Energy Infrastructure, Siting, and Reliability Committee Report

Introduction

This Committee’s previous Year in Review reports were within the technical and economic context of grid resiliency and the influx of sustainable energy. This 2022 report, while touching upon such subjects, expands the scope to include pressing environmental justice considerations.

II. Environmental Justice

A. Grid Reliability

Grid reliability is inherently an environmental justice issue. Large scale grid failures in recent memory, such as those following Winter Storm Uri in Texas, have shown just how acutely the cumulative effects of climate change and extreme weather events threaten reliability, especially in light of an aging grid. Across the nation, when power grids are pushed to failure, whether the threat to a power grid comes from heightened demand during a heatwave or equipment failure in a harsh storm, racially marginalized and low income communities suffer from an unequal distribution of long-duration power outages. 2022 saw the need for a coordinated public and private response to grid reliability recognized, and as this need is acted on, public and private stakeholders have slowly begun acknowledging the priority due to marginalized communities.

1. Department of Energy’s “Building a Better Grid” Initiative

At a federal level, the Department of Energy (DOE) launched the “Building a Better Grid” initiative with its January 12, 2022 publication of a notice of intent. The initiative promises to identify critical national transmission needs and deploy significant planning, financing, and research and development resources to find solutions, building on the programs launched under the Infrastructure Investment and Jobs Act of 2021. The Building a Better Grid initiative will distribute up to $2.3 billion over five years and provide states, tribes, and territorial governments with grants to upgrade power transmission infrastructure in the face of “natural disasters exacerbated by climate change.” In a direct acknowledgment of the inequality of grid reliability issues, DOE repeatedly committed to robust engagement with environmental justice organizations, along with other stakeholders.

2. Industry Efforts to Address Inequalities in the Renewable Industry

Investor-owned utilities have also stepped up their response to the glaring inequalities in their service regions. Wisconsin Electric Power announced a ten-year, $700 million resiliency plan, directing a third of the investment towards Milwaukee – with special attention to zip codes with the lowest median income. Still a grid reliability response has neither been uniformly prioritized nor implemented as promised. In Michigan, DTE Electric Company began the year by entering a settlement agreement approved by the Michigan Public Service Commission, which included a commitment to study and rectify issues with its low-income energy programs and coverage, prioritizing factors such as energy burden, language barriers, race, and ethnicity. Yet in August 2022, when severe thunderstorms wracked the area, low income and minority communities in the Detroit metro suffered up to six day long power outages compared to hours long outages in wealthier neighborhoods only a few miles away.

3. Conclusion

Just as a rising tide lifts all boats, investing in reliable power transmission to all homes brightens the future. Grid reliability is an environmental justice issue, and environmental justice is a collective prosperity issue. 2022 saw the private and public sectors begin to adjust their respective policies to ensure vulnerable communities maintain stable access to power, but many vocal critics believe that the response still falls short of equity.

B. Energy Infrastructure Siting

In the United States, energy siting processes generally have affected communities of color and low-income communities more than their white or higher-income counterparts. Discussions in 2022 centered on balancing clean energy permitting and siting processes in the Biden Administration’s renewable energy framework with ensuring inclusion of environmental justice communities in the decision-making process—a fundamental aspect lacking in siting decisions throughout US history. Acknowledging that this country’s infrastructure is a result of decision-making that has historically excluded communities of color and low-income communities, thereby forcing those communities to bear the burdens of harmful projects in their backyards without gaining any of the benefits, federal agencies’ planning discussions concerning President Biden’s Justice40 Initiative focused on the fact that the programs within the initiative must be led by communities most impacted by previous harms.

1. Environmental Justice Issues in the Inflation Reduction Act

The federal government took several key steps in 2022 to further its commitment to environmental justice in future energy siting decisions. The Biden Administration’s passage of the Inflation Reduction Act (IRA) marks the first time that the administration’s environmental justice agenda and Justice40 language has been expressly included in a key statute. The IRA assures billions of dollars in funding for “disadvantaged communities,” language used in Biden’s Justice40 Initiative, based on income, energy burden, and other environmental justice related criteria and demographics. “Disadvantaged communities” in the Justice40 initiative, while not defined in the IRA, refers to “communities that have been historically marginalized and overburdened by pollution and under-investment in housing, transportation, water and wastewater infrastructure, and health care.” However, environmental justice advocates and some U.S. Senators are concerned about whether the funding will be allocated in an equitable way, and whether negotiations around streamlined permitting processes, initially meant to remove barriers for clean energy infrastructure construction in disadvantaged areas, will also allow polluting infrastructure to bypass necessary environmental justice community input.

