The evolution of the energy industry is upon us, as evidenced by the overwhelming number of renewables requesting to connect to the PJM grid.
To accommodate this unprecedented influx of new generation resources, PJM and its stakeholders are implementing an improved interconnection process this summer. The new process and the transition to the new rules positions the system to maintain reliability while enabling the processing of more than 200,000 MW in new generation projects – mostly renewables – that support part of states’ clean energy goals.
Ken Seiler, Vice President – Planning, discusses how this reform will streamline interconnection requests.
He also points to a concerning new trend – the slow pace of construction – as something that PJM, its stakeholders, government and industry must come together to solve to make sure enough new resources are coming online to replace retiring generators.
Inside Lines: PJM raised concerns about having enough generation to meet demand by 2030 in the latest installment of its Energy Transition in PJM series, Resource Retirements, Replacements and Risks. Will this interconnection process reform address those concerns?
Seiler: We think the transition and the new process will absolutely help by making sure that PJM clears the backlog of projects waiting to interconnect and moving all projects through the PJM planning queue efficiently.
Our new Queue Scope tool also allows developers to better assess the engineering and financial impacts of a project at various locations on their own before they formally enter PJM’s interconnection queue. This should save them, particularly smaller developers, time and money and result in more viable projects to be studied by PJM.
We believe that delays and backlogs will be a thing of the past once we start the transition to the new process July 10. And we have enough projects seeking to join the system to replace retiring generators.
Inside Lines: So, does that mean the problem is solved?
Seiler: The work doesn’t stop once PJM has cleared generation to connect to the grid. The challenge before all of us today is that many projects coming through the queue are not being built because of siting, financing or supply chain issues.
The numbers tell me there’s a problem. Right now we have about 44,000 MW of projects that have completed our study process and should be moving to construction. That number should be about 62,000 MW by year’s end, and likely 100,000 MW by the end of 2025.
Yet in 2022, we saw just 2,000 MW in projects built, and only 700 MW of that were renewables. Only 117 MW of solar, 200 MW of wind and 1,875 MW of natural gas, or a total of 2,192 MW, of projects have come online thus far in 2023.
So, renewable energy projects are moving through the queue, with signed interconnection service agreements and little to nothing in the way of required transmission upgrades, but too many are sitting out there and not moving to construction.
There is no shortage of proposed renewable projects in our New Services Queue. Of about 265,000 MW worth of projects seeking to interconnect in PJM, more than 95% are renewables. Our transition plan should process enough interconnection requests to make up for retiring thermal (coal, oil, gas) generators.
The big question is, will enough new projects actually come online? These projects have to get built at a reasonable pace to replace retiring thermal generators, and right now that pace is not nearly fast enough to replace the capacity we are at risk of losing.
Inside Lines: What can PJM do about that?
Seiler: We are having this conversation with all of our stakeholders right now – from our PJM members to renewable developers, state and federal officials and regulators, and the industry as a whole – because we need to figure this out together.
Inside Lines: That is something we all have an interest in. This new process is the culmination of a joint PJM stakeholder initiative. Can you recap that process?
Seiler: In April 2021, PJM and stakeholders began an intensive exploration of how we could streamline the process of getting requests through the queue more efficiently – helping developers by providing a more predictable, transparent process in terms of timing and costs, and improving the completion rate by weeding out speculative projects.
Stakeholders overwhelmingly supported a proposal that transformed the process from a first-come, first-served method to a first ready, first-served process. We submitted the proposal to the Federal Energy Regulatory Commission last June, and FERC approved it in November. Now we’re preparing to transition to the new rules.
Inside Lines: What’s next in this new process?
Seiler: For the first 60 days – basically July and August – developers will be submitting documentation for their readiness requirements.
Over the subsequent 60 days – September and October – PJM will determine which projects will go into what we’re calling the Fast Track and which will go into Transition Cycle 1.
The transition to the new interconnection process – expected to start in July – has two cycles:
- Cycle 1 should process about 100,000 MW of nameplate capacity, mostly solar and other renewables, by the end of 2025. This includes about 300 projects that are expected to qualify for the Fast Track that will have them exit the study process by the end of 2024.
- Cycle 2 will process another 100,000 MW of cleared projects by the end of 2026.
The 260,000 MW that we expect to study in the next three years include projects that may drop out before the end of the process; we estimate that there could be about 100,000 MW of projects with signed ISAs by the end of 2025 and as many as 184,000 MW by the end of 2026.
Inside Lines: We know that power engineers are a scarce commodity these days. Does PJM have the resources to get this done?
Seiler: The answer is yes, because we understand what’s at stake. We have invested significantly in tools and automation, as well as in staffing both in employees and outside consultants. Since Jan. 1, 2021, PJM has augmented its staff in this area by over 50% and still has openings posted on PJM.com to fill. Since that time, PJM also has increased its outside contractor staff by 30%.
Plugging these new resources into the grid is absolutely essential to the transition to a greener, smarter, more efficient and more interactive system, and one that still keeps the lights on. We believe the solutions are out there; we must all work together to find them.