PJM files queue reforms with FERC as agency mulls its own sweeping interconnection changes

A complete rethinking of PJM’s approach to studying and approving new projects is now one step closer to becoming a reality.

The regional transmission operator on June 14 filed its queue reforms with the Federal Energy Regulatory Commission in an attempt to relieve a lengthy logjam of interconnection requests and prevent a similar pile-up in the future. FERC, on June 16, published its own Notice of Proposed Rule Change (NOPR) aimed at combating the same issues nationwide.

The grid operator has requested the federal regulators issue a decision on the queue reforms — which center around a plan to switch from a serial “first-come, first-served” approach to a cluster “first-ready, first-served” approach — by October 3. That would make most of the reforms effective by January 3, 2023.

Nautilus Solar is “generally supportive” of the reforms, including the cluster study approach and cost sharing, the company’s Executive Director of Public Policy, Scott Risley, told NPM. But the interconnection pause, planned to allow PJM to play catch-up and prioritize shovel-ready projects, continues to grow “longer and more impactful,” he said.

PJM’s filing includes a graphic outlining the transition, showing it expects to process interconnection applications filed after October 1 of last year starting in 1Q26.

“This will make PJM projects which are currently in the queue more valuable, but they won’t be able to move forward until 2026,” Risley said. “With PJM on this kind of hiatus, the only projects which will be able to move forward between now and 2026 in the PJM footprint will be distribution-level interconnected projects such as community solar.”

FERC could wait and address PJM’s woes in more broad reforms, like those in the NOPR filing, according to Risley.

“The length of this hiatus might give FERC pause and even cause it to postpone PJM’s interconnection reforms until a broader set of interconnection reforms can be developed through a broader stakeholder process available in some currently open FERC dockets,” he said.

The interconnection backlog is a problem years in the making, and is not isolated to PJM. In addition to an outdated process designed to study (fewer, larger) traditional generation projects, PJM has also had to contend with a ballooning amount of projects looking to produce electricity in the Mid-Atlantic. A stakeholder process was kicked off in fall 2020, as PJM saw its targeted and incremental reforms were having a diminishing impact on the growing issue.

The grid operator in 2021 saw nearly triple the amount of New Service Requests as in 2018, according to the filing.

Another aspect of PJM’s proposed reforms, the implementation of “decision points” at which projects seeking interconnection services would have to submit “readiness deposits,” is aimed at supporting mature projects and incentivizing those with more speculative queue positions to drop out of the queue. The RTO is also proposing a transition period that would pause new queue entries and expedite projects nearly ready to connect to the grid.

There is a cumulative effect at play, according to the filing. If a project withdraws, other projects lower in the queue must be restudied to “ensure the proper upgrades are identified.” Under the current process, PJM does an Initial Feasibility Study and then a System Impact Study, and “if necessary,” a Facilities Study.

“Historically, as many as 33 percent of projects withdrew from the queue after the Feasibility Study, while at present, only about 5 percent of projects withdraw that early,” the filing reads, “this leaves many projects languishing in the queue only to drop out at a rate that totals 80 percent of the total number of initial queue applications.”

FERC chairman Richard Glick on Thursday pointed to the “unprecedented demand for new resources” seeking access to the grid, and some 1.4 GW of generation and storage requests awaiting interconnection at the end of 2021, in the release of the commission’s NOPR. It all amounts to an air of uncertainty around costs and timing for developers.

Proposed changes include a mandatory switch to the clustered “first-ready, first-served” approach, as well as “more stringent financial commitments and readiness requirements” aimed at reducing speculative queue positions. In addition to other reforms, strict penalties could be issued to transmission providers that miss study deadlines. Comments are due within 100 days of the filing.

The basic lack of transmission capacity is at the core of the problem and could be helped by the transmission investment tax credit in the current reconciliation budget bill’s energy package, according to Grid Strategies President Rob Gramlich.

“There are many region-specific details in the interconnection processes, so regional implementation will be needed in each region with many region-specific factors. It is good that PJM started before the NOPR,” Gramlich told NPM. “The root cause of the logjams is insufficient grid capacity, so both PJM and FERC need to focus on the transmission planning and cost allocation improvements that are in FERC’s transmission planning NOPR first and foremost.”

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