Will ERCOT’s streamlined connect-and-manage approach work for other markets?

The key feature of ERCOT’s C&M that differentiates it from other region’s interconnection queues is an “absence of rules,” said former CEO of the ERCOT market monitor Beth Garza, now a senior fellow at think tank R Street Institute.

ERCOT’s initial studies of interconnection applications ensure “there is adequate generation,” but it has no capacity market, resource adequacy requirement, or other means to ensure deliverability, Garza continued. It “makes a sort of leap of faith that the competitive energy market will meet the need,” she said.

“Most of the interconnection costs are paid by energy users through ERCOT’s transmission cost allocation charge,” Garza added. “The generator assumes the main risk by accepting curtailment if the transmission system can’t absorb the output,” she said.

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Deliverability or flexibility?

System operator studies differentiate between resources deliverable when and where needed and energy-only resources for use when system conditions allow, Garza, Norris and others said.

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C&M or an ERIS to NRIS process “might be workable for regulated utilities, but it also might tend to drive out more competitively priced projects,” Mindham said. The uncertainty with either option “would make independent developers’ projects unfinanceable or financeable only at higher interest rates,” he added.

But ERCOT’s success has put pressure on other regional markets to design more flexible and streamlined interconnection processes, Garza, Mindham and Norris said.