Myth-busting Power markets, permitting & interconnection: 10 misconceptions holding teams back

Only 13% of renewable energy projects submitted to U.S. interconnection queues between 2000 and 2019 ever reached commercial operation. The remaining 87% either withdrew, were canceled, or remain stuck in an increasingly congested pipeline. This staggering attrition rate—combined with median wait times that have doubled from two years to over five years—reveals that the clean energy transition is not supply-constrained but grid-access constrained (Lawrence Berkeley National Laboratory, 2025).

For procurement teams, project developers, and sustainability leads, understanding what's actually happening in power markets, permitting, and interconnection processes is essential. Misconceptions in this space can lead to stranded investments, missed deadlines, and flawed transition plans.

Why It Matters

The global energy transition depends on connecting clean energy to the grid at unprecedented scale. At the end of 2024, approximately 2,300 GW of generation and storage capacity sat in U.S. interconnection queues alone—enough to power the entire country multiple times over. Yet this capacity remains largely theoretical until projects secure grid access.

The stakes are enormous: interconnection delays directly impact corporate power purchase agreements (PPAs), national decarbonization targets, and the economics of renewable energy investments. According to the Council on Foreign Relations, the U.S. interconnection backlog represents the single largest barrier to scaling clean energy deployment. Meanwhile, permitting challenges at the local level have intensified, with 395 restrictive ordinances across 41 states—a 73% increase from 2022 to 2023 (Berkeley Lab, 2024).

For European markets, similar constraints apply. The EU's REPowerEU plan requires member states to designate renewable energy go-to areas and streamline permitting, yet implementation remains uneven. Teams that fail to anticipate these realities will find their sustainability commitments at risk.

Key Concepts

Interconnection Queues: The Hidden Bottleneck

An interconnection queue is the formal process through which power plants request connection to the transmission grid. What was once a routine administrative procedure has become a multi-year odyssey. Key statistics from Berkeley Lab's 2025 "Queued Up" report:

Metric	2024 Value	Change
Total Active Queue Capacity	2,300 GW	-12% YoY
Median Time to Commercial Operation	5+ years	Doubled since 2007
Completion Rate (2000-2019 cohort)	13%	77% withdrawn
Average Interconnection Cost (Completed)	$240/kW	Varies by region
Average Interconnection Cost (Withdrawn)	$599/kW	Sunk costs

Permitting: More Than Federal Approvals

Permitting delays occur at multiple levels—federal, state, and local. While federal reforms like the Inflation Reduction Act have accelerated some processes, local ordinances have proliferated. Nineteen states now have state-level restrictions on renewable energy siting, double the number in 2022.

FERC Order 2023: A Partial Solution

The Federal Energy Regulatory Commission's Order 2023 (July 2023) represents the most significant reform to interconnection rules in decades. Key provisions include cluster-based studies instead of first-come-first-served processing, higher deposits, and stricter timelines. However, implementation is still rolling out across regional transmission operators, with full effects not expected until 2026-2027.

What's Working and What Isn't

What's Working

Record Interconnection Agreements: Despite queue congestion, 2024 saw 75 GW of interconnection agreements signed—a record high. Through July 2025, another 36 GW were completed, indicating that projects with strong fundamentals and patient capital can navigate the system.

PJM Reliability Resource Initiative: In February 2025, PJM approved a one-time fast-track program for 50 shovel-ready projects, demonstrating that targeted interventions can break logjams. Similar programs are being evaluated in MISO and CAISO.

FERC Order 2023 Reforms: The shift to cluster studies is reducing speculative queue entries. Queue volume declined 12% in 2024—the first decrease in decades—partly due to higher deposits and site control requirements that filter out less serious projects.

What Isn't Working

Study Delays Persist: In 2022, 68% of interconnection studies were issued late. The restudy problem—where one project's withdrawal triggers restudies for all remaining projects in the cluster—continues to cascade delays.

Local Opposition Intensifying: The 73% increase in restrictive local ordinances (2022-2023) reflects growing community resistance. These battles occur outside federal jurisdiction, creating unpredictable risks for developers.

Natural Gas Surge: Counterintuitively, interconnection requests for natural gas generation increased 72% in 2024, driven by data center demand. This competes with renewable projects for limited grid capacity and study resources.

Key Players

Established Leaders

PJM Interconnection: The largest regional transmission organization, serving 65 million people. Its 2025 Reliability Resource Initiative is a model for queue reform.
CAISO (California ISO): Manages 523 GW of queued capacity and has pioneered cluster study approaches.
National Grid: A major transmission owner implementing grid modernization across the U.S. and UK.
Enel Green Power: Global renewable developer with extensive experience navigating complex permitting in multiple jurisdictions.

