Unpacking DOE's proposal to transform data center interconnection

Last Thursday, Energy Secretary Chris Wright directed the Federal Energy Regulatory Commission to consider rulemaking to fast-track interconnection for large loads — as long as they agree to be curtailable or colocate with dispatchable generation. So what does this proposal actually mean for interconnection? In this episode, Shayle talks with Allison Clements, former FERC commissioner and current partner with digital infrastructure advisory firm ASG. Allison is also principal of 804 Advisory. Shayle also talks with Tyler Norris, doctoral student at Duke University’s Nicholas School of the Environment. Allison, Tyler, and Shayle cover topics like: How the proposal would standardize interconnection procedures for certain large loads, with study periods no longer than 60 days The jurisdictional shift: asserting federal authority over a process traditionally under state purview The types of eligible loads, including traditional data centers as well as ones that colocate with generation, also known as “hybrid facilities” The duration of flexibility and whether 2-hour, 4-hour, or longer durations are needed for curtailment Whether flexibility resources should be behind-the-meter or front-of-meter The potential disadvantages for bring-your-own-supply or bring-your-own-VPP Resources: Latitude Media: Wright directs FERC to fast track large load interconnection Latitude Media: How the world’s first flexible AI factory will work in tandem with the grid Latitude Media: OpenAI pushes the White House to invest in the grid to compete with China E3: Demand Response as a Capacity Resource in SPP’s Era of Data Center Growth Canary Media: In a first, a data center is using a big battery to get online faster Credits: Hosted by Shayle Kann. Produced and edited by Daniel Woldorff. Original music and engineering by Sean Marquand. Stephen Lacey is our executive editor. Catalyst is brought to you by EnergyHub. EnergyHub helps utilities build next-generation virtual power plants that unlock reliable flexibility at every level of the grid. See how EnergyHub helps unlock the power of flexibility at scale, and deliver more value through cross-DER dispatch with their leading Edge DERMS platform, by visiting energyhub.com. Catalyst is brought to you by Bloom Energy. AI data centers can’t wait years for grid power—and with Bloom Energy’s fuel cells, they don’t have to. Bloom Energy delivers affordable, always-on, ultra-reliable onsite power, built for chipmakers, hyperscalers, and data center leaders looking to power their operations at AI speed. Learn more by visiting⁠ ⁠⁠BloomEnergy.com⁠.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Speaker 00

  Latitude Media, covering the new frontiers of the energy transition.

• 0:07Shayle Kann?

  I'm Shayle Khan. This is Catalyst.

• 0:11Speaker 02

  23 years ago, FERC issued Order 2003 to standardize large generator interconnection. We've now had two decades of experience of the problems and the solutions, which have been kind of haphazard and piecemeal over time, to get at this explosion of requests for supply to interconnect to the system.

• 0:31Shayle Kann?

  Coming up, who needs coffee when you've got a FERC Aenoper on large load interconnection?

• 0:45Speaker 00

  Demand flexibility is now an essential part of the data center's speed to power playbook. But how do data centers actually curtail load? GridBeyond is the end-to-end solution for flexible energy management. GridBeyond's advanced DERMs and VPP platform is tailored to what data centers care about most: maximizing reliability, intelligently meeting curtailment obligations, reducing costs, and managing all your distributed resources in one place. Ready to transform your distributed energy management? Get started at gridbeyond.com. Catalyst is brought to you by Antenna Group, the communications and marketing partner behind the most influential companies in energy, climate, and infrastructure. For three decades, Antenna has helped ambitious companies stand out, build market leadership,

• 1:29Speaker 00

  and become category-defining brands. From breakthrough startups to global industry leaders, their team brings the expertise, relationships, and track record to accelerate your momentum. Learn more at antenna group.com.

• 1:43Speaker 03

  The power plant for the modern grid isn't a building, it's a network. Energy Hub's DERMs platform connects batteries, EVs, thermostats, and commercial and industrial sites into virtual power plants that over 230 utilities dispatch as reliable grid capacity day in, day out. VPPs deploy in 60 to 100 days at 40% to 60% less cost than traditional infrastructure, and they perform like conventional generation from day one. Learn about the flexibility platform for the modern grid at energyhub.com.

• 2:18Shayle Kann?

