FERC Interconnection Reform 2026: EPC Guide

Where Interconnection Reform Actually Stands

FERC Order 2023, issued in July 2023, replaced the old "first-come, first-served" serial interconnection process with a "first-ready, first-served" cluster study model, requiring transmission providers to study groups of projects together rather than one at a time, and imposing financial penalties for missed study deadlines. It also established co-location standards allowing battery storage to share a single interconnection request with a generation asset, addressing a longstanding barrier for hybrid solar-plus-storage projects.

That was three years ago. The reform is still being implemented, unevenly, and it hasn't yet reversed the underlying trend: PJM's own data shows the average time from interconnection application to commercial operation rose from under two years in 2008 to more than eight years in 2025.

Why PJM Is the Center of This Story

PJM is the largest RTO in the country, serving more than 65 million people across 13 states and Washington, D.C., and it's also the region where Order 2023 compliance has run into the most trouble. In July 2025, FERC rejected PJM's Order 2023 compliance plan as insufficient, finding that while parts of PJM's process complied, PJM had not met the rule's full requirements. In April 2026, FERC accepted PJM's revised compliance filing "in part" and directed further compliance filings, an ongoing, unresolved process as of this update.

Two additional PJM-specific developments EPCs should track:

• Co-located generation and load. In December 2025, FERC found PJM's tariff "unjust and unreasonable" for lacking clear rules on co-located generation and load arrangements (relevant to solar-plus-storage projects serving large loads like data centers), and ordered PJM to file revised interconnection procedures by January 20, 2026 and co-location terms by February 17, 2026.
• The "Fast Lane" transition. PJM completed its first reformed-process transition cycle on November 20, 2025, issuing interconnection agreements to a second cohort of projects, including 21 battery storage projects totaling 1.9 GW. PJM has stated it expects to review an additional 63,000 MW of interconnection requests through 2026.

The Real Cost of Delay, Not Just the Inconvenience

This isn't just a scheduling headache. Analysis commissioned by GridLab and conducted by Aurora Energy Research found that if just 10% of the 107 GW of land-based renewables sitting in PJM's pre-2024 queue had been built in time for the 2026-2027 capacity auction, it would have added 1.5 GW of net supply and saved PJM consumers approximately $3.5 billion. That auction ultimately hit the FERC-imposed price cap of $329 per MW-day across PJM's entire footprint, direct evidence of the supply pressure slow interconnection is creating.

This Isn't Going Unchallenged

The reform process itself is contested from multiple directions, worth knowing before presenting Order 2023 to a client as a settled fix. American Electric Power filed a formal petition with FERC requesting an extended compliance deadline, and specifically flagged concern with the new penalty regime: AEP's vice president for FERC and RTO strategy called the elimination of the prior "Reasonable Effort Standard" and the imposition of financial penalties "very fraught," warning it could generate litigation and further delay rather than speed up interconnection. Separately, environmental law group Earthjustice filed a formal protest against PJM's own compliance filing, arguing PJM's plan only "anticipates" clearing its backlog by 2026 without offering any binding commitment or clear evidence it will hit that timeline.

The practical read: don't present PJM's reformed process to a client as a fixed problem. It's a process still being actively litigated and challenged by parties on both sides, utilities arguing the penalties go too far, advocacy groups arguing PJM's plan doesn't go far enough.

Why 2026 Looks Different by State, Not Just by RTO

SEIA's own Q2 2026 market outlook adds a layer of regional detail worth factoring into procurement planning specifically. The report projects a near-term national contraction in 2026, driven primarily by California's transition to a new tariff regime, with New York and Massachusetts also expected to install less new commercial solar this year specifically because of lengthy interconnection delays and reduced pipeline volumes in those states. That's a useful, concrete example of how the national interconnection story translates into state-specific procurement risk: an EPC with projects concentrated in these three states should expect 2026 to look meaningfully different than the national picture suggests, and should factor that into client timeline conversations now rather than after a project stalls.

It's Not Just PJM

Every major grid operator is dealing with a version of this problem, though the specifics vary:

PJM: 60+ GW under study for 2026; compliance plan rejected once, partially accepted since

MISO: Over 170 GW of solar, wind, and storage awaiting interconnection; roughly 50 GW of that is battery storage within a 650 GW total queue

NYISO: Backlog doubled from 176 projects in 2018 to 350 by 2025; only about 9% of battery storage submissions ultimately advance to commercial service

ERCOT: Fastest interconnection process in the country, operates outside FERC jurisdiction, but BESS applications fell 50% in the second half of 2025 versus the first half, driven by policy uncertainty including lost tax credits

Nationally, the interconnection backlog stands at roughly 2,200 GW, and 111 GW of hybrid solar-plus-storage capacity was added to queues in the past year alone, according to S&P Global Commodity Insights.

