Why won’t PJM let batteries and clean power bolster a stressed-out grid?

PJM, the largest electric grid operator in the U.S., has a major problem — old, dirty power plants are closing down faster than new clean energy resources can replace them.

This mounting grid crisis is already driving up electricity costs for the 65 million people living in PJM’s territory, which stretches from the mid-Atlantic coast to the Great Lakes. By the end of the decade, the situation could become so dire that it threatens the reliability of PJM’s grid.

The blame falls in large part on PJM’s worst-in-the-nation grid-interconnection backlog. New energy projects looking to come online in its region face yearslong wait times before they’re even considered.

To make matters worse, energy companies and climate advocates say PJM is dragging its feet on one straightforward way to work around this logjam. Existing wind and solar farms and fossil-fired power plants often have more grid capacity than they actually need during many hours of the day or seasons of the year. Developers could add batteries or other new energy capacity next to these power plants and make use of that surplus grid space. It wouldn’t eliminate the trouble altogether, but it would make a serious dent, clean energy developers say.

Federal regulators have repeatedly directed grid operators to allow power plant owners to pursue such additions under what’s called ​“surplus interconnection service” (SIS) rules. But PJM has made it next to impossible for power suppliers to do so, even as most other U.S. grid operators have abided.

Critics say PJM’s refusal to follow suit is particularly frustrating: By barring this faster approach, PJM is making its bad grid situation worse. That’s why those critics are asking for federal intervention.

This summer, clean energy industry groups and environmental advocates asked the Federal Energy Regulatory Commission to deny the interconnection reform plan submitted by PJM, which was required by last year’s FERC Order 2023. Among their objections to PJM’s plan is its refusal to change the rules it now uses to deny these fast-track additions.

In July, renewable energy and battery developer EDP Renewables (EDPR) filed a complaint with FERC asking it to overturn PJM’s denial of its plan to add solar to a wind farm in Indiana. It’s just one of the failed surplus interconnection proposals the developer has brought to the grid operator.

Trade groups Advanced Energy United, the American Clean Power Association, and the Solar Energy Industries Association; the environmental group Sierra Club; and fellow clean energy developers Invenergy Solar Development North America and EDF Renewables added their support to EDRP’s complaint.

“We go to PJM and say, ​‘Look at this amazing deal. We already have the capacity. Our transmission system is underutilized during the periods we need it. Let’s connect this,’” David Mindham, EDPR’s director of regulatory and market affairs, said during a September webinar. ​“And they say no.”

Getting more round-the-clock use out of the grid

Mindham’s comments came during a presentation of a report from Gabel Associates, commissioned by the American Council on Renewable Energy (ACORE) and other clean energy industry groups, detailing the potential for using this technique to help PJM meet its growing shortage of electricity generation.

The focus of the presentation was on surplus interconnection service, the technical term for what is a fairly simple concept: Let energy projects use the grid interconnection capacity they already possess to its fullest potential.

Many energy projects don’t use their maximum capacity all 8,760 hours of the year. So-called ​“peaker” plants — fossil-gas-fired power plants that are turned on only during times of high electricity demand — may run just 250 to 1,500 hours per year, for example. And wind and solar farms generate their full capacity only when the wind is blowing or the sun is shining.

That leaves plenty of hours when these projects aren’t using their maximum allowed grid capacity — their ​“interconnection service,” in FERC parlance. Surplus interconnection service can fill in those gaps.

Mike Borgatti, Gabel Associates’ senior vice president of wholesale power and markets services and co-author of the report, offered the example of a 100-megawatt solar farm that could add batteries to store power during the day and send to the grid after the sun goes down.

“At the end of the day, you would end up with 100 megawatts of energy that could be supplied by any combination of solar and storage,” he said. ​“It could be 100 percent storage at some points in time; it could be 100 percent solar at others. It could be, say, 50 megawatts of solar and 50 megawatts of storage. As long as whatever combination of outputs never exceeds 100 megawatts, we’re good to go.”