  I'm Shayle Khan. I lead the early-stage venture strategy at Energy Impact Partners. Welcome. All right, so this is wonky, but it is super important. We've talked innumerable times at this point on this podcast about connecting large loads, particularly data centers, to the electricity grid and how that has become like the epicenter of a huge challenge, both in AI world and in energy world. And just recently, the US Secretary of Energy, Chris Wright, wrote a letter on this topic that could have really huge impacts. It's a letter to FERC, Federal Energy Regulatory Commission, and it is a combination of asserting FERC authority in a way that has not happened historically over large load interconnection,

• 3:02Shayle Kann?

  but also, just as, or maybe even more importantly, trying to set a process to get those loads interconnected faster, particularly when they are combined with generation. We've talked before about colocation of generation and data centers, and/or if they are flexible loads and curtailable, another thing that we've talked about before. So it ties together a bunch of stuff that I've been interested in, that everybody in the energy world has been monitoring, and it's going to play out pretty quickly because Secretary Wright requested this to be done with an actual order from FERC by April, which is basically lightning speed from a federal regulatory perspective. So we'll see if it happens. But it's one

• 3:43Shayle Kann?

  of these things that is very, very important for many folks downstream of this, on both the energy side and the AI side, but that I think is actually poorly understood, other than the headlines. So in order to parse out what's actually in this letter, in this proposed order, I brought on two folks who are wildly knowledgeable on the subject. One has been on the show before, Tyler Norris. Tyler is a PhD student at Duke University, and wrote, I think, what is now considered to be kind of the seminal paper on data center load flexibility. And the other is Allison Clements. Alison was actually a FERC Commissioner from 2020 to 2024, so she has deep experience inside the agency itself. She's now a partner

• 4:25Shayle Kann?

  with digital infrastructure advisory firm ASG and the principal of 804 Advisory. Here are Tyler and Alison. Allison, Tyler, welcome to you both.

• 4:34Speaker 02

  Thanks for having me. It's great to be here.

• 4:36Speaker 04

  Great to be here, Shale.

• 4:37Shayle Kann?

  All right, so excited to talk to you about this letter and notice of proposed rulemaking that Secretary of Energy Wright sent out very recently. Allison, I want to start with you, since you have the procedural knowledge here. Like technically speaking, what is this? What did Secretary Wright send?

• 4:56Speaker 02

  Technically speaking, what Secretary Wright did was use a provision in the Department of Energy Organizing Act, provision 403B, which is why people are referring it as the 403B letter. He sent a letter to then Chairman Rosner at FERC and all of the commissioners and said, "I, the Secretary of Energy, direct you to consider issuing an advance notice of proposed rulemaking, or an ANOPR, around large load interconnections." And it's a 14-page, kind of bare bones document that in the eyes of the Secretary constitutes an advance notice of proposed rulemaking. That's the process, and now FERC can say, "Okay, great, we're going to consider it."

• 5:39Speaker 02

  And they either move forward and issue the advance notice of proposed rulemaking, which there has been some public indication already that they are eager to do, or they could decide not to issue the rule, but they would have to justify that decision.

• 5:52Shayle Kann?

  Historically speaking, when the Secretary of Energy does something like this, would it be common or uncommon for FERC to say, "No, thank you"?

• 6:00Speaker 02

  Well, it hasn't happened very often. The one time that people remember is under the next provision, or the previous provision in that act, 403A, in 2017, the administration sent over a letter with a proposed rulemaking to then Chair Neil Chatterjee and the FERC, requesting them to subsidize coal and nuclear plants with some onsite fuel supply benefit. And that FERC unanimously rejected moving forward with that proposal.

• 6:32Shayle Kann?

  Okay, so there's some possibility it doesn't move forward. But I mean, reading the tea leaves, maybe Tyler, you can comment on this, because I've seen you say it publicly. It seems generally, maybe outside of FERC, but in the public domain, this has been pretty well-received, broadly speaking, which I mean, I think does run in contrast to, I remember that previous letter about coal, 90 days of storage and so on. So your sense is that the vibes here are good, Tyler?

• 6:56Speaker 04

  So far, you know, let's not discount that there will likely be other perspectives that have not yet been represented. But no, like, I think it was very significant that, Commissioner Rosner came out of the gates expressing, you know, an eagerness to work on the proposal. You know, on the other side of the aisle, you had, you know, Senator Mike Lee that came out, you know, strongly supporting it, and a variety of different stakeholder groups, at least I've seen, and companies that are involved in this space, seem to view it generally favorably. I think, just to parse out a key distinction, right, there's this jurisdictional question, and on that one, I think there's obviously going to be a variety of perspectives, and there will be concerns on the part of, especially of

• 7:41Speaker 04

  some state commissioners, officials, and certainly the investor-owned utilities. But with respect to the substance, that's where I've seen the most excitement, and I know we'll get into it, but in terms of the, what this would actually do to sort of improve the interconnection process, that's where I think there's been the most positive reception.