Emerging Startups

Interconnection.fyi: Provides daily queue data updates across all ISOs/RTOs, enabling better project planning.
Pearl Street Technologies: AI-powered grid interconnection analysis and optimization.
Generate Capital: Infrastructure investor specializing in sustainable infrastructure with deep permitting expertise.

Key Investors & Funders

Brookfield Renewable Partners: Major investor in grid-connected renewable assets globally.
BlackRock Infrastructure: Largest asset manager with significant renewable energy holdings.
U.S. Department of Energy i2X Program: Federal initiative providing technical assistance and data resources to accelerate interconnection.

Examples

Duke Energy Carolinas Cluster Study Reform: In 2024, Duke implemented a modified cluster study process that reduced average study completion time from 18 months to 11 months for its service territory. The utility processed 8.2 GW of interconnection requests using the new methodology, demonstrating that RTOs can adapt FERC Order 2023 principles ahead of mandatory deadlines.
Ørsted's Atlantic Shore Offshore Wind: This 1.5 GW New Jersey project illustrates permitting complexity. Despite federal approval in 2024, the project faced 14 separate state and local permits, environmental reviews from three agencies, and two legal challenges. Ørsted allocated 18 months solely for permitting activities and embedded regulatory affairs staff in key jurisdictions to accelerate approvals.
Invenergy's Grain Belt Express Transmission Line: This 800-mile HVDC line connecting Kansas wind resources to eastern markets took 12 years to permit across four states. The project required negotiating individual county approvals, state utility commission certificates, and federal environmental reviews. It became operational in 2024, providing a template for long-haul transmission development—but also illustrating why such projects are rarely attempted.

Action Checklist

Audit your current PPA pipeline for interconnection risk exposure—projects in early queue positions face highest withdrawal probability
Require detailed interconnection cost estimates and restudy contingencies in developer negotiations
Map local permitting landscapes for target project areas, including recent ordinance changes
Build 24-36 month permitting buffers into project timelines, especially for projects requiring state-level approvals
Engage with ISO/RTO stakeholder processes on queue reform—your input shapes future rules
Establish relationships with transmission owners early in project development
Consider hybrid projects (solar + storage) that may receive preferential queue treatment

FAQ

Q: Will FERC Order 2023 solve the interconnection backlog? A: FERC Order 2023 addresses some root causes—speculative queue entries and serial study inefficiencies—but full implementation will take until 2026-2027. The order does not directly address physical transmission capacity constraints or local permitting challenges. Expect gradual improvement rather than immediate relief.

Q: Why are so many projects withdrawing from queues? A: The 77% withdrawal rate reflects multiple factors: unexpectedly high upgrade costs (averaging $599/kW for withdrawn projects), extended timelines that exceed financing terms, and changing market conditions. Projects often enter queues speculatively, without firm offtake agreements or full financing.

Q: How should procurement teams evaluate developer interconnection risk? A: Request queue position, estimated completion timeline, allocated upgrade costs, and whether the project has secured an interconnection agreement (not just a queue position). Projects with signed interconnection agreements (408 GW nationally as of end-2024) represent significantly lower risk than those still in study phases.

Q: Is the situation different in Europe? A: European markets face similar constraints. The EU's emergency permitting regulation (December 2022) temporarily accelerated renewables permitting, but implementation varies by member state. The UK has a 10+ year queue for offshore wind connections. Procurement teams should conduct region-specific assessments.

Q: What about the natural gas surge in queues? A: The 72% increase in natural gas interconnection requests (2024) reflects data center and AI-driven load growth. While this doesn't directly block renewable projects, it competes for limited study resources and grid capacity. Some regions may prioritize reliability needs over clean energy targets in the near term.

Sources

Lawrence Berkeley National Laboratory. "Queued Up: 2025 Edition, Characteristics of Power Plants Seeking Transmission Interconnection As of the End of 2024." January 2025.
Federal Energy Regulatory Commission. "Explainer on the Interconnection Final Rule (Order 2023)." 2023.
Council on Foreign Relations. "The U.S. Interconnection Challenge: Why Renewables Are Stuck in Line." 2024.
U.S. Department of Energy. "i2X Transmission Interconnection Roadmap." April 2024.
Wood Mackenzie. "5 Key Questions About US Grid Interconnection Answered." 2024.
PJM Interconnection. "Reliability Resource Initiative Filing." February 2025.