Is Energy-Only Interconnection Working? Empirical Evidence from Two Decades of US Market Data

Abstract

Growth in electricity demand and generation is increasingly constrained by generator interconnection bottlenecks, with 2,061 gigawatts of proposed capacity stalled in US queues. Energy-only, or non-firm, interconnection is intended to let generators connect to the grid more cheaply and quickly by accepting "as-available" service. Texas's "connect and manage" model has made this approach central to reform debates, but most US regions instead offer two service options: firm Network Resource Interconnection Service (NRIS) and non-firm Energy Resource Interconnection Service (ERIS). Using a dataset of over 36,000 interconnection requests and 4,500 cost studies spanning two decades, we show that ERIS fails to function as a true non-firm access option, offering neither cheaper nor faster interconnection. The historical network-upgrade cost discount associated with ERIS is driven by a "threshold effect," providing financial relief only when network upgrades are entirely avoided. Once physical upgrades are triggered, non-firm (ERIS) and firm (NRIS) interconnection face statistically comparable costs. As mounting grid constraints have cut the share of zero-cost ERIS outcomes from 80% to 10%, ERIS's financial and temporal advantages have largely evaporated and developer demand for this service has contracted. Our results suggest that the concept of "energy-only" interconnection is not inherently flawed; rather, ERIS's observed performance stems from restrictive study methodologies that do not reflect the characteristics of a true non-firm service option. These findings point to an opportunity to align interconnection rules with as-available grid access through operational redispatch, and to examine whether capacity value can remain informed by grid constraints without being dictated by interconnection service. Note: This manuscript is one of two complementary papers on energy-only interconnection. The companion paper reviews the regulatory and institutional design of ERIS and is also available as an DukeSpace preprint under the title, ‘A Review of United States Energy-only Generator Interconnection Service Policy and Considerations for Reform’, available at: https://hdl.handle.net/10161/34843