• 8:00Shayle Kann?

  All right, so let's dispense with the wonky jurisdictional stuff first, because I do think it's important to talk about, but then we'll get into the meat of the substance here, which I think is where it's more interesting. But Allison, back to you, what is distinct here about what the Secretary of Energy is proposing in terms of the shifting of power and authority between FERC and states?

• 8:19Speaker 02

  It's wonky but fun, Shell.

• 8:21Shayle Kann?

  Of course.

• 8:22Speaker 02

  The Federal Power Act gives FERC the federal regulator jurisdiction over the transmission system, right, the high voltage poles and wires, and the wholesale sales of electricity, whereas the states reserve power for generation, as well as the distribution system. And there is a little bit of a fuzzy area as relates to whether or not FERC has jurisdiction over the transmission aspects of bundled rates in vertically-integrated states. So if you live in a state with a vertically-integrated utility, the state commission has jurisdiction over not only your generation charge part of your bill and the distribution portion of your bill, but also the transmission portion of your bill. And FERC has never exercised

• 9:05Speaker 02

  authority, exercised its authority, to take jurisdiction over that piece. The reality is, though, it's hard to imagine anything You know, FERC has jurisdiction over practices affecting transmission rates. It's hard to imagine anything more directly affecting transmission rates than new loads hooking up to the transmission system and the costs that those loads impose. And so I think the legal arguments are very strong in favor of the Secretary of Energy's position here and in favor of the position FERC would take. I'm not sure if it's by tradition, by culture, experience, or practice that it actually hasn't been asserted in the past.

• 9:45Shayle Kann?

  But so in practice, then, is what's the question at hand here? Say I'm a large load, say I'm a data center or a prospective data center, and I want to go get sighted in a regulated utility territory. Is the question, who has authority over the tariff that is offered to me or the interconnection queue and how it is managed? Or like, what is the actual balance of power that's in question here?

• 10:12Speaker 02

  There are two parts of that hookup, right? If you're the data center in Georgia or in Oregon and you go up to hook up to the grid, your utility has authority to go take you through that study process and hook you up and tell you what it's going to cost. But the state has jurisdiction over that decision when you hook up to the grid in vertically integrated states, right? Even if it's hooking up to the transmission system. Whereas what this large load, this ANOPR is saying is known FERC is going to now have jurisdiction. So FERC could standardize rules for that piece of the hookup across all utilities or some set of principles that these utilities must follow in a way that they have not done before.

• 10:55Speaker 02

  So the second piece of the jurisdictional question is who has authority over the sale from the generator to the data center as the retail sale? And that piece remains with the states.

• 11:08Speaker 04

  Yes, Shealan, I'll just say, you know, as someone who originally came into this as a developer and an analyst, it was always a puzzle to me, right, why we had standardized interconnection procedures that were promulgated by FERC for generators, but nothing for loads? And setting aside all the concerns around rate regulation, or even really anything that happens after you're already hooked up to the system, but just the process leading up to actually getting connected, it was always a puzzle to me. And of course, you know, Allison sort of articulates how it plays out in terms of the legal and jurisdictional dynamics. But I think, and of course, in the letter itself, you know, the secretary

• 11:49Speaker 04

  references the fact that, look, we've had long established standardized generator interconnection procedures, in part because FERC recognized that interconnection is inherently part of, you know, open access to the transmission system. And it sounds like they're making a similar argument.

• 12:07Shayle Kann?

  Okay, so it sounds like the, I don't know, the key thing here is if, if this goes through the jurisdictional shift, then if a large load wants to interconnect to the transmission system, the utility will still be the one who has to manage that interconnection and introduce the tariff and all that in a regulated territory. But the oversight might shift from the State Public Utility Commission to FERC. If this is true, and that would allow FERC to do something that's more standardized and sort of national versus it all being piecemeal. That's basically the gist of it.

• 12:37Speaker 02

  Yeah, that's right.

• 12:38Shayle Kann?

  Okay. All right, let's get to the meat and the substance of what the secretary is actually proposing. Can you just give Allison just a high level overview of the sort of what you view as the key elements of the proposal?

