy that's driving this change in the resource mix. You know, I think there's another set of urgency around inflation, and around the high cost of, of natural gas, oil, other things like that. So I think all of those things are driving urgency, irrespective of the politics among customers, and among developers and even among some utilities who are seeing the rain pressure coming and, you know, a switch to inflation proof technologies that don't rely on fuels right, is a pretty is an attractive and really necessary thing to do right now. On the generator connection NOPR itself, the procedure number we just talked about, you know, obviously that five nothing vote helps. But there is still a sense of urgency around resolving these backlogs, particularly in a region like PJM. In PJM there are over two, I believe over 2000 solar wind, battery storage and hybrid projects waiting to get through to over 300 gigawatts of generating capacity, last time I looked. That's could generate power for 60 million homes and support 1.75 million jobs. So there is an urgency in PJM on its own. That urgency actually led PJM to file some major reforms with FERC ahead of this NOPR. They just filed them last month that take a lot of the steps that FERC is proposing here, like moving to a cluster study moving to first ready, first served and things like that. So there's an urgency there for sure.

Host: John Engel  35:51

And in PJM, for example, though, that's that's because the urgency of PJM was just it's a disaster of a backlog. Yeah, I mean, that that's what did they have to take a two year pause on on reviewing new interconnection applications just to catch up?

Jeff Dennis, Advanced Energy Economy  36:05

They have proposed that and what they found is that one measure that they've proposed to help them devote resources to clearing the existing backlog is to pause the processing of new applications. Yes. But you know, back to your question, urgency to I mean, I think I think where the kind of political dynamic urgency comes in is around some of the things that have been a little bit less unanimous, and have had a little bit more political, tend to them, like the transmission planning and cost allocation role. Now, that was a 4-1 vote. Commissioner Christie did vote in favor of that. So I think that there is some more urgency there. Anytime you look at the potential for a 2-2 FERC, I think there is more urgency to try to move things along. While we know there is the potential for a two to split to slow things down or even stall things, right? These rulemakings are not statutorily required items. So if there are not three votes to move ahead, they simply don't move. So I think there's urgency in that sense. But again, I think the real urgency is just this transition that we're seeing and the urgent need to build transmission to address it and declare queue backlogs. To address it as well.

Host: John Engel  37:28

Well I guess that's the bad news of the story and also, the good news is that the maturity of the technologies and just the state of how the generation mix is changing, allows this industry to stand on its own two legs a little bit, instead of just being a, you know, a green ideal of the left. It's just not the case anymore.

Jeff Dennis, Advanced Energy Economy  37:48

It absolutely is not. And I think it, you know, and again, the reality is, is that we're seeing so many folks moved to these technologies as the cost continue to decline. And, you know, from the political side, yes, we see some partisan politics around renewables versus fossil fuels. But a lot of it comes down to consumer costs when you talk to politicians. And that's really, that is going to be a fundamental driver of what they're worried about, particularly as we're in this inflationary period, particularly as we have a war in Ukraine and driving up the costs of fossil fuel, fossil fuels across the board that are priced in world markets, these technologies in their declining cost and their lack of reliance on fuels, makes it really urgency, urgent to get more of them onto the grid. And I think you hear politicians from both sides of the aisle say.

Host: John Engel  38:39

What's been the general reaction from the the clean energy community to this advocacy groups like yours, and just even, you know, your member companies who do file with FERC, their comments as well.

Jeff Dennis, Advanced Energy Economy  38:52

You know, it's still very early, but folks are encouraged and really, really pleased with the direction of the interconnection NOPR and the extent to which it proposes really concrete and certain requirements that transmission, utilities and RTOs would have to file. Because I think that will, as we talked about earlier, that'll help get this thing implemented more quickly, and get changes more quickly. So I think that there's a lot of a lot of folks are pleased with that as well. As I mentioned earlier, it's notable all five commissioners voted to support it. That's really is, I think, helpful to our industry and others and utilities as well, in terms of you know, this is not going to be the kind of policy that flip flopped between FERC leadership or administration. So that's all important and I think folks are really pleased with all that and pleased with the overall direction of the NOPR. As I mentioned, people are still you know, folks in our industry are still digesting in detail. So I thing, one place where there'll be a lot of focus is how do those ready readiness and financial requirements that are imposed that are proposed to be imposed on generators on the one side, balanced against those more stringent study requirements on utilities and RTOs on the back end. I think that there's going to be a lot of focus on are those balanced. Um, so I think that's one place where you'll see our industry dig in, and have a lot of comments that reflect sort of the real, kind of the real world implications of those proposals for projects and their commercial readiness. There is one part of the rule that people are still taking a look at that imposes basically, it is an obligation on renewable resource owners to model their capabilities more accurately when they come into the generator connection queue, and operate equipment to ensure that they can ride through voltage disturbances and or frequency excursions like incidents on the grid. Because we have seen in some recent NERC reports and others, some indications that there were instances in which solar wind developers were not operating equipment, were tripping offline too quickly. And the commission is kind of saying you've got technology now and you really need to use that technology to support the reliability of the grid as we move forward. So that is certainly a new obligation that these owners will see. But I think it's one that that is necessary, when you factor in the fact that we are moving toward a grid that is more and more reliant on these technologies.

