An Empirical Analysis of the US Generator Interconnection Policy

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Generators applying to connect to the U.S. power grid go through an interconnection queue. Most wind and solar generators that began the process do not complete it, in part due to high interconnection costs and long wait times. Using new data on interconnection costs, we find that these costs are highly correlated with the decision to withdraw from the queue. We also show that waiting times are longer when the queue is longer. Finally, we find evidence for a geographical cost externality: generators near a recently interconnected generator have lower costs of interconnection. We develop and estimate a dynamic model of the queue and quantify the effect of policy reforms on withdrawal rates and welfare.