• 12:52Speaker 02

  Absolutely. I mean, it's 14 pages long. And, you know, we issued a regional transmission planning rule at FERC last year. It was 1,200 pages long. So this is very bare bones, high level conceptual, and there's a lot of devil in the details. But what the main things that the rule does is, one, it asserts the jurisdiction we just talked about, which has been untested largely. Two, it suggests that

• 13:15Speaker 02

  Loads connecting with new generation together should be studied together, which saves both costs and time. And three, and the exciting part that I know Tyler's going to want to jump in on is that it suggests that if loads are willing to be curtailed, curtailable, if loads will stop when asked, stop taking power from the grid when asked by the grid operator, they should experience accelerated interconnection and that study time should last no longer than 60 days.

• 13:41Shayle Kann?

  Can I ask though, before we talk about the curtailable piece, and even, and also the hybrid facility piece, is it not saying overall, there should be a faster load interconnection process for these large loads? And, and instead it's saying only in these circumstances, we need to fix the problem for co-located generation and load, and we need to introduce a faster process for, for curtailable load? Is it not like an overarching, we got to connect data centers faster kind of thing?

• 14:06Speaker 02

  It is that. I think you see kind of an embracing of the co-location model. But overall, it is kind of a, a cut through the confusion and the uncertainty and, and hopefully the lack of transparency around how you get hooked up to the grid as new load today in this time where, you know, supply is, is, is tightening.

• 14:27Shayle Kann?

  And maybe that's the first, that's the part of the jurisdictional thing. It's like, okay, we need to streamline and standardize this whole process to make it better across the board. And then also specifically, let's do something new with regard to facilities that are co-located with generation or that can be curtailable.

• 14:43Speaker 02

  That's right. I mean, if you think back, you know, 23 years ago, 25 years ago, when FERC issued Order 2003 to standardize large generator interconnection, we've now had, you know, since that time, two decades of experience of the problems and the changes and the solutions, which have been kind of haphazard and piecemeal over time to get at this explosion of requests for supply to interconnect to the system. And now you have an administration saying, you know, whether or not you like it, we're going to assert this jurisdiction that we're confident that FERC has, and we're going to not put, put us on a track for the next 10 years to face similar problems.

• 15:25Speaker 00

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• 16:07Speaker 00

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• 17:35Shayle Kann?

  Okay, Tyler, I want to ask you first, you're the curtailable load guy, but before we talk about the curtailable load stuff, I am interested in the second thing that Allison said is in there, which is the, what is called the letter hybrid facilities, right? That's the co-located generation plus load. And my read of it is that part of what they're doing here is saying, look, like, in a default scenario, you submit a load interconnection request, you submit a generation interconnection request, those two things are considered independently, and it's not really unified. And so this tries to unify them and say, consider them together. But beyond that, you know, these things are kind of intertwined because generation might be the mechanism, if it's behind the meter, it might be the mechanism to be curtailable.

• 18:16Shayle Kann?

  So as you think about the big picture world of data centers and their energy provision, where does generation fit in, in your mental framework?

• 18:28Speaker 04

  Yeah, maybe it's worth just stating very clearly upfront that like, one of the things that has been revealed over the past year, you know, based on this co-location docket and PJM and other considerations and other jurisdictions is that we really have an antiquated load interconnection study process and study criteria, because as you said, it's really divided from the generation side. And so this has very significant consequences if you are talking about co-located generation and load, because what you might have going on, right, is that a generator can be essentially offsetting the withdrawal from the grid from

• 19:10Speaker 04

  a given load during the most stress period, right, which is what the utilities are actually studying to determine your network upgrades. And so if they don't consider the ability of that onsite generator to offset your withdrawal, you may be much more likely to trigger the need for major network upgrades. And of course, that's more expensive and it can take multiple years. So that's sort of part of the delay. I guess to your sort of broader question there, I mean, I suppose it's no secret that The preferred option, right, for flexibility, or we could say curtailability on the part of these large loads is, you know, either onsite generation or storage. I do think, we've heard a lot about the generation option, but, and we hadn't really

• 19:54Speaker 04

  seen large-scale battery storage deals, right, just until the past few weeks. I think the first one that I noticed that was in the public domain was from Iron Mountain, which announced that they were gonna do, you know, they were gonna size battery storage, two-hour battery storage, a hundred percent of their facility in New Jersey, and then the same in Virginia. And then, just last week, we saw the significant announcement from Calibrant and Align Data Centers that will do also a two-hour battery for a new data center in the Pacific Northwest. And that, specifically, they said it was helping to accelerate its interconnection by, you know, on the order of years. So, this, even just this, I mean, it sounds very simple in a sense, just like, instead of studying them separately, study them together.

