Dive Brief:
- The PJM Interconnection on Friday presented to stakeholders a straw proposal for allowing “shovel ready” projects to jump into an interconnection study process early next year in an effort to meet grid reliability needs.
- PJM intends to give stakeholders a formal proposal early next month for feedback and to file it at the Federal Energy Regulatory Commission for approval in early December, according to Donnie Bielak, PJM director of interconnection planning. The Reliability Resource Initiative has the support of PJM leadership and its board, and the grid operator doesn’t intend to ask for a stakeholder vote on the plan, Bielak said during a special Planning Committee meeting.
- Some stakeholders at the meeting said the plan may face challenges at FERC and in courts for giving preference to certain generating projects at the expense of those that are already in the grid operator’s interconnection process.
Dive Insight:
PJM has been raising concerns in recent years that it faces resource adequacy issues, Bielak said during the meeting Friday. The jump in capacity prices in PJM’s last capacity auction reflected tight supply-demand conditions, he said.
The grid operator is considering three avenues for helping to get generation online more quickly, according to a presentation at the meeting. They include reforming the process for transferring capacity interconnection rights from deactivating power plants to other resources; changing the process for using surplus interconnection capacity; and the Reliability Resource Initiative.
PJM has received requests for a fast-track interconnection process for some generating resources from Ohio and Pennsylvania governors and lawmakers and from the Organization of PJM States Inc., according to Tim Burdis, PJM director of state policy solutions. Also, FERC in September held a workshop exploring possible interconnection reforms, including a discussion on prioritizing interconnection requests, Burdis said at the meeting.
“This is about improving market access to improve the resource adequacy outlook that we have,” Burdis said, noting that PJM’s capacity auctions are being held on a compressed schedule that makes it hard for generators to respond to the auctions’ price signals.
The initiative comes as PJM is clearing out a backlog of interconnection requests that had been put on hold and are being reviewed under a three-track process to transition to a fully reformed interconnection study framework. PJM plans to begin studying new interconnection requests by mid-2026 under its reformed process.
PJM is completing generator interconnection agreements for its roughly 25-GW “fast track” interconnection review and aims to finish its 26-GW Transition Cycle 1 process in mid-2025, according to the presentation. A window for eligible projects to enter the roughly 96-GW Transition Cycle 2 process closes on Dec. 17. TC2 is for projects that filed interconnection requests between October 2020 and September 2021.
PJM’s Reliability Resource Initiative would allow a limited number of projects to enter the TC2 study process through an application window that would open in the first quarter next year, Bielak said.
The PJM staff is considering two options for the criteria that would allow new projects to be studied during the TC2 cycle, according to Bielak. The “firm eligibility” option would be open to projects that have an effective load-carrying capability, or ELCC, of at least 45%. They include thermal resources, energy storage, offshore wind and landfill gas, according to the presentation. Under this approach, PJM would allow 100 projects that could be online by June 2029 to enter the special study process.
The PJM staff is also considering a “formulaic” approach that would rank the top 100 proposals based on their value to the grid, according to Bielak. Criteria for the ranking could include the ELCC rating, capacity size, whether it is an uprate or greenfield project, permitting status and online date, he said.
PJM intends to present a proposal at an Oct. 30 Markets and Reliability Committee meeting and offer a final plan at a Nov. 6 Planning Committee meeting.
During the Friday meeting, stakeholders raised concerns that PJM hasn’t presented an analysis showing that it faces a reliability problem and that its proposal could help solve it. Some stakeholders also said the proposal could affect projects in TC2 and affect cost allocation for paying for network upgrades needed to connect projects to the grid.
The PJM staff explored various options and decided that letting projects into the TC2 study process was the only path for bringing reliability-oriented generation online quickly, according to Bielak.
However, PJM’s proposal isn’t fuel-neutral, according to Ruta Kalvaitis Skučas, a partner at Crowell & Moring who represents renewable energy developers.
“PJM's proposal stacks the deck so clearly in favor of resources with specific attributes, and possibly in certain locations, that it is functionally indistinct from an [integrated resource plan],” Skučas said in an email Monday. “It is not just and reasonable for PJM to act as the gatekeeper for which resources get built, and this type of top-down approach will not result in economic and efficient allocation of resources.”
Also, PJM’s proposal will result in delays for projects in TC2 and beyond, according to Skučas. Projects that have not yet been submitted into a queue will now need to wait at least four to five years for PJM to work through the special queue and TC2 before the grid operator opens up a new cycle, she said.
“As a result, investors investing in currently-queued projects and projects that aren’t in the queue yet have very little sense of when their projects will be processed,” Skučas said. “This uncertainty will hamper investment, and will exacerbate PJM’s potential capacity shortfalls in [delivery year] 29/30 and beyond.”
Editor’s note: this story was updated with comments from Ruta Kalvaitis Skučas, a partner at Crowell & Moring.
