Crypto-Miners, Large Loads Subject to New Interim Interconnection Process in ERCOT

April 21, 2022

On March 25, 2022, the Electric Reliability Council of Texas (ERCOT) issued a notice regarding a new interim large load interconnection process that is effective immediately. The interim process applies to load interconnection requests — usually large, flexible loads with accelerated timelines, such as crypto-miners — that have not been modeled and studied in a completed ERCOT planning assessment (e.g., regional transmission plan, full interconnection study or regional planning group review). The new interim large load interconnection process applies to:

  • new loads not co-located with a resource with total demand within the next two years of 75 MW or greater;
  • existing loads not co-located with a resource increasing total demand by 75 MW or greater within the next two years;
  • new loads co-located with a resource with total demand within the next two years of 20 MW or greater; or
  • existing loads co-located with a resource increasing total demand by 20 MW or greater within the next two years.

Furthermore, new large loads may be limited in the amount of load they will be allowed to interconnect into ERCOT until further studies are made.

ERCOT established this interim large load interconnection process to ensure that large loads with accelerated interconnection timelines — which ERCOT says have increased in recent years, presumably due, at least in part, to the emergence of cryptocurrency mining operations in the state — are interconnected reliably and in accordance with North American Electric Reliability Corporation (NERC) reliability standards.

As ERCOT discussed, the interim process will require transmission service providers (TSPs) to first submit an interconnection study for each applicable large load that proposes to interconnect to the grid. The study must meet NERC’s FAC-002-2 reliability standard. ERCOT staff will review the studies with a goal of completing each review within 10 business days, though this is not a guaranteed deadline.

If there are no concerns with the TSP studies and no comments that need to be addressed, ERCOT staff will then conduct an operational review to assess whether the interconnection of the large user will cause any stability constraints on the transmission system and whether any transmission improvements or expansions are necessary to ensure reliability. If long-term transmission improvements are necessary for the reliable interconnection of the large load, ERCOT will assess whether an interim usage limit is appropriate to allow a customer to interconnect at least a portion of the requested load within a short time frame. Meanwhile, ERCOT will continue to assess and implement necessary action to reliably interconnect the full load requested.

In an attempt to develop a long-term large load interconnection process in collaboration with stakeholders, ERCOT established the Large Flexible Load Task Force (LFLTF), which held its first meeting April 14, 2022. LFLTF members came to a general consensus during the April 14 meeting that it would be most expeditious for ERCOT and the TSPs to engage in discussions outside LFLTF meetings to establish a permanent interconnection process. Those involved in these discussions will then bring recommendations to the LFLTF for approval.

On April 26 the LFLTF task force will hold another meeting during which it will prioritize a list of issues related to the interim process, hear from stakeholders and discuss model integration and planning for large load interconnections.

McGuireWoods represents energy generators and consumers in Texas, and the energy team at McGuireWoods LLP and McGuireWoods Consulting has been following these developments in ERCOT. For more information, please contact the authors.