Advanced Energy Perspectives

The PJM electricity market faces a capacity shortfall, due to rising demand and a slow and inefficient interconnection process. As millions of people across the region face rate hikes due to this capacity shortfall, the states that are part of the PJM market are seeking new ways to take action to help keep power affordable and reliable. 

In the face of these challenges, some stakeholders are seeking to attract more natural gas power plants to PJM states. However, natural gas power plants are not the solution to this crunch. (One reason for this is the gas turbine supply chain, which is currently stretched to a breaking point: Gas turbines are being ordered up to eight years in advance due to record demand.) State lawmakers and regulators need to expand capacity quickly, and they need to tap non-gas solutions to do so. 

One of the biggest challenges facing our nation’s economic growth – and one of the largest threats to consumer energy costs and the reliability of our electricity system – is the ability to quickly connect new, large-scale energy resources to the transmission grid.

There’s now roughly 2,600 GW worth of energy sources stuck waiting in line to connect to the power grid (more than double the capacity of the current electricity system), held back by an antiquated way of studying and approving transmission grid upgrades. This process, known as ‘generator interconnection,’ was designed for an increasingly bygone era. In an era of more dynamic, more cost-effective, more distributed advanced energy resources, grid operators and electric utilities need a new approach for bringing new energy resources online. 

FERC’s landmark transmission planning order – Order No. 1920 – will require changes to how America builds up its transmission system, the backbone of our electric grid. Fundamental to this new process will be a formalized role for states in deciding how transmission lines are planned and paid for. The ruling has the potential to transform our system by encouraging cooperation and prioritizing system reliability and affordability. Getting it right will require a new approach by many stakeholders, and will especially require robust state engagement. 

When FERC issued Order 2023 requiring an overhaul to interconnection processes, clean energy advocates lauded it as a crucial first step in addressing overdue reforms. Inefficient interconnection processes for integrating new clean energy resources onto the grid present arguably the biggest current bottleneck in the energy transition, threatening both grid reliability, affordability, and states’ abilities to meet their climate and energy policy requirements. While a lot of work to fully rectify interconnection in New England will remain even after Order 2023 reforms are implemented, compliance with this Order marks a crucial milestone towards a more efficient, equitable, and expedient interconnection process. 

The recently finalized Federal Energy Regulatory Commission (FERC) transmission planning and cost allocation rule—known as Order 1920—represents a pivotal moment in the regulatory landscape of energy infrastructure in the United States, which we expect will launch the nation towards a more holistic planning approach for our country’s transmission grid.