FERC approves PJM’s ‘first-ready, first-served’ interconnection reform plan, steps to clear backlog

Dive Brief:

The PJM Interconnection will move to a “first-ready, first-served” interconnection review process that groups proposals and assigns upgrade costs in clusters under a plan approved by the Federal Energy Regulatory Commission.
While PJM clears out its pending backlog of interconnection requests, the grid operator won’t review new interconnection requests until early 2026, according to FERC’s decision released Tuesday.
FERC Commissioner Allison Clements, who said she reluctantly voted in favor of PJM’s plan, called for additional measures to improve the interconnection process, including better regional transmission planning.

Dive Insight:

Like other grid operators, PJM has seen a surge of renewable energy and energy storage projects filling interconnection applications so they can connect to the grid, which has led to delays in a study process that was largely designed for reviewing interconnection requests from conventional power plants.

During the interconnection review, PJM studies how proposed projects would affect the grid, determines what grid upgrades are needed to bring them online, and allocates those costs. Typically, project developers cannot finance their facilities until they have obtained an interconnection agreement at the end of the review process.

PJM had 2,700 projects in its interconnection queue, representing more than 250 GW, as of early May, the grid operator said in its application to FERC. More than 95% of the proposed capacity is wind, solar and storage facilities, or hybrids of solar or wind with batteries, according to PJM, which operates the grid and wholesale electricity markets in 13 Mid-Atlantic and Midwestern states, plus the District of Columbia.

The FERC-approved plan includes a transition phase that will prioritize about half the pending projects, including a “fast-lane” process for projects to help clear the existing backlog, according to PJM. The grid operator expects to start the transition phase early next year.

In its decision, FERC said PJM’s reforms should provide the grid operator with the ability to reduce its interconnection backlog more quickly than possible under its current rules and will speed the review of new interconnection requests.

FERC directed PJM to make two compliance filings, including adding language to its tariff confirming that only new service requests with no network upgrade cost allocation and no need for further studies are eligible for accelerated review.

“This order is great news for the many stakeholders who worked on and supported this proposal, which will establish a new process to help move the energy transition forward,” Ken Seiler, PJM vice president of planning, said in a statement.

Under the approved plan, PJM will impose new requirements, such as “readiness deposits,” that aim to weed out more speculative projects.

Those requirements ramp up through three “decision points,” under which a developer must decide if it wants to continue moving through PJM’s study process. At the third decision point, PJM will require project developers to show they have 100% control of the site where they plan to build their facility.

That requirement sparked concern from Clements, who said it may facilitate anti-competitive conduct by interconnecting transmission owners.

“I am concerned that a generation-owning transmission owner could utilize the facilities study process to direct a late-stage route change, which when coupled with PJM’s 100% site control requirement, could lead an otherwise viable project to withdraw from the queue,” she said.

Additional steps, such as better transmission planning, will be essential complements to PJM’s plan, according to Clements.

“Forward-looking planning of transmission infrastructure with significant regional benefits will greatly reduce the strain on the interconnection process,” Clements said. “A well-planned transmission system would yield a simpler study process for PJM, and would facilitate an interconnection process less likely to trigger disproportionately high-cost network upgrades, spurring queue withdrawals and further delays.”

The need for more interconnection reforms will be heightened if the PJM region fails to coalesce on a portfolio of beneficial projects that significantly reduce the strain on the interconnection process, she said.

“I encourage PJM to prioritize working with the states in its region to come together around a shared vision to facilitate the construction of needed transmission projects in a manner that all can agree is fair, such that it can make significant progress toward building necessary regional transmission infrastructure as we have recently seen in other regions,” Clements said.

Tom Rutigliano, senior advocate at the Natural Resources Defense Council’s Sustainable FERC Project, echoed Clements’ concerns.

“The new rules are an improvement, but won’t fix interconnection problems by themselves,” Rutigliano said Thursday. “Even if these reforms work exactly as intended, PJM’s interconnection queue will continue to delay state renewable goals and other emission-reduction targets until FERC, PJM, and states work together to build the transmission we need.”