The PJM Interconnection on Friday asked the Federal Energy Regulatory Commission to approve two key elements of its emerging plan for ensuring it has enough power supplies to meet growing loads, driven mainly by data centers.
Under a proposed “expedited interconnection track” process, PJM would consider up to 10 interconnection requests a year on a fast-track basis for new or uprated capacity resources of at least 250 MW.
The proposals must be backed by a pledge from a state’s “primary siting authority” that it supports expediting the project so it can come online within three years, according to the filing.
“PJM’s EIT is an efficient, fair, and resource-neutral process that will allow for the improvement of the efficiency, reliability, and/or cost effectiveness of interconnecting a limited group of advanced, high impact projects through a well-defined process while not affecting the main [interconnection] Cycle Process,” PJM said.
PJM expects it would take about 10 months between the filing of an expedited interconnection request and issuing a generation interconnection agreement. PJM asked FERC to approve the proposal by May 28 so it could take effect on July 31.
If approved, the program would sunset at the end of 2027.
Meanwhile, PJM also proposed extending a price collar on the grid operator’s next two capacity auctions.
Under the proposal, PJM would set a price cap of about $325/MW-day on unforced capacity and a price floor of about $175/MW-day of UCAP for the 2028/29 and 2029/30 delivery year auctions. The next auction is set to start on June 30. PJM asked FERC to approve its request by April 28.
Without the proposed changes, the price cap for the next base residual auction will be about $550/MW-day, according to the filing.
PJM’s last two capacity auctions included a price collar and earlier this year the White House’s National Energy Dominance Council and all of the governors of PJM states called for it to be extended. The price cap in those auctions reduced capacity costs by $13.1 billion, according to a report from PJM’s market monitor.
“This temporary proposal is designed to mitigate price volatility in the market until PJM, working with independent consultants and stakeholders, completes the upcoming reliability backstop procurement and holistic market reforms,” PJM said.
PJM is working with stakeholders to develop a reliability backstop auction to buy long-term capacity “before the end of this year,” but with a September target date, the grid operator noted.
That auction could affect the ability of PJM’s capacity auctions to draw new power supplies to its market, according to the grid operator.
“Given that PJM is planning to proceed with a backstop procurement that is likely to commit resources on a multi-year basis, it is questionable whether there would be appreciable new entry that is offered in the upcoming Base Residual Auctions that will be conducted this year,” PJM said. “Therefore, higher prices intended to stimulate new entry may not be necessary and could increase the risk of price volatility absent extending the existing price collar for two additional Delivery Years.”
Because of a hiatus earlier this decade in its capacity auctions, PJM is holding them six months apart to get back onto its typical schedule of annual auctions that buy capacity three years in advance.
After its next two auctions, PJM will be back on schedule. However, the schedule for the 2028/29 and 2029/30 delivery years have forward periods of 23 months and 29 months, respectively, the grid operator noted. That may make it challenging for capacity market sellers to develop new generation resources that could be in service by the start of those delivery years, PJM said.
Even so, PJM said it expects new supply to respond to the price signals sent in the auctions with short lead-time resources like uprates, demand resources, reactivations and acceleration of resources that have cleared or are in late stages of the interconnection queue.
