Since 2000, only 13 percent of projects that entered the U.S. interconnection queue have actually been built. Nearly eight in ten never make it through. Most times, financing runs out and the economics stop making sense.

The scale of that waiting room is now larger than the power system it is trying to join. At the end of 2024, the U.S. interconnection queue held approximately 2,060 GW of generation and storage capacity, compared with roughly 1,200 GW of installed U.S. generation capacity. [1] Simply put, the queue is nearly twice the size of the system already in service, competing for connection to a grid that has not expanded fast enough to absorb it.

The pressure is especially visible in the markets now driving AI infrastructure demand. Northern Virginia, the largest data centre market in the world, sits within a grid region where new large-load interconnection studies are running for four to six years. [2] Phoenix and Dallas face comparable timelines.

Key Figures at a Glance

AI Interconnection Queue Management

The Federal Energy Regulatory Commission's (FERC) Order No. 2023, issued in July 2023, was the agency's most ambitious effort to overhaul the U.S. grid interconnection process in decades. Designed to cut mounting backlogs and bring greater certainty to project timelines, the reforms replaced the traditional first-come, first-served approach with cluster studies that evaluate projects in groups. For an industry mired in years-long delays, the order raised hopes that the interconnection crisis was finally beginning to ease.

Three structural factors explain why AI interconnection queue management is a multi-year problem regardless of administrative reform.

1. Grid infrastructure investment has lagged demand for a decade

   The IEA estimates that closing the global grid modernization gap requires $600B per year in transmission and distribution investment through 2030. [3] Current annual investment globally runs at approximately $400B—a $200B annual shortfall that compounds year on year. In the U.S. specifically, transmission capacity growth has averaged less than one percent per year over the past decade while generation capacity seeking connection has grown at multiples of that rate. The queue is the physical expression of that gap.

   
   

2. The study process is sequential and self-compounding

   Under the pre-Order 2023 interconnection study framework, each new project entering the queue triggered a restudy of all projects behind it. A single large project filing could add months to the timeline of dozens of projects already in process. FERC Order No. 2023 introduced cluster studies to reduce this effect by evaluating projects in groups rather than one at a time. But implementation has been uneven across regions, and the backlog inherited under the old framework continues to weigh on the new process. Projects already in the queue are still working through a process designed before the reforms.

   
   

3. AI data centre demand is accelerating queue growth faster than reform can absorb

   Hyperscaler capital expenditure on AI infrastructure exceeded $320B globally in 2024 and is projected to grow further in 2025 and 2026. [4] Every gigawatt campus requires a grid connection. The Northern Virginia market alone has seen interconnection requests from data centre developers accounting for hundreds of gigawatts in a single study cycle. FERC Order 2023 was designed for a market with a different demand profile. The AI infrastructure buildout is a structural demand shock that arrived faster than any regulatory framework anticipated.

The Transformer Supply Chain Lead Time Bottleneck

Clearing the interconnection queue does not resolve the schedule problem. A project that successfully obtains a connection agreement still faces a second constraint at equipment delivery: the transformer supply chain lead time crisis.

Large power transformer lead times have extended from 12–18 months pre-2022 to 18–26 months and beyond in 2025–2026. [5] Wood Mackenzie's Q2 2025 supply chain survey found standard power transformers averaging 128 weeks for delivery; generator step-up transformers at 144 weeks. [6] The underlying constraint is manufacturing capacity. Production is concentrated in a small number of facilities across the U.S., Europe, and South Korea, and it has not expanded fast enough to keep pace with simultaneous demand from renewable energy, data center power infrastructure, and grid modernization projects.

When a project spends 48 months in the interconnection queue, a 26-month transformer lead time can add another 12–18 months to the schedule if procurement begins only after financial close. Most project financial models account for the queue delay, but not the combined impact of equipment lead times.

The practical implication for procurement strategy is this: transformer orders need to be initiated significantly earlier in the development cycle than pre-2022 norms suggest—ideally at or before interconnection agreement execution, not at financial close.

Three Implications for Project Developers

1. Reprice your schedule assumptions

   Any project schedule built on pre-2022 interconnection timelines or transformer lead times is carrying unpriced risk. The 2022–2024 period represented a step-change in both variables. Developers and their lenders should be running sensitivity analysis against current market data, not historical norms.

   
   

2. Interconnection queue position is a project asset

   Given withdrawal rates above 75 percent, a confirmed queue position, particularly in a constrained market, carries real option value. Projects that hold active interconnection agreements in Northern Virginia, Phoenix, or Dallas are holding an asset that took years to obtain. Competing projects cannot easily replicate their advantage on a compressed timeline.

   
   

   This value is frequently underrepresented in development-stage project valuations and should be explicitly modelled in capital allocation decisions.

   
   

3. Early-stage risk intelligence is a structural advantage

   Projects that use AI to monitor interconnection queues during early-stage development have a meaningful information advantage. Instead of treating queue status as a static metric reviewed once a quarter, they continuously track changes in queue positions, study revisions, and competing load applications that signal emerging risks.

   
   

   Many of the factors that turn a 28-month interconnection wait into a 48-month delay are visible before they become embedded in the project schedule. But the window to respond is often short.

The data in this report reflects the current shape of the market, not a forecast. For developers with assets in or approaching the queue, interconnection is no longer a background assumption in the model. Interconnection has to be built into the model: shaping timelines, procurement decisions, financing horizons, and the value of the project long before construction begins.