2. The White House and Council on Environmental Quality’s Climate and Economic Justice Screening Tool

Furthermore, to assist federal agencies in identifying disadvantaged communities that will benefit from the Biden administration’s Justice40 Initiative, the White House and Council on Environmental Quality introduced, and later in 2022 officially launched, its Climate and Economic Justice Screening Tool. This tool, also available to the public, maps and identifies communities that are most in need of investment from clean energy by weighing income levels and over two dozen socioeconomic, health, and environmental factors. During the public comment period for the initial launch of the tool, however, environmental justice advocates pointed out that the factors listed do not include race, a crucial component of siting decisions and environmental justice issues. The revamped tool included new capabilities, like the ability to overlay race with existing data and redlining data points, but still omits race as an indicator, which the Biden administration argues acts as a mechanism to survive future legal challenges.

3. The EPA’s EJScreen Updates

The Environmental Protection Agency (EPA) also updated and added new capabilities to EJScreen, the Agency’s public environmental justice screening and mapping tool. EJScreen combines environmental and socioeconomic information to identify areas overburdened by pollution, and the new additions included data on U.S. territories, threshold maps which provide a cumulative outlook on vulnerable populations, and supplemental indexes that provide additional socioeconomic information to highlight vulnerable populations. The new five-factor supplemental demographic indexes include: percent low-income, percent limited English-speaking, percent less than high school education, percent unemployed, and low life expectancy. The EPA will still primarily rely on the EJ index to determine disparate impacts, which uses an average of percent low-income and percent people of color, but the supplemental indexes provide additional perspective on potential community vulnerability and may be more relevant for use in situations such as awarding grants and funding under the IRA and the Justice40 Initiative.

4. Conclusion

Though the federal government has begun to take concrete steps, these steps are still in their formative stages. Energy justice still lacks priority in energy development, as local communities in general, and non-white communities in particular, are often marginalized in energy siting decision-making. For example, while the U.S. Department of Energy has created a beta Energy Justice Dashboard and dedicated $1.15 million to increasing solar development in underserved areas, it is important to note that, due to historic redlining, racial inequities, and environmental injustice, low-income and communities of color still face vast disparities in their quality of air, water, level of pollution, and shoulder a heavier energy burden than their higher-income and white counterparts. The commitment to truly include the voices of environmental justice and frontline communities in the energy siting process, especially in the wave of renewable energy, requires action from governments and stakeholders at every level to site clean energy infrastructure and investments into these disadvantaged communities.

C. Energy Efficiency

This year marked a vital turning point for energy efficiency in buildings after COVID-19 led to two of the worst years for progress.

1. State and Local Legislative Action

Pivotal legislation on the local, state, and federal levels showed the desire to decrease greenhouse gas emissions by addressing the built environment. Massachusetts passed Bill H.5060, An Act Driving Clean Energy and Offshore Wind, requiring mandatory energy usage reporting for buildings larger than 20,000 square feet and utilities to submit plans for improving transmission and distribution systems. Maryland’s Climate Solutions Now Act requires owners of inefficient buildings to make upgrades, which will reduce emissions by twenty percent by 2030. In New York, the Advanced Building Codes, Appliance and Equipment Efficiency Standards Act of 2022 is estimated to save residents $800 million annually on utility bills by 2025.

2. Federal Legislative Action

On the federal level, the Inflation Reduction Act contains the largest combined investments in energy efficiency in U.S. history. It will provide $9 billion for states to issue rebates to homeowners for whole-home retrofits and heat pumps for space and water heating. This year's legislation promoting energy efficiency in buildings is a leap in the right direction toward a sustainable future. Energy efficiency will help mitigate grid strain by reducing the amount of electricity on the grid at one time. The smaller load minimizes peak demand and the possibility of congestion or stress, thus preventing power disruptions. That, in turn, will strengthen the U.S. electric grid by boosting resilience and reliability, especially at a crucial time of heightened concerns over energy security and the inflationary impact of higher energy prices on economies and people's livelihoods.

