Now is the time for interconnection reform

For those who have experienced the infamous ‘solarcoaster, the near-term future likely feels like a steep drop with a familiar sinking feeling in the stomach. Instead of the thrill that comes with careening through twists and turns, industry professionals on this ride are likely going to be contemplating significant shifts in their business plan and navigating the world of layoffs, downsizing and potential business closures.

Those seeking to climb to the crest of the next hill are looking at several years of business innovation and uncertainty while anticipating another shift in federal policy that will help the US regain its standing in renewable energy deployment. If the impacts of this bill on jobs, investment and energy costs align with the forecasts from SEIA and others, a future change in leadership is likely to open the door to correcting course.

In the interim, the US will need to focus its efforts on advancing a clean energy future, state by state. While federal tax policy has had a significant role in advancing renewable energy investment, state-level energy policy and regulation are also substantial drivers. There are ample local opportunities to advance clean energy priorities that address short-term needs while creating a regulatory environment that is better prepared for expansive growth than the one we have today.

In this article, we explore the opportunity and imperative for reforming interconnection policy for distributed energy resources (DERs), such as solar, energy storage and electric vehicle charging infrastructure, and how such efforts can address near-term challenges while readying the US for a streamlined transition to clean energy.

The need for DER interconnection reform

In January 2025, the Interconnection Innovation e-Xchange (i2X)—a programme of the Department of Energy—released its ‘Distributed Energy Resource Interconnection Roadmap’ [2], which highlights key actions that can be taken in the next five to ten years to address DER interconnection challenges. Priorities include increasing grid transparency, streamlining utility approval, including interconnection in grid planning processes, and supporting grid reliability, resiliency and security. The authors argue that effectively addressing these priorities will provide significant benefits, including reducing interconnection approval timelines, increasing approval rates, improving interconnection queue data, ensuring DERs do not impact transmission-level reliability and reducing customer grid interruptions.

As highlighted in the roadmap, “[if] the potential for DER deployment is to be realised … interconnection processes must evolve to handle large and growing volumes of DER interconnection requests”. While the pace of interconnection requests is expected to slow down in 2026, this reduction in volume will not alleviate the challenges that individual projects face.

Distribution grids have a finite amount of capacity for hosting DERs. With each subsequent project, the risk of interconnection challenges increases. Effective interconnection rules adopted by state utility regulatory commissions are essential to ensure that future projects are able to fully utilise existing hosting capacity and that processes are in place to pay for investments to modernise the grid equitably.

In 2023, the Interstate Renewable Energy Council (IREC) highlighted the scale of regulatory reform needed in the US through its ‘Freeing the Grid’ evaluation [3], which grades the strength of each state’s interconnection rules (see Figure 1). Thirteen states scored an “F” because they do not regulate DER interconnection, and another 16 states scored a “D”, indicating a need to significantly update their interconnection procedures to streamline review processes, reduce costs and improve transparency.

In summary, nearly 60% of states in the US need drastic improvements to their interconnection procedures to address existing barriers to DER deployment, let alone to achieve the goals highlighted in the i2X roadmap.

Change takes time

One of the challenges of regulatory reform is that its timelines are typically measured in years. Take New Hampshire, for example. Interconnection customers knew well before the most recent update to ‘Freeing the Grid’ that improvements were needed. In January 2022, the state legislature passed Senate Bill 262 to address interconnection delays by directing its Department of Energy to investigate the state’s interconnection procedures. That bill resulted in a year-long proceeding and a December 2023 report to the legislature that concluded working groups would be needed to identify regulatory changes.

Recognising that a formal rule-making would be required to address ongoing concerns, the legislature ordered the Department of Energy in January 2024 to instead initiate a formal rule-making proceeding to align the state’s interconnection rules with national best practices and cited IREC’s ‘Model Interconnection Procedures’ [4] as a resource. A final revised rule is expected to be approved by April 2026.

New Hampshire’s four-year process is not unique. Massachusetts began considering changes to include energy storage in its utilities’ interconnection tariffs in May 2019. Over six years later, these improvements are currently being considered by the state’s Department of Public Utilities. New Mexico, the only state to score an “A” in the 2023 edition of ‘Freeing the Grid’, overhauled its interconnection rules in November 2022 following passage of a grid modernisation bill that was signed into law in March 2020.

Similarly, it took Maine over two and a half years to significantly amend its rules following the passage of interconnection legislation in March 2021.

How change happens

Reforming interconnection regulation requires prioritisation of the issue— typically either by the legislature or the utility regulatory commission—and formal public regulatory processes that evaluate whether any proposed changes will impact the utility’s ability to maintain grid safety and reliability. The time requirements of these processes are better aligned with solving forward-looking challenges, but the reality is that a large majority of regulatory proceedings are reactive. As a result, a discrete interconnection issue can impact a market for years. And while that particular issue is being solved, numerous others can arise.

Whether a deficiency in a state’s interconnection procedures is addressed depends heavily upon legislative or regulatory advocacy. Efforts may be initiated by a legislator who is contacted by a constituent or contractor who is experiencing considerable delays or is required to pay for significant upgrades to the grid to accommodate their projects. Or a regulatory commission may notice a pattern of complaints or receive a filing from a utility seeking guidance on how to comply with the state’s interconnection rules for a particular set of circumstances.

In very few instances do regulatory changes proactively seek to address issues experienced in other jurisdictions that are expected to arise locally in the future.

Often, interconnection issues experienced by utility customers never reach the key decision makers who can initiate needed change. Some solar contractors, when faced with an interconnection challenge and strong demand for projects from other customers, may avoid investing the considerable time needed to try to resolve the issue and instead abandon the project. Or they may try to resolve the issue with the utility and fail to find a reasonable pathway to resolution.