FERC made clear in 2018’s Order 845 and in last year’s Order 2023 that grid operators must enable surplus interconnection service, Borgatti added. And PJM needs to ​“accelerate new entry from high-capacity-value resources, and we need to do it very quickly.”

PJM has about 180 gigawatts of total generation capacity. Of that, 43 to 58 gigawatts are expected to shut down by 2030, according to a March report from its independent market monitor.

Meanwhile, electricity demand is forecast to rise at a rapid rate, with an estimated 40 gigawatts of new load expected by 2030. Despite these pressures, new power plant construction has stalled. About 160 gigawatts’ worth of projects that are trying to connect to the grid — almost all of them wind, solar, or batteries — are stuck in the interconnection queue.

Borgatti estimated that without changes, only about 6.3 gigawatts of ​“stuff we need” can be built by 2030. That’s not enough to make up for PJM’s growing electricity demand and shrinking power plant fleet.

The upshot, he said, is that PJM faces an impending ​“resource adequacy shortfall” — a gap between forecasted energy supply and peak demand — of nearly 4 gigawatts by 2029, he said.

The underlying barrier is that PJM hasn’t expanded its transmission grid quickly enough to accommodate more energy resources, Borgatti said. That’s a problem bedeviling grid operators across the country, and one FERC has ordered them to solve. But building new transmission lines still takes years to up to a decade.

In the face of this grid-capacity challenge, SIS projects are a neat workaround, Borgatti said. Because they make use of previously approved grid capacity, they can undergo an expedited study process that circumvents the standard interconnection queue. That accelerated timeline takes only 270 days, meaning that these projects could go from proposal to construction ​“within less than a year, theoretically.”

What’s more, batteries added to solar and wind farms can store power when the grid doesn’t need it and discharge it when it’s in short supply — something that’s already happening regularly in California and Texas. Batteries can also help meet fast-rising demand from corporate energy buyers like data center developers for clean energy that matches up with their power usage on an hour-by-hour basis, EDPR’s Mindham said.

Gabel Associates estimated that adding batteries to the estimated 9.7 gigawatts of solar power now expected to be available on PJM in 2026 and 2027 could boost those projects’ effective load-carrying capacity — a measurement of their ability to reliably provide power during times of peak grid need — from just under 2 gigawatts to nearly 8 gigawatts. Resources that can provide such a boost are costly and in short supply on PJM’s grid.

How PJM has closed the door on SIS 

Unfortunately, Borgatti said, PJM’s rules for surplus interconnection service have rendered the technique more or less ​“useless” in the region — a stark contrast to how other grid operators have found ways to make it effective.

It’s always possible that adding new resources to an already approved interconnection could negatively impact the grid, he said. It’s also possible that they might cause delays to other projects seeking interconnection, which wouldn’t be fair to developers that have been waiting for years to get online.

But other grid operators have figured out ways to work through these challenges, Borgatti said. He cited the examples of Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP), which operate grids across the U.S. Midwest.

MISO’s SIS process allows project owners to conduct studies to determine whether the proposed additions would trigger the need for grid upgrades or interfere with projects awaiting interconnection. If the answer is yes, they can be denied. But if the answer is no, ​“that project can go forward,” he said.

SPP has a similar construct that, while a bit more time-consuming, allows the necessary studies to be completed within ​“a year or two,” Borgatti said. All in all, he described those approaches as ​“the right balance of making sure that there is the ability for conventional interconnection projects to move forward and making sure the grid stays reliable, but also accelerating deployment.”

PJM’s approach, by contrast, essentially presumes that any surplus interconnection request will have negative consequences for the grid or for the projects waiting in the queue, he said. It then uses that presumption to justify denying them without even studying the potential consequences, he said.

“They’ve adopted a standard that says, ​‘If it’s possible that interconnecting something could impact another project in the queue or trigger a transmission upgrade … at some hypothetical point in the future, we’re not going to allow it,’” he said.

EDPR’s complaint to FERC documented how PJM applied this seemingly capricious approach to deny the addition of 200 megawatts of solar to the developer’s 200-megawatt Meadow Lake 1 wind farm in Indiana. EDPR submitted its initial request in August 2023, making clear that it would operate the wind and solar farms to keep total output to the grid within the site’s existing 200-megawatt limit.