3. Leadership in Engineering Equitable Participation Initiative

This year also prioritized equity by acknowledging the interconnectedness between energy efficiency and environmental justice. One achievement is the soon-to-be-released Leadership in Engineering Equitable Participation (LEEP) Initiative. This initiative prioritizes all stakeholders and community members by focusing on the social and economic impacts surrounding sustainable real estate development. The Building Certification and the Best Practices will promote an inclusive landscape that improves accessibility to energy-efficient buildings as local communities benefit from and shape their region. As pilot projects unfold in Oakland, California, Ana McPhail, Alan Dones, and other non-profit members continue to emphasize six goals: Environmental Sustainability, Small and Local Business Utilization, Employment and Workforce Development, Ownership Opportunities and Wealth, Housing for All, and Health and Wellness. The upcoming twenty-four months will reveal significant strides for the LEEP Initiative as it garners support and becomes available to the public.

D. Electric Vehicle Siting

The Department of Transportation, Department of Energy, and the Joint Office of Energy and Transportation, tasked with overseeing electric vehicle (EV) charging and infrastructure programs, have all recognized their role in meeting President Biden’s Justice40 initiative, which directs forty percent of the overall benefits of federal investments in clean transit to disadvantaged communities. Transportation is the largest domestic contributor to climate change, which historically and disproportionately impacts low- and medium‑income and minority communities. With these considerations in mind, these departments focused their 2022 EV siting initiatives on planning and funding rural EV infrastructure and approving Electric Vehicle Infrastructure Deployment Plans under the National Electric Vehicle Infrastructure (NEVI) Formula Program.

In 2022, we have seen small strides towards reaching President Biden’s national goal for electric vehicles to make up fifty percent of all vehicles sold in the United States by 2030. In line with Justice40 goals, the United States has begun to ramp up EV charging infrastructure and ensure that EV corridors are established equitably. As of November 2022, there are more than 56,000 EV charging stations and approximately 148,000 charging ports in the United States. The greatest amount of EV charging stations are currently located in heavily populated states including California, Florida, and New York, while rural states with smaller populations, including Alaska and South Dakota, house the least number of charging stations. The Federal Highway Administration has outlined stretches of highway called alternative fuel corridors, routes where EV drivers can travel freely without worrying about a lack of available charging stations.

Although these corridors are not yet equally distributed throughout the US, the Department of Transportation has made an effort in 2022 to extend EV benefits to all Americans, regardless of where they live, including communities of color, underserved communities, and environmental justice communities. In February, the Department of Transportation released a toolkit intended to aid rural stakeholders in EV expansion. It includes information on EV basics, benefits and challenges of rural vehicle electrification, partnership opportunities, planning guidelines, and provides an overview of federal funding and financing programs.

Over the year, multiple funding opportunities have begun to fully conceptualize nationwide EV expansion, including the NEVI program, which will provide more than $1.5 billion to help build EV charging stations in all fifty states. As of September, every states’ EV charging plan has been approved, and states will have a wide range of options on how to use this funding going forward, including upgrading existing and constructing new EV charging stations. The Inflation Reduction Act, passed in August 2022, will also provide funding for EV charging infrastructure, as well as provide tax credits for those who buy new or used electric vehicles.

Security

A. Federal Actions Aimed at Updating the Grid and Addressing Climate Change

The federal government undertook record national energy infrastructure fortification, modernization, and expansion efforts in 2022. The Department of Energy (DOE) Grid Deployment Office, utilizing the 2021 Bipartisan Infrastructure Law (BIL), launched a number of Building a Better Grid Initiative programs (the BIL Programs). Congress signed the Inflation Reduction Act (IRA) – the single largest investment in clean energy in United States history – into law on August 4, 2022. While much attention is focused on the IRA, the BIL Programs’ power to engage stakeholders to upgrade the nation’s aging electric grid cannot be overstated.

1. The BIL Programs

The BIL Programs present financing opportunities to incentivize industry players to address insufficient transmission capacity, grid reliability, and climate change and extreme weather exacerbated grid infrastructure issues.

a. The Transmission Facilitation Program

The DOE released the first Request for Proposals for $2.5 billion available under the Transmission Facilitation Program (TFP) on November 18, 2022. The TFP is a revolving borrowing program available to anyone developing or upgrading large scale transmission projects to “enhance grid reliability and resilience, and enable cost-effective access to low-carbon lower-cost energy.” The TFP application criteria requires system upgrade and climate resiliency innovation.

