Policy and Energy Notes with Neil: FERC’s Move on Large Load Interconnection

Welcome back, everyone, to this week's World Cup edition of Policy and Energy Notes with Neil. 

This week, former FERC chair Neil Chatterjee, jumps into his former agency's decisions around large load interconnection and what it means for data centers, tech companies, ratepayers, and companies like Palmetto.

Read the highlights below.

On FERCs large load interconnection orders

Last week my former agency, the Federal Energy Regulatory Commission, took a pretty significant step forward on the question of large load interconnection. How do we get power to all of these data centers while maintaining reliability and affordability?

It was a bit of a twist. Many of us were expecting the agency to move toward a notice of proposed rulemaking adopting Energy Secretary Chris Wright's proposal, which he submitted to the commission earlier in the year. What they actually did was far more FERC-y and, in my view, far more elegant. Instead of moving toward a nationwide final rule, they issued six show cause orders under Section 206 of the Federal Power Act, directing each of the RTOs and ISOs — the competitive wholesale power markets in the country — to demonstrate why their tariffs are currently just and reasonable when it comes to large load interconnection and, if they can't, to propose changes.

I think this is a faster process than moving to a nationwide final rule, and it's probably more legally defensible. It's on a tight timeline — 60 days — and it was voted out unanimously, five to zero. It's been receiving bipartisan praise from members of Congress, governors around the country, and the White House. In these polarized times, the commission coming together like this is a pretty big deal and a pretty positive signal.

On what comes next

There's a lot in there for supporters of clean energy to be excited about. The orders specified that grid operators need to look at distributed generation, behind-the-meter assets, and grid-enhancing technologies. While the order was directed at large loads and not necessarily behind-the-meter resources like residential solar and storage, you can see a logical extension toward greater clarity around a more distributed grid. I think it moves us in that direction. 

As we consider all of the power these data centers are going to require, it is a huge opportunity for companies like Palmetto, which offers a software optimization platform to move toward virtual power plants, take advantage of FERC Order 2222, and provide the excess capacity needed to offset demand from large data centers. Ten thousand residential households with solar and a battery can serve as a peaker plant. I think that is where things are headed with this proceeding.

We'll find out in about 60 days when the RTOs and ISOs come back with their proposals to the commission, so this is going to be a little bit of a process. We'll keep you updated on future episodes of Policy and Energy Notes with Neil. 

Go Team USA — let's move into the knockout round.