By Alexis Laundry

 

Last week, PJM Interconnection’s Planning Committee endorsed a transition plan that included a two-year delay on reviewing the majority of proposed projects in their interconnection request queue.[1] PJM is the nation’s largest regional grid operator, controlling electricity transmission activities across all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the District of Columbia.[2] Over the past several years, PJM has seen a drastic increase in interconnection requests for new generation projects, most from renewable sources like solar and wind, as demand for green electricity has grown in response to widespread passage of state Renewable Portfolio Standards and net-zero carbon goals.[3] The trend is expected to continue as the nation works towards meeting the Biden administration’s goal of a carbon-free electricity sector by 2035.[4] This increase in demand for interconnection approval has created a backlog in the queue, mostly due to the fact that the approval system is not meant to handle this volume of applications, which is delaying projects from being built by months and even years. It is a problem that must be resolved soon if the U.S. is going to meet the transition goals necessary to reduce carbon-emissions and mitigate the effects of climate change.

PJM is a regional transmission organization (RTO), which is a non-profit entity that coordinates the movement of electricity throughout a specific geographic region.[5] RTOs are responsible for operating the wholesale electricity market in their region and managing the high-voltage transmission grid to ensure reliable access to electricity for users.[6] This includes approving requests from new generation facilitates to connect into that transition network, which allows the electricity they produce to be delivered to end-users. The approval system was originally designed to accommodate the relatively few and far between requests for large-scale coal or natural gas plants to interconnect.[7] This process is slow and thorough, which worked fine when only a few big projects needed to be approved each year. However, the recent proliferation of smaller scale renewable energy projects being proposed across the region has overwhelmed the system. PJM recognized this problem and began taking steps late last year to create a plan for transitioning to a new approval process. The organization created the Interconnection Process Reform Task Force, which met for the first time in April 2021.[8] This task force created the proposed transition plan that was officially endorsed by the Planning Committee last week.[9] The transition plan creates a “fast track” approval process for projects currently in the queue that are the most ready for implementation, which amounts to about 450 of the ~2,500 projects currently languishing in the queue.[10] Another 1,200 would be prioritized for review starting in 2024.[11] The plan also includes a pause on new applications until 2025, which means many approvals wouldn’t be complete until 2027.[12] The ultimate result is a two-year pause on reviewing the majority of projects currently in the queue, which will delay getting over 100,000 MW of carbon-free electricity onto the grid by at least that long.[13] The plan is just a proposal at this time and still needs to be reviewed by additional PJM committees and ultimately approved by FERC, the federal agency responsible for regulating RTOs.[14] PJM plans to file with FERC in May and begin implementation late this year or early next year.[15]

What does this all mean for our nation’s climate action goals? On the one hand, many stakeholders are very supportive of the plan.[16] Representatives from major trade groups and public interest organizations have spoken in favor of the changes, seeing them as necessary and timely.[17] It’s obvious that something must be done to address the backlog for renewable projects, which is an issue replicated at many RTOs across the country. PJM is largely considered a bellwether for how RTOs operate, so approval of this plan would likely make it a model for other regions.[18] On the other hand, the two-year delay and new prioritization process will put many renewable project developers into tough financial positions, forcing them to delay work and ultimately revenue on projects as they await approval.[19] The delay will also have consequences on states’ ability to meet their renewable portfolio goals, many of which are statutorily mandated, as well as national goals. It seems unlikely that the U.S. will be able to get to 100% carbon-free electricity in just 13 years if new projects can’t come online quickly. At the end of the day, it will all depend on whether FERC approves this plan and how other regions respond to the same problem. Hopefully, other solutions will also arise that can help maintain the momentum for renewable development that we’ve seen over the past few years.

 

[1] PJM’s Planning Committee Widely Endorses PJM Transition Plan to New Interconnection Process, PJM Inside Lines (Feb. 9, 2022), https://insidelines.pjm.com/pjms-planning-committee-widely-endorses-pjm-transition-plan-to-new-interconnection-process/ [hereinafter PJM Transition Plan].

[2] Who We Are, PJM, https://www.pjm.com/about-pjm/who-we-are (last visited Feb. 11, 2022).

[3]  PJM Transition Plan, supra note 1.

[4] Exec. Order 14,008, 86 Fed. Reg. 7,619 (2021).

[5] Who We Are, supra note 2.

[6] Id.

[7] James Bruggers, Overwhelmed by Solar Projects, the Nation’s Largest Grid Operator Seeks a Two-Year Pause on Approvals, Inside Climate News (Feb. 2, 2022), https://insideclimatenews.org/news/02022022/pjm-solar-backlog-eastern-power-grid/?utm_source=Energy+News+Network+daily+email+digests&utm_campaign=715c70fbdc-EMAIL_CAMPAIGN_2020_05_11_11_36_COPY_01&utm_medium=email&utm_term=0_724b1f01f5-715c70fbdc-89303368.

[8] PJM Transition Plan, supra note 1.

[9] Id.

[10] Id.

[11] Bruggers, supra note 7.

[12] Id.

[13] PJM Transition Plan, supra note 1.

[14] Id.

[15] Id.

[16] Id. (stating that the plan was approved by 91% of the committee and was preferred over several alternatives).

[17] Bruggers, supra note 7.

[18] Id.

[19] Id.

Image source: https://www.rtoinsider.com/wp-content/uploads/PJM-Backbone-Transmission-System-PJM-web.jpg