Application criteria require applicants to demonstrate that their projects will contribute to storm hardening, improve nationwide transmission resilience, and enhance grid reliability against extreme weather and climate-driven events. The first round of proposals for this program are due February 1, 2023.

b. The Grid Resilience Formula Grant Program

The Grid Resilience Formula Grant Program sets aside $2.3 billion in grants for states, territories, and tribes to “strengthen and modernize America’s power grid against wildfires, extreme weather, and other natural disasters” exacerbated by the climate crisis. Applicant states must submit high-level five-year strategic plans by March 31, 2023 to receive grants that will be disbursed over five years.

c. The Grid Resilience and Innovation Partnerships Program

On November 18, 2022, the DOE opened the first application period for three Grid Resilience and Innovation Partnerships (GRIP) Programs, which will provide a collective $10.5 billion over five years to bolstering grid reliability and resilience. Of this $10.5 billion, $2.5 billion will be distributed as Grid Resilience Utility and Industry Grants to operators, generators, distribution providers and fuel suppliers whose applications demonstrate innovative technological solutions to mitigate extreme weather event impacts on the power system. An additional $3 billion will be distributed as Smart Grid Grants to domestic entities--higher education institutions, for- and non-profit entities, state and local governmental entities, and tribal nations--whose applications drive technological advancement in key areas. The Smart Grid Grants are intended to integrate renewable energy at transmission and distribution levels, EV integration, and promote smart grid adoption across wider markets. The final $5 billion of the $10.5 billion is targeted to foster collaborative relationships between governmental and electric sector owners and operators to deploy innovative transmission, storage, and distribution infrastructure programs.

d. The Western Area Power Administration Transmission Infrastructure Program (TIP)

The Western Area Power Administration (WAPA) loan opportunity seeks to attract investment in new or upgraded transmission lines and related facilities that expedite delivery of renewables and have at least one terminus in WAPA’s fifteen state service territory.

e. Loan Program Office Financing

The DOE’s Loan Programs Office (LPO) offers several existing programs to help deploy large-scale energy infrastructure projects. The existing programs have been bolstered by the IRA and the BIL Programs.

B. State Regulations/Actions Aimed at Addressing Climate Threat Infrastructure Vulnerabilities

Grid modernization was also a priority for all fifty states and the District of Columbia in 2022. Nation-wide regulatory and legislative bodies targeted energy storage deployment, utility business model updates, smart grid deployment, advanced metering infrastructure deployment, time-varying rates, distribution system planning, and data security.

After the Climate and Equitable Jobs Act was passed on September 15, 2021, the Illinois Legislature continued to prioritize energy legislation in 2022. The Illinois Commerce Commission’s grid planning division that was created under the Act issued orders to its electric utilities providers, ComEd and Ameren, that specified equity and decarbonization requirements for their grid plans. The Illinois Commerce Commission also modified Illinois’ interconnection rules in order to modernize the interconnection process and reduce the time and cost to connect clean energy to the grid.

New Colorado legislation requires the state energy and resiliency offices to develop grid modernization plans. Modernization plans must include how to “harden the grid, improve grid resilience and reliability, deliver electricity where extending distribution infrastructure may not be practicable, and operate autonomously and independent of the grid, when necessary.”

The New Mexico Energy, Minerals and Natural Resources Department (EMNRD) issued a new New Mexico Grid Modernization Roadmap to guide the state’s transition to a zero-carbon electricity grid. EMNRD specifically identified “[t]he need to decarbonize in the face of climate change [as] driving a transition from fossil fuel generation resources to renewable energy resources” which “requires a shift in grid infrastructure and technology.”

The Virginia State Corporation Commission approved Dominion Energy’s Phase II of the Grid Transformation Plan on January 7, 2022. Virginia’s transformation plan seeks to harden distribution substations through increased physical security, to increase grid optimization and reliability, and incorporate small-scale solar and energy storage facilities.

