New FERC Co-Location Order Has Potential to Improve Electricity Affordability and Reliability for Consumers

WASHINGTON, DC – As large energy load users, including data centers, seek faster connection to the power grid of PJM Interconnection, co-locating with power plants or committing to flexible operations are promising compromises. Today, the Federal Energy Regulatory Commission (FERC) issued a new order that has the potential to create much-welcome regulatory certainty for large load customers as well as some safeguards to ensure that co-location won’t negatively impact the electric rates and system reliability of all other customers.

Of particular note, FERC’s Order directs PJM to create additional pathways for co-located load and generation to connect to its system, and a way for large energy users to only take power from the system occasionally. These requirements could improve speed-to-power and grid flexibility, protecting consumers from price increases while better ensuring grid reliability. Advanced Energy United looks forward to closely reviewing and engaging on finalization and implementation of the new Order. Importantly, the Commission also acknowledged when issuing the Order that clarifying co-location arrangements is only part of the solution to maintain reliability and affordability in light of load growth. Advanced Energy United continues to urge further reforms to generator interconnection, market rules, and demand response and distributed energy resource participation to take full advantage of the contributions of advanced energy technologies. 

“At a time when demand for energy from new large loads is outpacing the ability of the market alone to reliably and affordably serve these loads, PJM’s current rules lack clarity about ways new large loads can bring their own generation, and this FERC Order should move us closer to fixing these flaws,” said Caitlin Marquis, Managing Director at Advanced Energy United. “Advanced energy solutions like battery storage, solar, wind, demand response, and distributed energy resources are well-suited to reliability and affordably serve new large loads in PJM and across the country. The advanced energy industry will welcome new rules within PJM that empower large load customers to bring their own new clean energy to the system, benefiting all energy users.” 

The newly announced FERC Order comes just hours after PJM Interconnection said that its latest capacity auction had failed to secure enough new generation to meet growing demand. The 6.6 GW shortfall shrinks PJM’s reserve margin below levels needed for reliability and shows PJM continues to struggle to bring new clean generation on-line in a timely fashion.

“The capacity auction shortfall, along with this new FERC Order, should be seen as a warning to PJM that more system-wide issues still need attention, including transmission build-out, generator interconnection, capacity reforms, and better integration of demand and distributed energy resources,” said Jon Gordon, Director at Advanced Energy United. “PJM needs to heed FERC’s message that grid flexibility enables speed, affordability, and reliability. As PJM proposes new rules to enable fast-tracking large load interconnections, it should prioritize the advanced energy technologies that are quickest to build and enable flexibility.”