Connect and manage - is that the future for new generator interconnections?
Perhaps. But FERC is not going down that path anytime soon.
Dear Reader,
If you subscribed to this Newsletter in the past few days, welcome! I have a passion for seeing more and more electric utility customers participate in the electricity market. I strongly believe that if more customers such as residential households, commercial facilities such as Shopping Malls, and industrial facilities, send their excess energy, however tiny that is, it will make a difference in the long term. But it is not simple. It is a complex system of rules and regulations. And politics too!
That is why I write and write and write.
Not everything I write will be easy to read. You won’t even agree with whatever I write. That’s OK. But I need to write and share what I know so that you can be better informed.
Happy Reading! And if you have ideas on what should I write or didn’t understand something I wrote, I am sure you know how to reach me.
All the BEST!
Rao.
The discussion about "connect and manage" arises from FERC Commissioner Allison Clements' concurrence in FERC Order 2023 issued in July 2023. FERC is the Federal agency charged with policing our electric and gas utilities. If electrons or molecules cross state boundaries - then, it becomes FERC jurisdiction.
Clements suggests options for improving the interconnection process, including transitioning to a "focused" interconnection process or "connect and manage" approach for all energy-only resources. This approach allows renewable generators to connect to the grid without waiting for transmission to be built, with the grid operator managing their output by curtailing it as needed.
This method has been successful in Texas but is not under FERC jurisdiction. While FERC Order 2023 applies to other transmission providers and wholesale market operators, its impact remains to be seen.
The conversation below also touches on Network Integration Transmission Service (NITS) and the similarities in requirements between ERCOT and MISO for ensuring transmission service availability before interconnection. The main advantage of "connect and manage" appears to be reduced interconnection study timelines.
Why talk about renewables in the first place?
As the survey below shows, 2/3rd of Americans prioritize renewable energy resources like wind and solar over fossil energy resources such as coal and natural gas.
Source - https://www.pewresearch.org/short-reads/2023/08/09/what-the-data-says-about-americans-views-of-climate-change/sr_2023-08-09_climate-change_1/
Demography-wise, who is most interested in prioritizing renewables?
Younger US adults. That’s who.
Source - https://www.pewresearch.org/short-reads/2023/08/09/what-the-data-says-about-americans-views-of-climate-change/sr_2023-08-09_climate-change_2/
And guess what -
Two-thirds of U.S. adults say the federal government should encourage production of wind and solar power
https://www.pewresearch.org/short-reads/2023/08/09/what-the-data-says-about-americans-views-of-climate-change/sr_2023-08-09_climate-change_3/
Those are the reasons why our Federal government is encouraging the production of renewable energy.
Why are we talking about “connect and manage”?
One of the primary reasons we[1] are talking about “connect and manage” is the Federal Energy Regulatory Commission (FERC)’s Commissioner Allison Clements concurrence[2] while issuing FERC Order 2023 in July 2023.
Commissioner Clements states, “In my estimation, the record of this proceeding, as well as recent stakeholder initiatives, suggest several options for further improvement. They are not necessarily exclusive of one another, and appropriate application may depend on the particular regional context. They include (1) linking the interconnection process to proactive transmission system planning; (2) in applicable regions, aligning the interconnection process more closely with competitive resource solicitations; and (3) transitioning to a “focused” interconnection process or “connect and manage” approach for all energy-only resources.”
Commissioner Clements also states in that same concurrence, “Johannes Pfeifenberger of The Brattle Group notes that using a “connect and manage” approach, the Electric Reliability Council of Texas (ERCOT) has interconnected more generation more quickly than other regions.45 Under its system, which “limits restudy needs,” “[p]rojects can be developed and interconnected within 2-3 years,” while “in other regions, the interconnection study process itself may take longer than that.”46 Public Interest Organizations state that “[t]he UK’s ‘Connect and Manage’ approach has reduced lead times by 5 years compared to its previous ‘Invest and Connect’ approach.”47”
Unfortunately, Commissioner Clements has announced that she is not seeking a second term. Her term expires in June 2024, but she could stay on until the end of the year, as Commissioner Danly has done. You see why she will be sorely missed because she writes so well and digs into the details.
It is also fair to say the reason why Commissioner Clements mentioned connect and manage is because of ERCOT. While other regions are struggling to connect renewables in a fast manner, ERCOT is leading the way. See the stats below -
Source - https://www.utilitydive.com/news/connect-and-manage-grid-interconnection-ferc-ercot-transmission-planning/698949/
What is “connect and manage”?
Instead of waiting for the transmission to be built when “connecting” a renewable generator, in a connect and manage the world, the grid operator allows the renewable generator to connect without transmission built out and “manages” the output of the renewables by curtailing on an “as-needed” basis.
Connect and manage is not new to the grid operators. It is called Energy Resource Interconnection Service, ERIS. ERIS is available today in most wholesale markets.
