Grid operator PJM reports progress on interconnecting new generation as capacity costs surge

Grid operator PJM Interconnection “agrees with many of the recommendations” for speeding interconnection made in a report by the nonprofit RMI, and has “addressed all of them in one form or another,” said a PJM spokesperson responding to the report.

Nationwide, 2,100 GW of solar and storage awaited transmission interconnection as of year-end 2023, according to Berkeley Lab’s most recent interconnection queue study. PJM serves the nation’s most populous transmission grid region.

RMI’s report focuses on PJM’s upcoming 12-month capacity costs of $16.1 billion set by its latest capacity auction—costs that will be paid by electric utility customers in the PJM region in the 12 months beginning next June. RMI said those annual costs rose from $2.2 billion in PJM’s December 2022 auction—an increase of $13.9 billion.

A separate study commissioned by GridLab has linked PJM’s capacity costs to the amount of renewables and storage waiting to interconnect and reach commercial operation. The study, conducted by Aurora Energy Research, estimated that PJM’s capacity costs next year would have been reduced by $3.5 billion if 10% of the land-based renewable and battery storage projects in PJM’s interconnection queue had been set to reach operation by May 2026.

RMI’s report says PJM’s leadership has indicated that the pace of adding generating projects is “a problem they are eager to fix.” But the report says PJM’s Reliability Resource Initiative last year, and its proposed Expedited Interconnection Track mechanism, are “band-aid fixes that allow certain projects to receive special, expedited treatment.”

For interconnection requests submitted to PJM since 2022, PJM will begin to review the requests in 2026, RMI said.

Four recommendations

RMI recommended that PJM use automation software by providers such as Pearl Street and Nira Energy to complete interconnection studies quickly, potentially in just ten days.

A PJM spokesperson said PJM “has developed internal smart tools to help us process nearly 600 projects between 16 and 21 months” in its “first transition cycle” between 2023 and 2025. “We are actively working with Google and Tapestry on AI tools to further streamline the process and reduce processing times.” PJM first announced its work with Tapestry in April.

“Going forward, beginning with new projects filed in April, studies will take one to two years depending on impact,” the spokesperson said.

PJM, its spokesperson added, now has “approximately 60 GW of generation projects that either have signed interconnection agreements or have been offered agreements and have no more requirements from PJM. We have seen that, to date, they cannot build fast enough to meet the growing demand based on difficulty with permitting their sites, navigating supply chain challenges, or finding suitable financing.”

RMI also recommended that PJM “reform” its energy-only interconnection service, sometimes called “connect and manage” or ERIS, and provide an ERIS interconnection study process that is distinct from the study process for “firm” or NRIS service. RMI claimed that “PJM’s current interconnection process studies ERIS resources much like Network Resource Interconnection Service (NRIS) capacity resources.”

In a nationwide study, Berkeley Lab researchers reported last December that although energy-only ERIS service would be expected to “trigger fewer network upgrades” than NRIS “capacity” service, their analysis of an interconnection dataset of more than 5,000 projects quantitatively supported the hypothesis by former Duke University researcher Tyler Norris “that the distinction between these two service requests in practice is not well defined and is subject to transmission provider business rules that are not always clear.”

PJM’s spokesperson said that ERIS service “is available in PJM,” and provided a link to a PJM manual that describes the service, which PJM calls “energy resource” service.

RMI’s third recommendation is for PJM to “rigorously consider” advanced transmission technologies, a category that can include advanced conductors that increase capacity on existing transmission lines, which can enable more generators to interconnect.

“PJM is already working with multiple companies implementing dynamic line ratings,” said its spokesperson, “and we will continue to work with transmission owners who offer projects featuring advanced technologies.”

In response to RMI’s final recommendation that PJM plan for and build more transmission, the spokesperson said “PJM has approved over $10 billion in transmission projects since 2023 and is currently considering additional major transmission backbone projects for 2026.”

“Wealth transfer”

A complaint filed by Pennsylvania Governor Josh Shapiro with the Federal Energy Regulatory Commission and highlighted in RMI’s report says that PJM’s ratepayers “face potentially the largest unjust wealth transfer in the history of U.S. energy markets” due to PJM’s capacity auctions. The complaint calls for changes to the PJM capacity auction’s price cap.

While not specifically addressing Governor Shapiro’s complaint, the PJM spokesperson said that PJM’s governmental services group works closely with regulators and officials in all the states PJM serves, and has “almost daily interaction” with the Organization of PJM States, whose members are generally appointed by their state’s governor.

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