In March 2024, PJM asked the developer if it intended to operate the existing wind farm and the new solar installation simultaneously. When EDPR replied that it did, PJM took less than six hours to reject the request on the grounds that this ​“would produce material impacts” to the transmission system. PJM did not offer to conduct a study to determine whether that impact would in fact be a problem.

Denying proposals in this way defies FERC’s instructions to grid operators, EDPR argued in its complaint.

In an August filing with FERC, PJM disputed the validity of EDPR’s complaint, noting that FERC approved its current SIS methods in 2020. It also disputed the idea that the technique could be helpful in meeting future grid needs, stating that it ​“does nothing to respond to the need for additional capacity to meet future demand.”

PJM’s statements to FERC indicate that it doesn’t see its current approach to surplus interconnection service as a problem. In its May filing laying out its plan to meet FERC’s latest interconnection mandates, PJM stated that ​“few developers have requested” surplus interconnection service and asked to be exempted from offering ​“a service no one in PJM is requesting.”

EDPR pushed back against that characterization in its complaint to FERC, noting that it and other developers have been trying for years to propose changes to PJM’s approach. ​“There is no puzzle as to why Surplus Interconnection Service is not widespread in PJM,” the company wrote. ​“PJM has adopted processes that prevent its use.”

Melissa Alfano, senior director of energy markets and counsel for the Solar Energy Industries Association, said during the September webinar that the lack of requests from developers is a direct result of PJM’s approach of preemptively denying those few that have been made. Planning out such proposals takes time and costs money, and ​“there’s no incentive to put up that money just to get that request rejected,” she said.

Looking for solutions to SIS

As developers and environmental groups push for federal intervention into PJM’s surplus interconnection rules, some experts see a glimmer of hope in another pathway to reform: PJM might be open to working directly with stakeholders on the issue via a separate wonky grid process.

PJM is in the midst of a ​“generator replacement process” to study alternatives to paying money-losing coal plants to stay open for years until new transmission lines or power plants can be built to backfill the reliability problems created by their closures. Batteries could be one such option, as underscored by studies evaluating the Brandon Shores plant in Maryland, a PJM territory, said Mike Jacobs, senior energy analyst for the Union of Concerned Scientists.

PJM had initially proposed that it should apply its current SIS approach to these generator replacement studies, ​“which would render that useless too,” Borgatti said. In practice, this would likely create a dynamic similar to how PJM handles SIS requests today: The grid operator might simply cast aside useful alternatives (namely batteries) to old, uneconomic coal plants without actually studying them.

More recently, however, the grid operator has ​“signaled some receptivity” to performing studies that ​“evaluate actual impacts,” he said. If PJM is willing to embrace a more thoughtful approach to generator replacement, the logic goes, it might be willing to do the same on SIS.

Borgatti and Mindham both said they’d prefer to see this happen — for PJM to use its ongoing generator replacement work to engage with its stakeholders on changes to its SIS approach.

EDPR’s complaint to FERC ​“has some advantages,” Mindham said, as it brings the matter directly to the federal agency to resolve. ​“But it has a pretty big disadvantage, and that is there’s no statutory timeline for FERC to rule.”

It is also possible that EDPR and PJM could resolve this dispute without FERC’s intervention. Last week, EDPR and PJM filed a joint motion with FERC to postpone consideration of the complaint to give them time to consider settlement discussions.

Meanwhile, FERC may choose to deny PJM’s request to eliminate surplus interconnection altogether as part of its plan to comply with Order 2023. But it could take a year or more of back-and-forth between FERC and grid operators for the agency’s orders to yield concrete changes in how grid operators set and administer rules to comply with them.

Mindham said he hopes PJM will respond to the repeated demands from energy developers and other stakeholders ​“as a clear signal that they should do something quickly in the stakeholder process and come up with a solution that works for everyone. Because I’m not sure that FERC rules on a timeline that really helps people.”