interconnection queue

A registry of proposed power generation projects waiting for grid operators to study and approve their connection to the transmission system.

An interconnection queue is a registry of proposed power generation and storage projects waiting for regional grid operators to conduct engineering and economic studies. These studies determine if the existing transmission grid can handle the new power and identify what grid upgrades the developer must fund to connect safely. Because the electrical grid is a complex, shared network, adding a new power plant can cause congestion or instability elsewhere on the system, making this review process a technical necessity. For investors, long and congested interconnection queues represent a major barrier to entry for new energy supply. The queue process has historically suffered from severe backlogs, with projects often waiting several years to receive approval. Consequently, companies with existing, already-connected power plants hold a significant competitive advantage (scarcity value) because building competing new plants can take many years due to these regulatory and study backlogs. When analyzing utility or independent power producer stocks, investors monitor the size and progress of their interconnection queues. A high withdrawal rate from the queue is a common pitfall; many developers submit speculative projects and later abandon them when studies reveal that the required grid upgrade costs are prohibitively expensive. Therefore, a large queue pipeline does not automatically translate into future revenue.

A developer submits a proposal for a 100 MW solar farm to a regional grid operator. The operator places the project in its interconnection queue behind 800 other projects. Due to the backlog, the operator estimates it will take 3 years to complete the system impact study and another 2 years to construct the required $15 million substation upgrade, delaying the project's commercial operation date by 5 years.