California’s progress towards its clean energy goals is undeniable, but getting clean energy projects online has increasingly become a complex process that takes many, many years. Now more than ever, it’s critical to clear the bottlenecks and connect clean energy to the grid faster to help decarbonize the state.
One of the barriers slowing down clean energy development has been long wait times to connect projects to the grid. The interconnection process is how generating projects receive approval from California’s grid operator (CAISO) to connect to the grid. CAISO runs a series of studies to determine whether a project can safely connect to the grid, or if additional grid upgrades are needed to accommodate the new project.
The interconnection process is a critical step to getting new clean energy resources online. However, it had gotten bogged down by an overwhelming number of applications and become a notable barrier to connecting new clean energy. This blog post will cover CAISO’s reforms to the interconnection process and their effectiveness at addressing the long wait times.
How did the interconnection process work prior to reforms?
CAISO used to run interconnection studies for all projects submitted to them. Interconnection studies are tricky because the ability of a project to connect to the grid also depends on the other generating projects already connected, and planning to connect, to the grid. For example, if a planned project drops out, the studies that incorporated that project become less precise. This dependency makes interconnection studies more complicated as more projects are being studied. Although the time to get through the interconnection process was slowing down, the number of projects being submitted was manageable for the process to move along.
In 2023, CAISO decided that was no longer the case. During its annual application window, which are named clusters, with 2023 being Cluster 15, CAISO received 347 gigawatts (GW) of interconnection requests from 541 projects, compared to 373 projects in Cluster 14 and 155 in Cluster 13. This large spike in Cluster 15 was on top of 185 GW already sitting in the interconnection queue. For perspective, CAISO also noted that only 165 GW of new resources would be needed to meet the state’s 2045 clean energy portfolio.
What reforms were implemented?
To address the interconnection issue, CAISO initiated reforms, implementing an Interconnection Process Enhancement (IPE) 3.0 in 2023 with three steps to improve the process. First, CAISO extended the deadlines for Cluster 14 studies, and paused Cluster 15 studies to give the agency time to reform the interconnection process for Cluster 15 requests and beyond. The next step was focusing on these new reforms.
At a high level, the reforms were intended to limit the number of projects being studied and prioritize projects to align with grid needs, market interest, and project viability. Specifically:
- CAISO now accepts only enough projects to meet 150 percent of the available capacity based on the point of interconnection’s transmission constraints. This limits the number of projects being studied to a more manageable number.
- All projects requesting to connect to the grid are now scored and ranked to decide which projects pass the 150 percent capacity threshold to reach the study stage. This prioritizes the projects being studied.
The scoring system uses metrics across commercial interest, project viability, and system need to rank projects with indicators in each of these categories below. Commercial interest points are given by load-serving entities (LSE), and other large electricity buyers and project viability are provided by project engineers.
| Category | Weight | Indicators |
| Commercial Interest | 30% | LSE allocations Non-LSE allocations |
| Project Viability | 35% | Engineering design plan completeness Expansion projects |
| System Need | 35% | Ability to provide local resource adequacy for a needed area Long lead-time resources |
Projects with the highest scores at each point of interconnection move to the next stage up to the 150 percent limit. As a note, because the 150 percent capacity is based on transmission constraints at each point of interconnection location, projects with the highest overall scores may not necessarily move forward, since some points of interconnection are more competitive than others.
The final step of IPE 3.0 modifies CAISO’s transmission plan deliverability (TPD). The TPD process allocates deliverability capacity for projects connecting to the grid. Projects must secure deliverability capacity to be eligible for resource adequacy, which is often important for project developers to secure project financing and buyers. Updating the TPD process was needed to align it with the other reforms and ensure that the most viable projects received deliverability capacity.
Has the new initiative been effective?
With the final step of IPE 3.0 approved only earlier last year, it’s difficult to fully assess the impact of the reforms. Broadly, the goals outlined at the outset—reducing project intake and queue management—have been successfully addressed. Cluster 15 has been reduced to a significantly more manageable number of projects that will go through the interconnection studies, and these projects are seemingly more viable by being further along in the development process. When the application window was initially opened in 2023, 541 projects totaling 347 GW were submitted. Following the implementation of the new process, 145 projects totaling 68 GW were passed to the stage for interconnection studies.
Cluster 15 is a good initial case study for the reforms. While generally a smooth process, there are a few notable issues that stand out:
- Cluster 15 reveals the high variation of project scores that pass into the validation stage. Low scores were able to move to the next stage in some areas, whereas high scores did not pass in other areas depending on how competitive the area was and how much capacity was available.
- Recommendation: More geographically granular data on transmission constraints would be useful for informing where projects could be sited. This would ensure that projects with higher scores, and are thus more viable, are being moved forward across the grid.
- A notable number of projects were withdrawn after passing the 150 percent threshold stage. The number of projects decreased from 177 to 145 with an associated decrease of almost 30 percent of capacity. Even with the increased likelihood that these projects are completed, additional withdrawals could create concerns that CAISO is no longer moving enough projects forward.
- Recommendation: The CAISO should consider another assessment window after projects are withdrawn to allow the next highest scoring projects to move through.
- A potential deficiency in the process is an equity component to support environmental justice objectives. The scoring system does not consider and could even systemically disadvantage projects that serve these communities. For example, a recent petition at the Federal Energy Regulatory Commission noted that Tribes face more financial challenges to obtaining the high commercial readiness deposits in the interconnection process. The scoring and ranking process under IPE 3.0 could systematically exclude projects that may not be as financially viable, but serve critical grid reliability needs of Tribal or disadvantaged communities.
- Recommendation: Future IPEs should implement pathways to ensure equitable access in the interconnection process for all communities to access clean energy.
The IPE is an iterative process, and many of the initial reforms in IPE 3.0 triggered additional issues that need to be discussed. The next iteration, IPE 5.0, launched this past year to address new and lingering issues such as managing stagnant projects in the queue. This continued engagement is important to ensure the processes for connecting clean energy generation to the grid are evolving to match the clean energy needs of the state.
Across the country, grid operators are struggling to complete interconnection studies in a timely manner, and connect clean energy projects to the grid. With the current federal administration hostile to clean energy, states like California need to remain steadfast in the transition to a clean grid. CAISO’s interconnection reforms are an important step in accelerating that transition.