ISO/RTO Interconnection Queue Reform: What It Means for New Load

FERC's landmark reforms are reshaping how new generation and load connect to the US grid — with profound implications for data center development.

The US electric grid's interconnection queue process has been described as "the most broken part of the most complex machine in the world." With over 2,000 GW of pending capacity across all RTOs and ISOs — and median queue-to-commercial-operation timelines of 5–7 years — the system was clearly broken. But starting in 2024, the Federal Energy Regulatory Commission (FERC) began implementing the most significant interconnection reforms in two decades.

This article examines how FERC Orders 2023, 2023-A, and related proceedings are changing the interconnection landscape — and what data center developers need to know to navigate the new rules.

The Reforms: A Summary

FERC's interconnection reform package consists of several interrelated orders and initiatives:

Order No. 2023 (July 2023)

The foundational reform. Key provisions:

• Cluster study transition: RTOs and ISOs must transition from serial (first-come, first-served) interconnection study processing to cluster studies. Projects entering the queue within a defined window are studied together, allowing shared grid upgrades to be identified and allocated more efficiently.
• Increased financial deposits: Developers must post larger financial deposits to enter the queue, with staged increases tied to study milestones. The goal is to reduce speculative projects that clog the queue without serious intent to build.
• Milestone deadlines: Projects must meet specific development milestones (site control, permitting progress, financing milestones) within set timeframes or face queue dismissal.
• Modeling and data improvements: Standardized modeling requirements to reduce study delays caused by incomplete or inconsistent data submissions.

Order No. 2023-A (May 2024 / effective 2025)

The follow-up order addressed implementation challenges raised by RTOs and utilities:

• Transition timeline clarification: RTOs were given specific deadlines for implementing cluster study processes, with most transitions completed by mid-2025.
• First-ready, first-served: Among projects within a cluster, those that demonstrate greater development progress (site control, permits, financing) receive priority in the study process.
• Affiliate rule clarification: Separate interconnection requests by affiliated entities can no longer be used to game queue position.

Load Interconnection Proceeding (Pending, 2026)

Perhaps the most important development for data center developers: FERC has opened a proceeding to specifically address the growing challenge of load interconnection requests. Historically, interconnection rules were designed primarily for generation projects, with load interconnections as an afterthought. The new proceeding is examining:

• Whether load interconnections should follow a separate, streamlined process
• How to allocate the cost of grid upgrades triggered by large new loads
• Whether data center loads should be required to contribute to network upgrades differently than generation

How Different RTOs Are Implementing Reforms

Implementation varies significantly across RTOs, with important implications for data center developers:

PJM Interconnection

PJM — the largest RTO in the US, covering 13 states and serving 65 million people — has been at the center of the interconnection crisis. PJM's queue backlog exceeded 250 GW in 2024, with typical study timelines of 48–60 months.

Reform status: PJM transitioned to cluster studies in late 2024. Its first cluster window closed in Q1 2025 with over 100 projects totaling 80+ GW. The transition has been challenging — initial cluster study results were delayed by several months due to the sheer volume of projects and data quality issues.

Impact on data centers: PJM's cluster-based processing is theoretically more efficient, but the sheer volume of requests means that even cluster studies can take 18–24 months. For large data center loads (100+ MW), PJM remains a 4–6 year timeline market.

ERCOT

ERCOT (Texas) operates differently — it is not subject to FERC jurisdiction. Its interconnection process is generally faster but less standardized:

Reform status: ERCOT has implemented its own reforms, including a "fast start" process for projects that meet specific criteria. However, the Texas grid's resource adequacy challenges (highlighted by Winter Storm Uri in 2021) have led ERCOT to scrutinize large load additions more carefully. In 2025, ERCOT introduced new requirements for large loads to demonstrate that they have secured firm transmission service.

Impact on data centers: ERCOT remains a relatively fast interconnection market (2–3 years for typical projects), but the new firm transmission service requirement has added complexity for large campuses.

CAISO (California)

California's grid operator faces unique challenges, including a rapidly decarbonizing grid, high renewable penetration, and growing electrification load:

Reform status: CAISO has implemented cluster studies and tightened milestone requirements. However, California's transmission constraints — particularly between Northern and Southern California — create additional bottlenecks.

Impact on data centers: Due to CAISO's renewable integration challenges and transmission constraints, new large data center loads face 4–7 year interconnection timelines and very high upgrade costs in some regions.

MISO (Midcontinent)

MISO covers the Midwest and parts of the South. Its queue has grown significantly with renewable and data center requests:

Reform status: MISO implemented a "Generator Interconnection Process" reform in 2023–2024, transitioning to annual cluster windows. MISO's queue backlog is less severe than PJM's, but transmission upgrade costs can be high in remote areas.

What the Reforms Mean for Data Center Developers

The practical implications of interconnection reform for data center developers are significant:

• Earlier entry required: With cluster-based processing, missing a cluster window can mean a 12–18 month delay until the next window. Developers must file interconnection requests much earlier in the project lifecycle.
• Higher deposits and financial risk: Increased financial requirements mean developers have more capital at risk during the queue process. However, this also means less competition from speculative projects that never get built.
• Site control is essential: The first-ready, first-served rules require demonstrable site control at the time of interconnection request filing. Developers who secure options or purchase agreements early will be prioritized.
• Cost allocation uncertainty: The pending FERC load interconnection proceeding could fundamentally change how grid upgrade costs are allocated for data center loads. Developers should model multiple cost scenarios.
• Behind-the-meter alternatives are increasingly attractive: As interconnection timelines remain extended even under reform, the behind-the-meter generation option (see our Ohio River Energy Park project) becomes more compelling.

Key Takeaways

• FERC Orders 2023/2023-A transition RTOs from serial to cluster-based interconnection processing
• Higher financial deposits and milestone deadlines are weeding out speculative projects
• PJM's queue remains backlogged despite reform; 4–6 year timelines persist
• ERCOT offers faster interconnection but has added firm transmission service requirements
• A pending FERC proceeding on load interconnection could transform the rules for data centers
• Missing a cluster window can mean 12–18 months of delay — timing is critical