• 20:37Speaker 04

  But, that would be a very significant development, I think, in the way we do load planning, and could mitigate the need for substantial amount of upgrades and accelerate the interconnection process.

• 20:48Shayle Kann?

  How much visibility, I mean, you mentioned those, all those projects are two-hour batteries. And, one thing that's not clear to me, in this FERC order, or just in general, is how much visibility we have, and maybe this is gonna be locationally specific, but how much visibility we have into the required duration of flexibility at any given time. I know there's a high level, you've done a bunch of great work on this, Tyler, on like, you know, over the course of a year, how much do you require in order to maintain, like, system-level resource adequacy? But, as we start to think about, is what's going to sit behind the meter exclusively gonna be generation, or is it gonna be storage, or something else?

• 21:33Shayle Kann?

  How often does a two-hour battery do the trick, basically? And like, how often are we gonna need more, and what's gonna dictate that?

• 21:40Speaker 04

  Yeah, no, this is, look, this is one of the questions. I mean, I think there it's widely recognized that in the vast majority of events that you're talking about, that, you know, the two to kind of six hour range is sort of the sweet spot when you just kind of look at most of these periods of system stress. And so even with a two hour battery, right? If it's sized at 100% your nameplate and the goal is to reduce, you know, your draw by 50%, well, that becomes a two hour battery, sorry, a four hour battery, and then you can sort of adjust it thereafter. So we should, we should also recognize like a two hour battery can become a longer duration batter if you're just, if you're using it for less than your, your nameplate. But I would point, there's another study that just came out

• 22:21Speaker 04

  a few weeks ago. It was by E3 and they use Southwest Power Pool as the, as the market. And they looked at four hour duration, I think it was eight or 10 hour duration from either a battery or whatever the onsite option was. And I mean, what they found is that even with four hours, you end up with what we called an effective load carrying capability in many cases, like above 50%, which is actually pretty close to like the ELCC of some generated options or even longer duration storage options. So I think there is substantial ELCC value that can come from even relatively short duration batteries. And in a lot of cases, again, especially if you're not trying to go all the way to

• 23:02Speaker 04

  zero. But the, one of the bigger questions that arises is, you know, if you're trying to spec this data center to be able to ride through, you know, some massive grid outage, right? Where you're talking about over 24 hours or even out to 48 hours. Of course, you can't do that with a battery. And this has become a very interesting conversation around these kind of events because first off, if, if these are transmission interconnected loads, you think about what type of event you'd be talking about, you'd have an outage of more than 24 to 48 hours. I mean, what we're really talking about are as an event on par with the largest blackouts that have ever occurred in US history that like literally led to the formation of NERC. And so obviously they're extremely unlikely. It's not to say

• 23:46Speaker 04

  that they can never happen. But the other thing you start to think about, What is going to happen during such a historic event? And the assumption that you're going to be prioritized to get diesel shipped to your data center as opposed to all the other competing needs, including, you know, serious emergency and life-threatening situations? I think that's been an assumption that might not necessarily hold. And, you know, usually you can't actually get more than, you know, a certain number of hours of diesel onsite and storage. And if you go beyond a certain volume, I mean, it actually becomes a little bit dangerous and there's a lot of concern about that. So, yeah, this is like one of the most interesting, I think, debates right now is like, do you really need to spec the 40 hours?

• 24:28Speaker 04

  Even if you do, in terms of like the size of the gen sets, can you actually get that much fuel onsite or can you expect it to be delivered? Or is it sufficient to go with something that's like a two to six or sort of eight-hour solution?

• 24:41Shayle Kann?

  There's like two things, two pieces here that I think are connected to each other, but, but also are distinct that, that I always find people conflate, which is using some onsite asset, could be a battery, could be a generator, could be curtailable load, as a mechanism to get interconnected faster. And that's sort of the crux of what this FERC directive is all about. And then there's the what are you using for backup power? Which is the, what you were just talking about, right? And you theoretically can use the same, some of the same asset, battery in particular, has like a role to play potentially in both. But you can easily imagine that they're distinct things and distinct assets. I mean, currently, that's how it's, it is, right?

• 25:25Shayle Kann?

  Like the diesel generator is just a backup asset and it probably does not, as runtime limits, they're going to keep it from, you know, operating too much. So depending on the amount of curtailment you need to do, like that just might not work for it anyway. So, I don't know, I, I feel like I want to be careful not to consider those two things the same thing. Does that make sense?