The Electric Reliability Council of Texas (ERCOT) is actively implementing measures to prevent future blackouts consistent with Texas legislative 2021 actions requiring grid weatherization. Notable measures include weatherization certifications, inspections for electric generation units and transmission facilities, conservatively balancing energy supply and demand, and allowing distributed energy resources to participate in the ERCOT market.

Interconnection Delays

Over the last several years, the commonly used metaphor to describe interconnection delay—a bottleneck—has proven to be an apt descriptor. The U.S. interconnection system continues to see a steady stream of renewable energy projects entering the interconnection queues, but very few projects pass through timely, if at all, and without significant increased project costs. In 2022, the industry saw continued efforts by industry regulators, generators, and grid operators to move the needle forward in making major adjustments to the industry’s interconnection approval process and transmission infrastructure.

A. The Impact of Interconnection Delays on Renewable Energy Project Development

Interconnection delays, unfortunately, are commonplace and are often a factor in the calculus of whether a renewable energy project will ever go online. Studies reflect that less than a quarter of all projects in U.S. interconnection queues will be completed. In addition to delays in the interconnection process, renewable project developers may have to combat issues that could lead to the cancellation of their applications or increased project costs, such as site control agreements that expire and must be re-negotiated, often at higher rates, or failed power purchase agreement negotiations, among other issues.

There is no one set culprit for the cause of the United States’ interconnection issues; rather, it is the result of a combination of (1) the rapid pace of the energy transition to renewable energy, (2) the slow and inefficient regulatory system governing the energy transition, (3) labor shortages, none of which have been helped by the United States’ recent economic troubles, and (4) lack of transmission infrastructure to connect these new renewable energy resources to the grid, among other things.

Some in the renewables industry would argue that the largest slices of the interconnection delay pie are lack of transmission and inefficient regulatory systems. Specifically, a lack of long-distance, high-capacity transmission that is required for renewable generation and outdated interconnection approval processes that exacerbate the already heavily backlogged regional interconnection queues. In 2022, the industry saw government and grid operators begin to focus on combatting this pair of issues.

B. Federal Action to Combat the Interconnection Queue Backlog

In 2022, the Federal Energy Regulatory Commission (FERC) took renewed action by proposing two sets of rule changes aimed at improving the electric regional transmission planning and overhauling large and small generator interconnection procedures and agreements.

1. The May 5th Notice of Proposed Rulemaking

Taking into consideration the comments and replies received to the Advanced Notice of Proposed Rulemaking (ANOPR), the information gathered from the Task Force, and the discussions at the Technical Conference that FERC issued, established, and convened in 2021, on May 5, 2022, FERC published a Notice of Proposed Rulemaking (NOPR) in the Federal Register, entitled “Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection,” which is the commission’s first significant regional transmission planning and cost allocation rule in over a decade.

Addressing the transmission planning prong, FERC’s May 5th NOPR proposes as requirement that public utility transmission providers to conduct long-term regional transmission planning that takes into consideration the changing pool of resources and demand and is “sufficiently forward-looking” to meet transmission needs and revise their existing interregional transmission coordination procedures to reflect the long-term regional transmission planning reforms proposed in the NOPR. Notably, FERC’s proposed rule does not propose changes to the existing requirements related to reliability and economic planning for public utility transmission providers that were established by Order No. 1000. Addressing cost allocation reforms, FERC’s May 5th NOPR proposes a requirement that public utility transmission providers in each transmission planning region “seek the agreement of relevant state entities … [on] the cost allocation method or methods that will apply to transmission facilities selected in [any given] regional transmission plan….” The proposed rule also addresses proposed changes to the construction-work-in-progress (CWIP) incentive, the federal right of first refusal (ROFR) to construct new transmission facilities, and enhanced transparency for local transmission planning.

At the time of writing, FERC is reviewing the comments and reply comments gathered in fall of 2022.

2. The July 5th Notice of Proposed Rulemaking

On July 5, 2022, FERC published a second NOPR in the Federal Register that was aimed at addressing reforms to both the pro forma large generator and pro forma small generator interconnection procedures and agreements and to address interconnection queue backlogs and to ensure that the “generator interconnection process is just and reasonable and not unduly discriminatory or preferential.”

