Clean Energy Backlog Eases with Groundbreaking New Rule: Kiplinger Economic Forecasts

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Federal regulators want to connect new projects to the electric grid faster. A new rule shifts the approach of the Federal Energy Regulatory Commission from “first come, first served” to “first ready, first served” when the agency decides what grid upgrades to prioritize to bring new generation and storage projects online. 

The rule is FERC’s first update to interconnection requirements in two decades. Wait times to connect projects to the grid have escalated in recent years. A typical power plant or storage project built in 2022 took roughly five years to proceed from its interconnection request to commercial operation, up from three in 2015. 

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Meanwhile, interconnection queues increased by 40% last year, bringing the total backlog of projects awaiting grid connection to 2,000 gigawatts. Experts say the move is a step in the right direction, but more is needed to reduce interconnection backlogs, as well as the cost of completing upgrades.

FERC is preparing another rule intended to spur transmission development via improved planning and cost allocation, to be released in the coming months. 

With odds of a bipartisan deal to reform energy permitting starting to fade, the agency’s regulatory moves will play an outsize role in the promotion of new and improved grid infrastructure. Congressional Democrats have started to petition FERC — now evenly split between two Democrats and two Republicans, with one vacancy — on possible changes to proposed regulations. Willie Phillips, acting FERC chairman, has committed to advancing rules in a bipartisan manner. 

The question now is who will fill FERC’s lone vacancy, as well as when, tipping the agency’s balance of power back in favor of the Democrats. The White House has yet to name a nominee for consideration by the Senate, despite much speculation.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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