Nearly 2,000 MW — almost all solar — has come online in the PJM Interconnection’s footprint this year, down from close to 5,000 MW in 2023, according to a presentation by the grid operator to its Markets and Reliability Committee on Wednesday.
Because of solar’s relatively low “effective load carrying capability” — a measure of its value when the grid is stressed — the solar added this year only represents a few hundred megawatts of capacity, “which is nowhere near where we need to be,” Paul McGlynn, PJM vice president of planning, said during the meeting.
PJM is concerned that proposed projects are clearing the grid operator’s interconnection study process but not getting built, according to McGlynn.
Nearly 450 projects totaling about 37.2 GW in nameplate capacity have signed interconnection agreements but haven’t been built, according to the presentation. Of that total, 8.6 GW is under construction, including 2.4 GW that is partly online. An additional 16.5 GW is in the engineering and procurement stage and 12.1 GW is “suspended,” meaning the transmission owner where the project will be sited isn’t working on the interconnection, but other project development may be ongoing, according to Jason Shoemaker, PJM senior manager for interconnection projects.
Projects with interconnection agreements in PJM include 23.4 GW of solar, 5.3 GW of natural gas, 3 GW of offshore wind, 2.7 GW of onshore wind and 1.9 GW of storage.
Project developers face a range of challenges such as long-lead time to procure equipment, local opposition and financing obstacles, according to PJM. About 12% of the solar and wind projects that have cleared PJM’s interconnection queue are slated to be built in counties with limits on new projects, according to Shoemaker.
Project developers can seek extensions of interconnection agreement milestones — such as permitting, equipment delivery and substantial site work — if they are diligently trying to move their project forward but are encountering difficulties outside of their control, Shoemaker said. PJM can cancel interconnection agreements if the project developer fails to meet the milestones.
In the last 12 months, PJM received 150 milestone extension requests, and PJM typically grants about 75% of them, he said.
PJM is in the middle of a transition period for its interconnection queue after major reforms were approved by the Federal Energy Regulatory Commission in 2022. PJM expects to process about 72 GW of new resources in its queue by the end of next year, according to McGlynn.
“While PJM continues to execute against the [interconnection] transition plan, concerns are growing that the construction build-out from the volume of applications has not yet materialized,” the grid operator said in the presentation.
PJM offers ‘misleading’ message
VC Renewables, a Vitol unit, asked for PJM to make the presentation in response to the grid operator’s assertion in April, and repeated at the committee meeting, that 38 GW of generation with interconnection agreements are not “moving to construction,” Jason Barker, the company’s vice president of regulatory affairs, said at the meeting.
“I concluded that PJM’s messaging is misleading, as their data shows that over 8 GW are literally ‘under construction’ and over 16 GW are undertaking permitting and equipment procurement, as anticipated,” Barker said in an email.
Also, the 38 GW in nameplate capacity that has interconnection agreements represents about 22 GW in effective capacity, including about 3.2 GW that is under construction, he said.
Project developers used to enter PJM’s interconnection queue and advance with the needed permitting at the same time, but with the roughly five-year queue backlog, they now wait to move on permitting until after an interconnection agreement is in hand, according to Barker.
PJM’s presentation shows that project developers are working to advance their projects, even if they haven’t come online yet, according to Barker.
“I can assure you, at least from this firm, we very much want to bring our projects to completion and are working very diligently in doing so,” Barker said. “We don't want our development activity and those of all developers, whether they be renewable, thermal or otherwise, to be lost in PJM’s messaging.”
What should be done? PJM’s Asthana asks
The discussion about the pace of bringing power supplies online in PJM comes as electricity demand is growing and power plant owners have retired some generation in PJM’s footprint. In part, the change in PJM’s demand-supply balance was reflected in the grid operator’s capacity auction in July when prices for the majority of its footprint jumped to nearly $270/MW-day, up from almost $29/MW-day in the last auction.
The question isn’t who is to blame for the slow pace of bringing generation online in PJM, but what should be done about it, according to Manu Asthana, PJM president and CEO. Capacity prices jumped in the last capacity auction and the cap on prices for the next one in December is sharply higher, which is raising affordability concerns, he said at the meeting.
PJM’s pending load forecast shows an increase in load growth, adding to the pressure, according to Asthana.
In addition, last week’s deal between Constellation Energy and Microsoft indicates upward pressure on power prices, he said. Constellation plans to restart its 835-MW Three Mile Island unit 1 and sell all the energy, capacity and clean energy attributes from the nuclear unit near Harrisburg, Pennsylvania, to Microsoft for the tech company’s data centers across PJM’s Mid-Atlantic and Midwest footprint.
Morgan Stanley analysts estimate Constellation will sell power to Microsoft for $98/MWh compared to market power prices of around $50/MWh. Constellation also expects the unit’s output will receive a roughly $30/MWh clean energy tax credit.
PJM will need all types of power supplies, but the price for them must be acceptable to consumers, Asthana said.
“It’s a generational challenge and we’re going to have to fix it together,” he said.