What Connect and Manage do is speed up the interconnection process by ensuring all interconnection customers are requesting ERIS, not NRIS. NRIS is a Network Resource Interconnection Service. Most renewable developers request NRIS because they are assured of firm delivery of renewable energy output unless there is an emergency. In return for that firm delivery, because they might have a Power Purchase Agreement (PPA) contract with the utility that states the renewable energy must be produced annually x% to meet the utility’s capacity obligations in a state, the renewable developer agrees to pay for transmission to be built by the transmission utility. A “Connect and manage” approach to renewable interconnection avoids all those headaches. Every renewable developer connects to the grid and takes their chances with grid dynamics.
Where does “connect and manage” work? Texas.
It is clear that “connect and manage” works in Texas, but Texas is not under FERC jurisdiction. FERC Order 2023 does not apply to Texas. But FERC Order 2023 applies to all other transmission providers where a wholesale market does not exist (think Duke Energy Carolinas) and, of course, all wholesale market operators like the Midcontinent Independent System Operator (MISO).
I doubt MISO and MISO Transmission Owners are going to sign off on a “Connect and Manage” approach to renewable interconnections.
FERC issued a Final Rule on Order 2023 but has yet to issue a final Order on transmission planning. The industry is waiting with anticipation for what the FERC says in its final order on transmission planning. I am curious whether FERC would mandate an Independent Transmission Monitor.
What about Network Integration Transmission Service (NITS)?
I am surprised by the lack of mention of NITS in this “connect and manage” conversation. That’s because whether ERIS or NRIS, renewables in most organized markets must also seek Transmission Service. There are a couple of options – NITS or Point to Point. One cannot show up on the transmission grid and start electrons flowing. One has to make a reservation – a transmission reservation, to be specific. NITS is one kind of transmission reservation. Without a transmission reservation, one doesn’t have any right to the transmission system. That’s what the Open Access Transmission Tariff (OATT) is all about. All this OATT stuff came about in 1996 in FERC Order 888.
I was curious if I would find mention of NITS in ERCOT’s Resource Interconnection Handbook. First, I did find that ERCOT’s interconnection process appears to be simple compared to a FERC-jurisdictional ISO like MISO’s interconnection process.
See the evidence below.
MISO Interconnection Process Flow -
Source - https://cdn.misoenergy.org/Definitive%20Planning%20Phase%20Schedule629192.pdf
ERCOT’s Interconnection Process Flow -
Source - https://www.ercot.com/services/rq/integration
Second, ERCOT’s Resource Interconnection Handbook mentions “transmission service” in this manner – “During the Security Screening Study, ERCOT may consult with affected TSPs to identify the most efficient means of providing transmission service. The TSP may suggest an alternate POI which will be allowed and not force the IE to submit another GIM[3].” So, ERCOT does talk to the transmission utilities to ensure there is transmission service available during the initial screening. This initial ERCOT screening is similar to MISO’s initial site verification before MISO’s phase 1 study starts.
ERCOT’s Handbook also mentions a checklist and one of the items in the checklist is, “Prior to submitting Part 1 (Energization) of the Checklist, the QSE, Resource Entity, and interconnecting Transmission Service Provider shall ensure that the transmission switchyard facilities have been adequately constructed and modeled in ERCOT’s Network Operations Model and are ready for energization and operation as part of the ERCOT system.”
So, before interconnecting, i.e., energizing the facility, the transmission utility must make sure there is transmission service available.
Similarly, MISO explicitly states, “Storage requests that indicate the need to charge from the grid will be studied at their maximum charging capability. Transmission Service is required to charge from the Transmission System; the GIA does not grant Transmission Service. In order to obtain any type of Transmission Service for charging from the Transmission System, the IC will have to seek service as a Transmission Customer.” [Source: MISO Generator Interconnection Business Practices Manual]
So, the bottom line, ERCOT, which is a non-FERC jurisdictional grid operator and MISO, which is a FERC-jurisdictional grid operator, are similar in requiring renewables seeking interconnection to ensure there is enough transmission service. And, the only benefit from “connect and manage” appears to be reduced interconnection study timelines.
If you want to read more about this “Connect and Manage” topic, here are some links -
https://www.brattle.com/wp-content/uploads/2022/05/Planning-for-Generation-Interconnection.pdf
[1] Stakeholders interested in generator interconnection reforms, meaning, people interested in changing regulations to connect renewables.
[2] Commissioners issue dissent and concurrence statements. In these statements they explain why they dissented from the majority of the Commissioners or concurred with (agreed with) the majority. In some cases, a Commissioner’s dissent becomes a roadmap for a party to file a rehearing request at FERC.
[3] TSPs are Transmission Service Providers, which are transmission utilities. POI is Point Of Interconnection, where the project has applied for interconnection typically a substation. POI could also mean tapping a 345 kV transmission line. IE is Interconnecting Entity, an Interconnection Customer in other grid operators. GIM – Generator Interconnection or Modification process. Generator Interconnection Queue in other grid operators.