The PJM Interconnection and stakeholders are making headway on the six components outlined by the Board of Managers in its Jan. 16 plan to reliably meet the unprecedented growth in electricity demand from the rise of data centers and other large energy users in the PJM footprint, the grid operator said on Feb. 25.
PJM Interim President & CEO David Mills, speaking at a meeting of the Markets & Reliability Committee, said PJM will continue with a holistic review of PJM’s markets and how they work in combination to support reliability and affordability, with some of the other initiatives designed to serve as transitional measures during a dynamic period in the industry.
Reliability Backstop Procurement
PJM and stakeholders on Feb. 6 held the first in a series of Reliability Backstop Procurement workshops to identify a one-time process to secure new generating capacity independent of existing generation capacity that participates in PJM’s capacity market.
PJM’s goal is to procure a quantity of capacity that begins to markedly improve the current and future shortfall of generation capacity within the PJM service area. This will be combined with a broader review of investment incentives in PJM overall with a strong focus on returning to competitive markets for resource adequacy as soon as possible.
The White House National Energy Dominance Council and governors of all 13 states served by PJM also have urged PJM to undertake such procurement no later than September as part of six principles outlined in their own Jan. 16 letter. State policymakers have also committed to exploring how to allocate costs for the Reliability Backstop to new data center loads that have not otherwise procured capacity or agreed to be curtailable in times of system need.
To execute a backstop procurement this year, PJM would need to file a proposal with the Federal Energy Regulatory Commission by this summer. PJM presented initial concepts and design preferences in the Reliability Backstop Design Working Paper Feb. 18.
PJM’s capacity market, or Reliability Pricing Model, is designed to attract enough generation to meet demand forecasts three years into the future, plus sufficient reserves to properly cover the system’s needs in times of stress, it said.
The most recent capacity auction, held in December for the 2027/2028 Delivery Year, fell short of the reliability requirement, which triggered an investigation.
PJM published its analysis, the 2027/2028 Base Residual Auction Reserve Target Shortfall Report on Feb. 9.
That report states PJM “has entered a critical period, or ‘transition gap,’ where demand growth has temporarily outpaced infrastructure development.”
Auction Price Collar
Another component of the Board’s plan was to consider extending the price collar that has been in place for the past two auctions in an effort to protect consumers from market volatility.
PJM solicited feedback from stakeholders, whose comments filled nearly 200 pages, the majority of which supported extending the price collar for two more auctions.
The Board decided to continue the price collar, and at a meeting of the Members Committee (MC), staff presented Tariff revisions to be filed with FERC enabling the collar to be used in the auctions for delivery years 2028/2029 and 2029/2030.
Expedited Interconnection Track
Also at the Members Committee meeting, PJM reviewed Tariff changes it intends to file with FERC to enable the Expedited Interconnection Track of large-scale resources that would be studied in parallel with the traditional interconnection process.
This stand-alone process would fast-track new, shovel-ready resources and uprates of at least 250 MW of unforced capacity that are supported by a state Primary Siting Authority. At the meeting, some stakeholders asked whether the definition of “Primary Siting Authority” was inclusive enough for all states, whose paradigms for siting can be vary; PJM said its Legal Department would be reviewing that issue.
The Expedited Interconnection Track will be open to all fuel types, including storage.
PJM would choose up to 10 projects annually for two years, with the initiative ending at the end of 2027.
“Connect and Manage” for New Large Loads
At Thursday’s MRC, PJM presented a first read of a Problem Statement and Issue Charge to address large loads that do not bring their own new generation that would be subject to curtailment.
The Issue Charge instructs the development of an emergency procedure that would be used prior to pre-emergency Demand Response by which PJM would allocate aggregate megawatts and coordinate with LSEs and transmission owners to curtail identified large loads.
In a complementary proposal, Exelon presented a Problem Statement and Issue Charge to connect and manage large load flexibility.
Load Forecasting Improvements
At a Feb. 20 meeting, PJM staff reviewed manual changes with stakeholders to gather feedback. The changes add language to address understanding contractual arrangements, ramp rates, and utilization factor.
Further load forecasting improvements discussed included:
• State review: This requires a submitter to provide an opportunity for the Relevant Electric Retail Rate Authority to review a load forecast adjustment before it is submitted to PJM.
• Duplicative requests study: Submitters will be directed to inquire with their subject customers, and indicate to PJM based on their best knowledge, whether any load interconnection requests are duplicative with other such requests made to interconnect large load either within or outside of the PJM region.
• Transparency: Submitters must ensure customers’ nondisclosure agreements include the ability to share all information with PJM related to large loads.
• Additional review: PJM may obtain additional review through an independent third party.
Holistic Market Review
At the Board’s direction, staff has begun a holistic review of PJM’s wholesale power markets.
The purpose of the review would be to recommend reforms that would result in all of PJM’s markets – not just the capacity market – working better in combination to promote resource adequacy and reliability in general.
This effort will include the publication of a white paper at midyear, after which stakeholder collaboration is expected to begin.