What EPCs Should Actually Do With This Information

• Treat interconnection timeline as a separate critical path from construction, not a formality that runs in parallel. A project can start construction on schedule and still wait 18 months or more for permission to operate.
• Check your specific RTO/ISO's current compliance status, not just the fact that Order 2023 exists nationally. PJM's compliance is materially behind schedule; other regions vary.
• For solar-plus-storage projects in PJM specifically, watch the co-location rule developments closely, this directly affects how projects serving large loads (including data centers) structure their interconnection requests going forward.
• Build realistic client expectations around the 8-year PJM average, not the pre-reform 2-year baseline. Even reformed processes are working through a multi-year backlog.
• Don't assume ERCOT's speed advantage extends to storage right now; the 50% drop in BESS applications there reflects real policy-driven hesitation, not process failure.

Frequently Asked Questions

Q1. How long does grid interconnection actually take right now?

It varies significantly by region, but PJM's own data shows the average time from application to commercial operation has risen from under two years in 2008 to more than eight years in 2025. This is despite FERC Order 2023 reforms that took effect starting in 2023.

Q2. How long does grid interconnection actually take right now?

Not yet, and not uniformly. The national interconnection backlog stands at approximately 2,200 GW. FERC itself rejected PJM's Order 2023 compliance plan as insufficient in July 2025 and only partially accepted a revised version in April 2026, with further compliance filings still required.

Q3. How long does grid interconnection actually take right now?

Yes, in part. Order 2023 established co-location standards letting battery storage share a single interconnection request with a co-located generation asset. In PJM specifically, FERC ordered further rule clarity in December 2025 for co-located generation serving large loads, with compliance filings due in January and February 2026.

Q4. Why did ERCOT battery storage applications drop in 2025 if ERCOT has the fastest interconnection process?

ERCOT operates outside FERC jurisdiction and remains the fastest interconnection process in the country, but BESS applications there fell roughly 50% in the second half of 2025 compared to the first half, driven by policy uncertainty, including the loss of key federal tax credits, not by process delays.

Q5. What's the practical impact of interconnection delays on project economics?

Significant. Analysis for PJM specifically found that building just 10% of the land-based renewables stuck in its pre-2024 queue in time for a recent capacity auction would have saved consumers an estimated $3.5 billion and added meaningful supply. That auction instead hit the FERC price cap, direct evidence of the cost of delay.

Q6. Is FERC's interconnection reform actually settled, or still being contested?

Still being contested, from both directions. American Electric Power petitioned FERC for an extended compliance deadline, warning the new penalty system could trigger litigation. Earthjustice separately filed a formal protest against PJM's compliance plan, arguing it lacks a binding commitment to clear its backlog on the timeline PJM claims. Treat this as an active, unresolved process, not a finished reform.

Q7. Which states are expected to see reduced solar installation in 2026 specifically because of interconnection issues?

SEIA's Q2 2026 market outlook specifically flags New York and Massachusetts, alongside California's separate tariff transition, as drivers of a projected national contraction this year. EPCs with projects concentrated in these states should plan for longer timelines than the national average implies.

Sources

• FERC, Explainer on the Interconnection Final Rule (ferc.gov) – confirms Order 2023's cluster-study framework, compliance deadlines, and Order 2023-A rehearing details.
• Utility Dive, "FERC orders changes to PJM's grid interconnection process" – confirms the July 2025 rejection of PJM's Order 2023 compliance plan and the 63,000 MW 2026 review target.
• FERC, April 2026 Commission Meeting Summaries (ferc.gov) – confirms the April 2026 order accepting PJM's compliance "in part" and directing further filings.
• K&L Gates, "FERC Orders PJM to Reform Tariff for Co-Located Generation and Load" – confirms the December 2025 co-location order and the January 20 and February 17, 2026 compliance filing deadlines.
• Energy Tech News, "FERC Interconnection Reforms Progress While Storage Queue Backlog Persists Into 2026" – confirms the 8-year PJM timeline figure, the GridLab/Aurora Energy Research $3.5 billion analysis, and MISO/NYISO/ERCOT regional data.
• Lawrence Berkeley National Laboratory, "Queued Up: 2026 Edition" (emp.lbl.gov/queues) – confirms the national 2,200 GW interconnection backlog and queue composition data.