Host: John Engel  41:38

That 5-0 vote goes back to a word that comes up very often on this podcast, and it's certainty, you know, it feels like that is the general theme of all issues related to clean energy is developers, asset owners, you know, investment groups all need certainty to be able to make any of these these decisions. And you mentioned another, you know, the piece that we should probably leave off on here is how quickly can we see implementation after a final ruling, you mentioned that this is not for quarter 2222, where, you know, we're waiting years and years to see how, you know, RTOS want to implement the order from FERC. But how long would you forecast? Is this something for can just put in the final ruling and say, here's your deadline?

Jeff Dennis, Advanced Energy Economy  42:26

Yeah, I think for the most part they can. So with every rulemaking, the commission, you know, it adopts a final rule based on the record that's been developed it, it may make some changes. One thing I didn't mention earlier that I should have to is that the commission has to provide adequate notice to the public of what it's proposing. So while the commission frequently makes changes in the details of its proposals, it sometimes drops particular proposals decides, you know, we got a lot of negative comments, we decided that's a bad idea, we're not going to do it. But one thing that it cannot really do is adopt big new proposals at the final rule stage because legally under the Administrative Procedure Act and case law, it has to provide adequate notice. So what you're really looking for is for it to firm up details, or, you know, for it to decide that it doesn't have enough record evidence to move forward on a particular proposal. But I think, you know, once it gets through that process, I think this is one that could easily be implemented more quickly, because these are pro forma requirements and they're fairly specific, as opposed to something like Order Number 2222 that required the RTOs to go back and do a lot of compliance work to fill in details, based on their own regional circumstances based on their own marketing rules and market designs

Host: John Engel  43:48

Well and it was on them to to submit their own implementation plans, it didn't give them an implementation plan.

Jeff Dennis, Advanced Energy Economy  43:54

Exactly. Yeah, exactly. That's not to say that we won't see filings and compliance with this from RTOs, or others who propose to take sort of a different approach. And if they do, so they have to argue that it's essentially, the standard is consistent with or superior to the Commission's proposal. So basically, I have to demonstrate, we have another way of doing this that we think will work better and will still achieve your objectives. And here's why and furcal rule on and typically for gives more latitude to RTOs to make those kinds of changes because the RTOs are independently operated. They don't sort of own generation like an industrial like a vertically integrated utility might, where there's a fear that those changes they want to make, could be an effort to favor their own generation over others or something like that. So So that's generally the way the compliance process will play out.

Host: John Engel  44:53

So I tell people all the time who you know, this audience knows about FERC and FERC's role I tell people who are outside of clean energy and outside of this space that FERC is one of those entities in the climate conversation that may be the most unknown and the most important all at the same time. And so I do appreciate organizations like Advanced Energy Economy and like, and people like you, Jeff, who do follow this, this blow by blow and sit through those hearings, and, you know, report back to the rest of us who just don't have the time to tell us what's going on. So, you know, you've you've been close to FERC for a long time and I don't think many know this, this process as well, as you do. So help me on a final note, characterize what this last year has been like, with the transmission NOPR with the interconnection NOPR all of these, you know, monumental tasks that FERC is taking on. It's a years long process often, and does not happen overnight, and takes all of this stakeholder input to come to fruition. How big is this?

Jeff Dennis, Advanced Energy Economy  45:53

It's big. Um, I would say, you know, to your question about the last year, FERC has teed up probably arguably the most aggressive sort of agenda, I've seen a commission, tee up. And I think that that's been by necessity, I think, you know, again, I'm gonna go back to my mantra about how fast this transition is moving. There is a lot of work to do to make sure the transmission grid to make sure these generator connection practices and to make sure that market designs keep up. And I think that, you know, we've we fall behind a little bit, and so really FERC has teed up an agenda that's not... You know, I think political opponents will characterize it as FERC is trying to be an agent of the clean energy industry or enact climate policy. But really FERC is reacting to what is happening in the industry. And that's this rapid transition. Now about transition is being driven in part by states with stringent climate policy objectives, a federal administration is moving in other parts to achieve climate objectives. But ultimately, what FERC is doing is looking at the industry looking what it's what it's going to take to ensure we have reliability, just and reasonable rates and non discrimination. Those are its those are in statutory obligations, as this world transitions. And so that has resulted in the business agenda I personally have ever seen at FERC. It's been almost overwhelming at times from the outside. And so I'm sure it is from the inside as well. But you know, if you were to ask me, gosh, what would I tell FERC not to do. I'd be hard pressed to find something on their agenda right now that is incredibly important to ensuring that this transition happens in a cost effective and reliable way.

Host: John Engel  47:49

Jeff Dennis Advanced Energy Economy. Thanks so much for joining us.

Jeff Dennis, Advanced Energy Economy  47:52

Thank you appreciate it.

Host: John Engel  47:59

The energy transition moves quickly and even for a tuned in audience like this the blow by blow can be difficult to keep up with never miss the latest news and clean energy development, research and financing by subscribing today to the free Renewable Energy World newsletter. Check out recent stories like IREC solar report that shows 9% growth in jobs last year, or a breakdown of the DoD pilot program that aims to drive community solar subscriptions. Join thousands of professionals who trust RenewableEnergyWorld.com as their industry source by subscribing to our newsletter today. Click the link in the show notes to learn more. I'm John Engel, connect with me on LinkedIn and Twitter and let me know what you think of Factor This! A quick reminder that now Factor This! is a weekly podcast. So we'll see you next Monday still breaking down solars most important topics with industry leaders who actually move the needle and please leave us a rating and review wherever you get your podcasts. Thanks for listening and we'll see you next time on Factor This.