Proactive planning is lowering the cost barrier for generation developers to connect, which should lead to more generation being built and lower prices for consumers – and make the most efficient use of planned transmission lines and rights of way as supply begins to catch up with growing demand.
PJM just completed the second study phase of its last transition cycle to the new interconnection process, in which it studied 270 projects. Between Phase I and Phase II, the cost of system Network Upgrades necessary to reliably interconnect the projects dropped by $8.7 billion, attributable to broader work performed under PJM’s regular Regional Transmission Expansion Plan (RTEP).
Some of the difference in cost is attributable to the withdrawal of 180 projects from the interconnection process after Phase I; but the bulk of the change is due to the PJM Board’s February approval of transmission projects addressing separate needs in the eastern, southern and western areas of the PJM footprint. Proactive transmission planning that accounts for the reliability needs of the PJM system as a whole ensures that efficient and cost-effective solutions are selected.
This approach enables PJM to replace multiple, scattered upgrades with more efficient and longer-term solutions. In addition, the holistically planned upgrades through the RTEP:
- Prepare the system for forecasted growth in electricity demand.
- Ease the integration of new generation resources needed to serve that new demand.
- Allow for the orderly retirement of old generation by clearing bulk, regional transfer paths between PJM regions.
“The proactive transmission planning we do under traditional cost allocation allows more generation to come online efficiently, lowering costs for everybody,” said Jason Connell, PJM’s Vice President for Planning.
The 270 projects studied in Phase II represent approximately 30 GW of new generation at full output.
Decision Point II, the next 30-day window for developers to review their results and decide whether to proceed to Phase III with additional financial commitments, began June 8.
Thirteen of the projects studied under Phase II are eligible to accelerate to Final Agreement at the end of Decision Point II.
“This is another data point to show the value of transmission to everyone in the system,” Connell said. “It gets generation online; it gets that generation to the to where it’s needed. And, when you have a robust system effectively connecting all this generation and load, you will see lower prices.”
This advanced planning is carried out ahead of PJM’s implementation of FERC Order 1920 on long-term planning, Building for the Future Through Electric Regional Transmission Planning and Cost Allocation. PJM’s plan to comply with Order 1920 is pending before FERC after receiving endorsement by the 13 states within the PJM service area and D.C.