Shifting focus towards customer-centric strategies for generator connection

In the power sector, tight supply conditions relative to soaring demand have sparked a need for change. One of the key areas under scrutiny is the process by which new power plants are interconnected to the power grid.

Today, the grid is largely tapped out, yet there are too many stakes in the ground that will never prove out. The contention surrounding the interconnection process is evident, as some argue that progress made to hasten the process does not address the dubious principle of allocating scarce resources based on Gold Rush rules prioritizing generator rights based on when they filed in the queue.

A pivotal step towards reform is being proposed, particularly in Colorado, where efforts are underway to change the prioritization for interconnection in the power sector. The aim is to base interconnection rights on customer interest, a shift that could see resources allocated more effectively and efficiently. These reforms extend beyond Colorado, with discussions around the Midcontinent Independent System Operator (MISO) filing proposals with FERC. However, the direct proposer's name is not explicitly given in the results.

The reforms include adjustments to interconnection processes and prioritizations to improve resource adequacy and reliability under state and local regulatory authorities. In discussions around MISO and Colorado regulatory frameworks, the focus is on expediting the interconnection process and ensuring a more market-based approach. Some interconnection rights for transactions with no obvious tie to generator output could be auctioned off in this more market-based approach.

In California, a different model is in place, with load-serving entities responsible for providing energy, capacity, and signing long-term contracts with new resources in furtherance of the state's resource adequacy and other policies. The model of allowing load-serving entities to designate new generators for priority interconnection could potentially be extended to markets with high competition, like the PJM Interconnection.

Progress is being made in this area. Recent reforms in Colorado have begun to allow winners of competitive solicitations to be fast-tracked for interconnection. Moreover, the PJM Interconnection has reduced its backlogged queue from over 200,000 MW to 63,000 MW through the use of new AI tools to expedite the computational work that is the heart of the interconnection study process.

However, questions remain about whether the firm deliverability considerations embedded in most interconnection processes are well suited to all resources and all loads. More foundational reforms are necessary to bring the grid into a new era that puts customer interests first.

As the power sector evolves, the focus on customer interest and efficient resource allocation is becoming increasingly important. The reforms underway in Colorado and discussions around MISO serve as a testament to this shift. Travis Kavulla, the vice president of regulatory affairs at NRG Energy, and Eric Blank, the chairman of the Colorado Public Utilities Commission, are among those leading the charge for change. The future of the power grid lies in prioritizing customer interest and streamlining the interconnection process.