The Interconnection Question: What Developers and Lenders Need to Know Before the Queue

Interconnection has always been central to energy project development. What's changing is the scale of projects seeking grid access, the number of competing projects, the cost of required infrastructure, and the speed at which developers must decide.

For developers and lenders, this means evaluating interconnection risk while the regulatory framework, the queue, the load forecast, and the required transmission infrastructure are all shifting at once — particularly as data centers and other large loads compete for a system already absorbing significant new generation and storage.

The Scale of ERCOT Projects is Changing Fast

ERCOT's December 2025 planning update recorded roughly 226 GW of large-load interconnection requests, up from about 63 GW a year earlier — a jump of more than 250 percent, with nearly 73 percent tied to data center load. Requests don't equal built projects, but the volume reflects the scale of uncertainty developers and lenders must now navigate, even as generation developers face their own extended queues and network upgrade costs.

Speed, Scale, and Cost Are Now Inseparable

A faster process can surface upgrade needs sooner rather than eliminate them; new large-load priority frameworks can still require substantial transmission investment; revised tariffs can shift cost allocation without changing physical grid constraints. FERC's 2026 actions — directing the six RTOs to justify or reform large-load tariffs, approving SPP's High Impact Large Load initiative, and pushing PJM on co-located generation — create new pathways but don't remove underlying constraints.

Queue Position Alone is a Poor Risk Indicator

Two projects entering the queue at the same time can face very different outcomes depending on local substation capacity, transmission paths, existing loading, nearby competing projects, and binding contingencies. Early system-topology analysis — not a substitute for the formal study process, but a lens for interpreting it — helps developers distinguish theoretical feasibility from a credible, executable path to power.

For Lenders, This is a Financeability Question

This is not just a documentation check. An executed interconnection agreement doesn't confirm that its cost, schedule, or underlying assumptions remain credible as system conditions evolve. Independent Engineers are positioned to connect interconnection outputs to the assumptions behind commercial operation date, capital cost, and revenue projections — surfacing what could change the investment decision before additional capital is deployed.

The Industry is Moving Toward Faster, More Flexible Large-Load Frameworks

SPP's approved High Impact Large Load process, PJM's co-location protocols, ERCOT's shift to batch processing, and FERC's broader review are all recent examples. These create opportunities, but the objective for developers and lenders isn't predicting every policy outcome — it's identifying which physical and commercial variables are most consequential to project viability, and bringing rigorous engineering analysis earlier into the development timeline.

Bottom line: The most valuable interconnection study is often the one completed before a project is committed to a specific site, configuration, or financial model. The next generation of successful projects will be defined not by who reaches the queue first, but by who understands the grid best.

EPE Technical Director, Independent Engineering, Matt Cramer, will discuss these themes at Data Center POWER eXchange 2026 in Washington, D.C. on September 30, alongside panelists from ERCOT, PJM, and The Brattle Group. Join us for a session covering interconnection speed, scale, and cost. Read more about the panel here.