• 25:47Speaker 04

  That makes complete sense. And yeah, the diesel's meant for right, absolute worst-case scenario, emergency purposes. And so my, my sense is that all those two-hour battery storage deals that we just mentioned at data centers, they still have gen sets, likely diesel for those longer duration emergency events. And they're not at all mutually exclusive. And in fact, it may be that predominantly we see that kind of arrangement going forward where we do have battery storage.

• 26:14Speaker 02

  You know, at a high level, if you're going to stop taking energy off the grid as a large load customer, you can curtail and just stop. You can go to your backup diesel gen sets or your gas rice sets, which are emerging, but you can face limitations in either case. You can decrease the intensity of your compute, which, you know, your guests in the past have talked about companies trying to do that. You can transfer your compute. You've had other guests on your show trying to talk about that, right? Or you could have a third party curtailment on your behalf, some sort of contract, whether it be the virtual power plant or otherwise, that would provide the decreased stress on the grid.

• 26:54Speaker 02

  And I think the kind of service, of curtailment service and where it's coming from, and the kind, whether it's energy, whether you're offering capacity curtailment and for how long and how you're getting paid, those are all really important details that haven't been defined anywhere. And so when you think about the bucket of issues that are going to arise in this proceeding, those are some that rise to the top for me.

• 27:17Shayle Kann?

  Yeah, I'm curious to get both of your take on this. I've been starting to conceptualize a little bit of a framework in my head for data center flexibility or large load flexibility in general, which is like a resource curve, sort of. It's a little different from your traditional like oil resource curve kind of thing. But as you said, Allison, there's a bunch of things you can do. And the way I think about it is the X axis is how much flexibility you can deliver, how much capacity, I guess, or like hours times megawatts, probably. And then the Y axis is cost, basically. And, you know, in principle, your lowest cost thing to do, assuming you can stay within your customer SLAs, is just load flexibility

• 27:58Shayle Kann?

  straight up. It's managing compute differently, either shifting geographically or shifting temporally, right? But there's only so much you can do of that. It's going to be limited. So it's, you know, low end of the resource curve, but not that wide on the chart. And then you start moving up the chart and you get, you know, batteries and generators and all this other stuff. And I guess the question, Allison, is...

• 28:22Shayle Kann?

  Do you think that FERC in this proceeding will, is FERC going to be in the position to have to sort of distinguish amongst these resource, the mechanisms to get to curtailment or flexibility and offer ELCC type metrics for them and things like that and then define all those rules? Are they going to leave that to the utilities and say, look, you know, utility, you define what curtailment looks like, what curtailable load looks like. But if there is a curtailable load in your territory, then you need to run this procedure to get interconnected.

• 28:54Speaker 02

  Yeah, I mean, I'll give you the, within kind of the FERC box answer and then maybe the political context in which this conversation is taking place and what that means for it. And within the political, the FERC box answer, it is rare that FERC regulates down to that level of specificity, right? I mean, you have seen on the supply side, capacity accreditation methodology and come in from the various RTOs, for example, and FERC largely defers subject to kind of any potentially discriminatory impacts. And so I, the, historically, the agency has also really been a kind of a thousand flowers blooming type place and been, ever since standard market design failed in 2000, been,

• 29:39Speaker 02

  the agency's been really skittish about requiring standardized anything across the board. It often does principles, satisfy these six principles, or when you're thinking about the types of flexibility, ensure that you value this, this, and this. So it, my instinct, my instinct without getting into the politics is they're not going to get that specific on First Take. And then you layer on the fact that the 403B letter from Secretary Wright suggested this should be done by April. So it's, it's the end of October, an ANOPER means you're going to take comments on an ANOPER, then write a NOPER, then take comments on a NOPER, then issue a rule. That would be rocket speed in, in, in FERC world. So I think.

• 30:23Speaker 02

  There's no way they can get to that level of specificity on so many of the details of these questions. And that's my biggest concern here. We don't want something rushed that ends up failing to really take advantage of the opportunity that these flexibility alternatives provide and incentivize them in a way that works for the providers.

• 30:40Speaker 04

  Yeah, and maybe I'll just dive in there for a second because I think one of the good news stories is that we actually arguably have a little bit of precedent for this type of what we might call quasi-firm service. It was really more meant for generators and it's actually called conditional firm transmission service. It's really, to my knowledge, hardly ever been used outside some cases in the Pacific Northwest. It was actually a service, I think it was created in the sort of late 2000s and the whole idea was right where you couldn't get fully firm transmission service and you didn't want to go fully non-firm. Could you get something that was conditional firm?

