The Electric Reliability Council of Texas (ERCOT) has implemented a streamlined connect-and-manage (C&M) approach to its interconnection process, which differs significantly from other regions due to what former CEO of the ERCOT market monitor Beth Garza describes as an “absence of rules.” Garza, now a senior fellow at the R Street Institute, highlighted that ERCOT’s initial studies on interconnection applications ensure there is adequate generation but lack a capacity market or resource adequacy requirement.
Garza explained that ERCOT relies on the competitive energy market to meet needs without additional deliverability assurances. She noted that most interconnection costs are borne by energy users through ERCOT’s transmission cost allocation charge, while generators assume the risk of curtailment if the transmission system cannot absorb their output.
System operator studies distinguish between resources that can be delivered when needed and those available only under certain conditions. The C&M approach or a transition from Energy Resource Interconnection Service (ERIS) to Network Resource Interconnection Service (NRIS) might work for regulated utilities but could challenge more competitively priced projects, according to industry experts including Mindham. He warned that uncertainty in these processes might render independent developers’ projects unfinanceable or only financeable at higher interest rates.
Despite potential challenges, ERCOT’s model has prompted other regional markets to consider more flexible and efficient interconnection processes, according to Garza, Mindham, and Norris.