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Clearing the Queue: PJM’s Ambitious Plan to Speed Up the Green Revolution

June 1, 2022
  • PJM has approved a new plan to cut down on its interconnection backlog and allow renewable energy projects to begin construction quicker. 
  • The three-phased approach, detailed below, could cut down on time spent in the interconnection queue by as much as 25%. 
  • While the proposed changes would have significant long-term benefits, the reform plan may cause delays for some projects in the interim. As a result, the renewable energy PPA market in PJM could continue to provide challenges for PPA buyers over the next few years.


The United States has begun a major shift – a revolution in how we power our businesses, homes and even our cars. The public sector – federal, state, and local – has rapidly turned policy toward a future driven by decarbonization via green fuel sources, to varying degrees. In the private sector, companies are creating and publicizing environmental, social and governance (ESG) goals to hold themselves accountable for greenhouse gas emissions up and down their supply chains. 


The result is an explosion in demand for decarbonization projects that can be purchased by public or private entities. These projects typically take the form of either on-site generation projects or power purchase agreements (PPAs). But before construction crews can be deployed and, eventually, the benefits of these projects can be realized, the process that must be followed is a long, complex, and potentially expensive one.


PJM, the country’s largest regional transmission organization (RTO), has seen this phenomenon firsthand with a massive influx of renewable project applications waiting to be approved. Their end-goal is to shorten the path to breaking ground, and now they’ve proposed a reform plan.


The Growth of the Project Backlog in PJM

Since 2017, over 3,700 applications have been submitted to PJM’s interconnection queue; 93% of the application capacity was renewable sources. Each one requires time-intensive and detailed feasibility studies, impact assessments and facilities studies, as well as additional steps involving PJM modeling and financial commitments.


Over that same period, almost 1,000 of those projects (roughly a quarter of the total) have withdrawn or retracted themselves from the queue for various reasons, and at different stages in the project. This means resources wasted on projects that did nothing but add to the already massive interconnection backlog. The rapidly growing additions to that backlog can be seen in the chart below, based on PJM data.

Chart showing increase in PJM renewable project queue additions over time.

In response, last year, PJM kicked off an interconnection process reform initiative. The goal was to rethink the approval process in a way that maximizes the available resources and prioritizes the strongest potential projects. They aimed to streamline each step to help clear the backlog and deploy renewable resources faster. 


The Proposed Three-Phase Approach

In simpler terms, PJM is changing from a first-in-first-out (FIFO) approach to a system in which projects that are closer to execution will get priority in the queue. Land ownership and financial standing will play a much larger part in the prioritization decisions. The hope is that these projects will move more quickly through the process.


The new plan, when (and if) fully implemented, will include three phases: (1) Interconnection Analysis, (2) Infrastructure Coordination, and (3) Operational Readiness and Market Participation. Each contains several requirements to be completed before moving on. The structure of each phase will in some ways resemble the current one in that similar studies and approvals must be completed. 


Project owners will submit new service requests within a set window of time, which PJM will collect and group together into a cycle of projects. These projects will all move through the process together with steps completed simultaneously. 


Prior to the start of each step, a financial commitment must be made to PJM to demonstrate intention to follow through with the project. At the conclusion of phases 1 and 2 (and only at these intervals), applicants can withdrawal from the process and cancel their project. A new cycle will not begin until the third phase of the preceding cycle has begun. The process is demonstrated in the chart below, from a PJM presentation on the changes.


Chart showing proposed three-phased approach.


How Will This Affect the Backlog and Future Project Timelines?

PJM has stated that they expect the new process to cut down on time spent in the interconnection queue by as much as 25%, which would be a massive improvement from the current state in which approximately 1% of all projects have been completed on schedule.


Chart showing total US PPA agreements by GW over time.
While the PJM proposed solution will undoubtedly improve on the current process, there are concerns about the immediate status of projects and what the timelines will be. An application “blackout” period of 2 years has the potential to cause additional delays until the new system is up and running. The already-squeezed PPA market has potential to be impacted as companies could look to fulfill PPAs outside of PJM territory if delays impact delivery times. PPA prices, already high due to a volatile energy market, could spike even higher as a result. The demand for PPAs has increased exponentially since the mid-2010s and expectations are that it will continue unabated as we approach target dates for emissions goals, some of which are as early as 2025.


What’s Next on the Road to Enactment?

The process as described has been presented and approved as of April 28, 2022, and will now move to FERC for consideration. FERC will rule on the process, timing of implementation and, most notably, the delay that will be permitted as the new process is initiated.


There is some debate about whether FERC will approve such a lengthy blackout period, but that remains to be seen. Regardless of their ruling, it is worth noting that FERC has also been considering rules specifically related to relieving interconnection queues across the country, FERC Chairman Richard Glick and has explicitly stated that he hopes it will be “significantly more ambitious than some of the measures that have been taken in the past."