If the contractor is successful in identifying an opportunity to resolve the issue, their customer may decide to cancel the project due to delays or uncertainty. Other customers may shoulder excessive costs or an excessive delay on a single project without raising the broader issue that, if addressed, would prevent similar issues for other customers. In extremely rare cases, negotiation between local industry and utilities can lead to resolution outside of formal regulatory proceedings.

Given the market disruption likely to occur in 2026, DER interconnection challenges need to be more visible and addressed promptly. Project cancellations due to interconnection challenges are likely to be more impactful to solar contracting firms and project developers. The importance of high interconnection approval rates increases with market contraction, and the ability to shoulder the costs to resolve interconnection disputes decreases with a smaller revenue base.

Additionally, once the pendulum of federal policy swings again and the solarcoaster takes another exhilarating ride, it is critical that states don’t spend years resolving interconnection bottlenecks that are very foreseeable today.

Prioritising regulatory reform during challenging times

With the burden of responding to very real and impactful market pressures, it may be difficult for individual solar companies to ramp up their activity in legislative and regulatory arenas where they may not see direct and immediate economic benefit. Even in good times, most of the companies engaging in interconnection reform do so with a specific project in mind. Durable interconnection reform requires a broader approach, one that may seem a significant luxury during lean times.

Yet, interconnection strategy and regulatory engagement are fundamental to the success of companies that weather the impacts of the Budget Reconciliation Bill. For those committed to the long-term success of their business or their state, here are some tips for advancing interconnection reform:

1. Identify the core interconnection issues facing your state. If you work in the solar industry and are experiencing specific interconnection challenges, evaluate your state’s interconnection procedures and determine whether the challenge is due to utility non-compliance with the rules or a deficiency in the rules themselves. If you are not experiencing interconnection issues and instead seek to be proactive, review your state’s scorecard from ‘Freeing the Grid’ to identify where there are opportunities for improvement.
2. Learn from other states. Unless you are in California or Hawai’i, there’s a strong likelihood the challenges you’re seeing have been experienced elsewhere. IREC’s ‘Model Interconnection Procedures’ represent a baseline model of effective DER interconnection provisions that have been adopted in states around the country. If your state scored a “D” or “F” in ‘Freeing the Grid’, a strong goal could be to adopt or revise your state’s rules in alignment with the IREC Model. If customers are experiencing issues that aren’t addressed in the IREC model, reach out to colleagues in other states to see whether they’ve experienced similar challenges or contact IREC directly.
3. Identify areas of strength. Regulatory reform requires broad expertise and benefits from collaboration. Once you’ve identified the challenges to address, identify what you can bring to the table. Are you a technical expert who can evaluate interconnection solutions from other states and how they apply in yours? Do you have expertise in the interconnection process, and what specifically needs to be improved? These insights are highly complementary to parties who want to advance local clean energy solutions and may be more familiar with the regulatory or legislative processes.
4. Build alliances. Interconnection reform requires people with influential networks, people who can motivate decision makers to act, lawyers or other regulatory policy specialists who can write compelling comments in formal proceedings and practitioners who can make and dispel technical arguments. Common advocates include individual DER companies, trade associations, nonprofit groups focused on climate or clean energy issues, energy agencies in states with climate goals and IREC. You may find collaborators in places you might not expect, such as with utilities. There are often renewable energy champions working on the front lines at utilities who also want to see processes improve. Building strong relationships with utility staff can help strengthen regulatory outcomes by more specifically identifying the barriers to change and the shared benefits of streamlined interconnection procedures.
5. Take the long view. In the states where interconnection reform has taken years to advance, the pathway was rarely a straight line. And even once those changes have been implemented, interconnection rules need to be updated regularly to address emerging challenges and opportunities. Engaging in these issues, either directly or through collaboration with other parties, is increasingly becoming part of doing business for those in the solar industry.

The second-best day to advance interconnection policy is today

There is an adage that the best day to plant a tree was 20 years ago, and the second-best time is today. The same holds true for developing strong DER interconnection regulation. While a majority of the states across the US would be better positioned to weather the interconnection challenges of today and tomorrow by initiating reform of their interconnection procedures two, four or even ten years ago, starting today is the next best time to remove barriers to solar and storage projects.

Such efforts will reduce the burden on customers and companies seeking to connect DERs to the grid during what is expected to be a particularly challenging time for the advancement of solar technologies. Interconnection reform is also necessary to streamline processes ahead of the wave of projects that will come when a federal commitment to clean energy returns. The consequences of waiting are predictable and will further hamper US deployment of solar power.

References

[1] https://seia.org/wp-content/uploads/2025/05/House_Reconciliation_Analysis_2025-05-22.pdf

[2] ‘Distributed Energy Resource Interconnection Roadmap’, https://www.energy.gov/sites/default/files/2025-01/i2X%20DER%20Interconnection%20Roadmap.pdf

[3] Freeing the Grid, https://freeingthegrid.org/

[4] ‘IREC Model Interconnection Procedures 2023’, https://irecusa.org/resources/irec-model-interconnectionprocedures-2023/

Author

Vaughan Woodruff is the vice president of regulatory reform at the Interstate Renewable Energy Council (IREC), an independent nonprofit building the foundation for rapid adoption of clean energy and energy efficiency. His team of engineers, regulatory attorneys and policy professionals helps states regulate their electric utilities to ensure DERs can rapidly and equitably decarbonise the grid. Prior to joining IREC, Vaughan was the founder and CEO of Insource Renewables, a Maine-based solar contracting company, the chair of Maine’s solar industry trade group and later served as VP of workforce development and interconnection strategy at ReVision Energy.