FERC Order 2023 (2023) — Improvements to Generator Interconnection Procedures and Agreements

Order No. 2023, issued in July 2023 in Docket RM22-14-000, comprehensively reformed the generator interconnection queue process to address an unprecedented backlog of projects waiting to connect to the transmission grid. Driven largely by surging renewable energy and energy storage development, interconnection queues in many regions exceeded hundreds of gigawatts while serial study processes from Order 2003 struggled to keep pace. FERC found that the first-come, first-served serial model encouraged speculative queue entries, inefficient upgrade cost assignment, and repeated restudies that delayed viable projects.

The order replaced the inefficient sequential study process with a cluster-based, first-ready-first-served approach that processes groups of interconnection requests together rather than one at a time. Cluster studies evaluate multiple projects simultaneously, identify shared network upgrades, and allocate costs using a Proportional Impact Method rather than assigning all upgrade costs to whichever project happened to be studied first. This reduces free-rider problems and better reflects how multiple generators interact on constrained systems.

Order 2023 established new financial deposit and project milestone requirements to reduce speculative queue entries that had been clogging the process. Interconnection customers must demonstrate site control, pay escalating commercial readiness deposits, and meet construction milestones or risk withdrawal from the queue. Transmission providers must conduct more timely and transparent studies, post improved interconnection data, and expedite construction of network upgrades serving multiple cluster projects.

The reforms also addressed transition rules for projects already in existing queues, material modification standards, and affected system coordination. Order 2023-A clarified rehearing issues and implementation details. The rule fundamentally modernized the path for new generators to reach the grid while preserving the LGIP and LGIA framework established in Order 2003.

The reforms include strict material modification standards so developers cannot hold favorable queue positions while substantially changing project size, technology, or location. Affected system operators must be consulted earlier in cluster studies, and transmission providers must publish improved queue transparency data so investors can assess upgrade cost exposure. FERC estimated that cluster reforms would accelerate viable projects by reducing restudy cycles that had plagued serial queues. Compliance required each transmission provider to amend its LGIP, with transition provisions for thousands of legacy requests already in regional queues when the rule issued.

FERC characterized Order 2023 as the most significant interconnection reform in a generation, addressing queue backlogs that threatened state clean energy goals and federal reliability objectives. The rule preserves developer rights to choose ERIS or NRIS service levels while changing how clusters share network upgrade costs and how quickly transmission owners must complete enabling infrastructure for groups of ready projects.