The NOPR addresses (1) reforms to implement a first-ready, first-served cluster study process, (2) reforms to increase the speed of interconnection queue processing, (3) reforms to incorporate technological advancement into the interconnection process. Among the proposed policy changes are firm deadlines for transmission providers to complete interconnection studies with financial penalties if they blow those deadlines and more robust requirements from power projects seeking to connect to the grid, including increased commitments related to financial and operational readiness by project developers.

Currently, FERC is reviewing the comments and reply comments gathered in fall of 2022, with the goal of issuing a final rule in early 2023.

C. Regional Grid Operators Take Action to Combat the Interconnection Queue Backlogs

In 2022, the industry also saw grid operators work to target the backlog of projects in their interconnection queues with proposed or adopted policies and procedures for application review. Two such examples are the proposed changes to their interconnection processes put forth by PJM Interconnection, L.L.C. (PJM) and California Independent System Operator (CAISO) this year.

1. PJM Interconnection’s Proposed Policy Overhaul

In the spring of 2022, PJM, the nation’s largest regional grid operator, proposed changes overhauling its new power project policies —a move that was aimed at unclogging the overwhelming number of projects stuck in the PJM interconnection queue. PJM has historically been the one of the largest regional grid operators in the past decade and has also historically had the greatest backlog of renewable energy projects in its queue. At the end of 2021, the projects in PJM’s queue represented almost 250,000 megawatts of generation.

PJM’s proposed overhaul will transition its evaluation and processing of projects from a “first-come, first-serve” to a “first-ready, first-served” basis and require the project to have one hundred percent site control in place for at least one year from the application date, a valid interconnection deal with a transmission service provider, and the required state and local permits secured in order to get a final interconnection agreement. Under its revised policies, PJM will review clusters of interconnection requests using an application and study in three study phases with three decision points, with milestone requirements, including certain financial obligations put forth by the project developers, at each phase and decision point. PJM’s proposed policy changes are also aimed at clearing the backlog of the project that have entered the queue since before 2021—more than 1,200 projects. PJM established two sets of policies: its Transition Period Rules are a set of rules that apply exclusively to projects meeting certain requirements and submitted between April 1, 2018 and September 30, 2021, and its New Rules apply to interconnection requests that were submitted on or after October 1, 2021.

In November of 2022, FERC conditionally approved PJM’s proposed policy changes, subject to additional compliance filings by PJM. PJM intends to transition to the updated interconnection processes in 2023.

2. California Independent System Operator (CAISO)’s New Interconnection Processes

In 2022, CAISO adopted two phases of new interconnection processes intended to streamline projects submitted for interconnection approval in CAISO. The proposed changes were initiated to mitigate delays due to a surge in the number of applications for projects received by CAISO in 2021. In 2021 alone, CAISO received 373 interconnection proposals—tripled from the ISO’s average of 113 interconnection proposals per year over the past decade.

CAISO’s Interconnection Process Enhancement (IPE) Phase 1 was approved by the CAISO Board in May 2022 and finally approved by FERC in August 2022. The proposed changes for Phase 1 included measures to address the current surge in applications in its queue. These changes include requiring interconnection customers to show evidence of site control “earlier in the process and giving interconnection customers more data to help them progress while in the queue.”

The changes in CAISO’s IPE Phase 2 focused on long-term solutions and broader reforms for a process to address a continued increase in projects in its interconnection queues. These reforms include (1) focusing on giving the most viable and ready project the highest priority and providing transparency on project milestones, (2) establishing appropriate cost allocation between developers and consumers related to network upgrades to local transmission systems, (3) providing a better defined process for developers with projects outside of the ISO footprint that includes reimbursement for network upgrade costs that are consistent with projects in the ISO’s balancing area, and (4) making information more accessible to help developers determine the best siting for their projects and giving developers more input during the planning process for required network upgrades. CAISO’s IPE Phase 2 was approved by CAISO’s Board of Governors in October 2022.

D. Conclusion

The past several years have highlighted that the interconnection process is a crucial, if not historically overlooked, aspect of bringing renewable energy projects online and transitioning to a sustainable energy future. In 2022, the industry saw progress toward upgrading outdated and cumbersome interconnection policies and procedures and collective planning to bolster the country’s transmission infrastructure. The year 2023 will bring further changes and some growing pains as FERC finalizes its proposed rules around transmission and interconnection procedures and grid operators continue to plan for process updates.