• 31:21Speaker 04

  And actually, I should shout out to Rob Grammle because I think he was actually representing the American Wind Association at the time after he had less work to get this done. And so one of the big debates in that proceeding became can the transmission provider define a certain number of hours that would be needed over the course of a year and that you could be curtailable, right? Such that you could qualify for this conditional firm service. And of course, there was significant pushback from the transmission providers and they said, you know, it's too hard to offer a certain number of hours a year. So instead, we're just going to tell you what the what the system conditions would be, when curtailment would be likely to occur. And so that sort of gave an out.

• 32:04Speaker 04

  But I think that the really, the holy grail here that we're sort of talking about is it has to be, you know, bounded flexibility or bounded curtailment in terms of like defined maximum number of hours in a year and then something with respect to like the duration of the events. And if you look at, for example, like Google's comments in the PJM, this big process, they have this critical issue fast path process trying to figure all this out. They say, look, we might be willing to actually participate in the demand response program. It's just that right Now it's it's unbounded, right? So there's just like no limit on the number of hours that could occur. And so that I think is where we're getting that. And by the way, there are other models to look at, too. The UK has this whole curtailable connections program.

• 32:45Speaker 04

  And they actually remarkably, i- if if they end up curtailing either the generator to the load more than what their sort of guarantee uh says, that they actually compensate the customer. I I don't know that we're going to get to that extent in this kind of um this kind of program offering. But at minimum, right, it would seem to make sense that we have that as a voluntary option for, you know, the flexible loads that are able and willing to use it.

• 33:09Speaker 02

  Another thing that comes to mind that you didn't mention yet is the you know, that we've talked a little bit about behind the meter and what the hybrid facilities might look like. But we also want to make sure that front of the meter opportunities to provide this type of support don't get left out of the conversation. I I heard um someone say at a conference yesterday, you know, behind the meter in front of the meter is going to evolve into around the meter. Right? Close to the meter. And I think that's a concept that we need to be careful doesn't get lost. So if you have a, for example, front of meter storage solution that might be able to provide curtailability close to but not behind the same point of interconnection as a new large load, that that this proceeding contemplate those opportunities as well.

• 33:48Shayle Kann?

  And that that within the the way that the letter is written would like when they talk about hybrid facilities, are they talking about exclusively behind the meter exclusively onsite or potentially near site? You know, like in the same zone or whatever. Is it clear?

• 34:05Speaker 02

  I read it to say, you know, withdrawal and injection behind the same point. It's it it doesn't suggest elimination of other opportunities. It just doesn't speak to them. What do you think, Tyler?

• 34:15Speaker 04

  I don't think they went into that level of specificity, but um, you know, for example, with what Southwest Power Pool is proposing. I think the metric they use, I'd we'd have to check the final version, but I think it was like it needs to be within two substations uh of you is is sort of like if if you're going to be somewhat co-located or have certain benefits from an associated generator with the load. So yes, I think there's a lot of opportunity to get creative there. And one other thing I just want to say about this, you know, almost. Inevitable proceeding that seems to be about to happen is that look like even if it doesn't lead to a final rule and even if right there are significant such can significant concerns about the jurisdictional dynamics that FERC doesn't want to go there and by the way I want to respect that there are some legitimate jurisdictional concerns as I want to respect

• 35:00Speaker 04

  this. I think just the the substance that this will hopefully elicit in terms of how to make this kind of service work is going to be incredibly valuable and even if it doesn't lead to a final federal that existing jurisdictions can sort of take that content and take that back to their ISO RTO or at the state level to hopefully get these kind of offerings in place.

• 35:20Speaker 02

  Yeah, that's a great point and I don't want you know I there's a lot in the negative bucket. There's lots of positives and opportunity here. This is a giant problem. This is a path forward. Let's not let perfect be the enemy of the good. Let's let's make progress. You know, there's lots of concern about independence of the commission about jurisdiction etc etc that must be acknowledged as we go down this path.

• 35:43Shayle Kann?

  Tyler, I guess I'm curious to get your your take on this flexibility resource curve, not necessarily the concept specifically, but the basket of things that will be available to provide curtailability. And in your mind, is the right, I guess the question is, is the right approach in your mind to say, you know, you need to be able to provide X hours of flexibility with the Y duration events or whatever, and then let the market figure out how much of that is going to be generation, storage and load flexibility? Or does it make sense to actually, I don't want to say put your thumb on the scale, but like try to dictate a little bit how much of what gets implemented there?

• 36:24Speaker 04

  Yeah, I know. And actually, our our research lab at Duke University has been because you know, we're modeling sort of the bulk power system. And so ultimately, you want it to be as sort of generalizable as possible, right? So that you can sort of represent any load that is utilizing this type of flexibility for all these purposes. And so you want to kind of parameterize it and make those parameters as generalizable as possible. Also, because then we can actually create a market, right, where a variety of different options Can compete either onsite or even to some extent offsite. I mean, this gets even more interesting and complex when you start to think about, you know, these large loads potentially procuring the flexibility from other loads in the same balancing authority.

• 37:07Speaker 04

  The kind of simplest version of it's just for capacity, right? Just resource adequacy. But then if you're actually talking about to sort of mitigate transmission congestion, you know, think about the electrical proximity of those customers and how you sort of do that study. I think that's sort of like the, the, the, the very advanced version. I hope we can get there, but a minimum like let's get it in place for, for those that are doing it behind the meter. And yeah, whether it's load shifting, um, you know, actually shifting around the computational workloads or it's, um, you know, it's battery storage or it's generation. Or even, you know, just reducing operation, you know, I think there are cases where just from a planning perspective, like you wouldn't, you wouldn't assume that a new load is going to be drawing at its, at its max pull during certain types of weather, you know, weather conditions.

• 37:52Shayle Kann?

  Is there a risk that this actually, I mean, you know, we, we've just seen the emergence of some of these first like, like the, the bring your own VPP type of thing, right? Which is not onsite, but is near site. Is there a risk that this process actually disadvantages that stuff in its decency?

• 38:11Speaker 02

  Yes, there's always a risk. I mean, I, you know, to, and to add to Tyler's previous response, which I totally agree with. The other nice thing about not getting that specific about technologies is that it'll, it'll, it's legitimate under the federal power act, which is FERC's guiding principle, right? And so to the extent that there are attempts to do things like take away the opportunity for bring your own virtual power plant, bring your own supply in other ways. That, that doesn't satisfy the non-discrimination requirements under the statute. So, um, to my mind, we need to make sure and there are guardrails in place to protect for that purpose.

• 38:49Speaker 04

  Yeah, and I'll just say to, you know, this is so different from the way we do kind of air connection studies right now where the way it works right now, right, is you're basically looking at these steady state fixed snapshots of the system, right, like single points in time. And you might do like a winter case, a summer case, and maybe one like during the shoulder months. But it is just a single fixed point in time. Whereas what we're talking about is like extending that out, maybe not all the way to 8760, right, but at least maybe to like 1,000 hours in the year. And there are a few, I think, existing transmission providers that could perform that kind of study. But we just, we're gonna have to just get better and more advanced at doing this. And, and so I think part of this, frankly, is like, we just need to like, train more, more

• 39:33Speaker 04

  people on how to do this kind of more advanced study. And I'm hopeful that this proceeding will sort of shine a spotlight on those needs and capabilities so that we can sort of promulgate it more broadly.

• 39:45Shayle Kann?

  All right. So wrapping it up, I want to talk about what comes next. Allison, you mentioned the timeline. So this is all supposed to happen. There's supposed to be like a final order by April. Is that a firm deadline of any sort? Could FERC just take longer if they need to? Because that is remarkably fast. I'm remembering how long it took to do like, I don't know, various other FERC orders historically.

• 40:07Speaker 02

  Yeah, it took us four years to issue from a NOPR to final rule, the transmission, regional transmission planning order, 1920. And then there was an order on rehearing 1920A, and then 1920B. It's not realistic what authority does the, you know, the Secretary of Energy have in that case, the bully pulpit, political pressure. But I think you, when that letter came out, there were a lot of FERC staffers who were thinking, oh, no, my Thanksgiving and holiday plans. So I think you have to imagine that if the, the commission is showing good progress, that that is a satisfactory place to be. But we will see what happens on that front.

• 40:47Shayle Kann?

  All right. Well, thank you so much for both of you for taking the time and walking me through this. This is going to be something to monitor closely over the next few months. So we'll have you back on when we know what's what. But appreciate the time.

• 40:59Speaker 02

  Sounds great.

• 41:00Speaker 04

  Thanks so much, Phil.

• 41:03Shayle Kann?

  Allison Clements served as FERC Commissioner from 2020 to 2024 and is now a partner with digital infrastructure advisory firm ASG and the principal of 804 Advisory. Tyler Norris is a PhD student at the Duke University Nicholas School of the Environment. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Daniel Waldorf, mixing and theme song by Sean Marquand. Stephen Lacey is our executive editor. I'm Shayle Khan and this is Catalyst.