PJM Interconnection, the operator of the electric grid and wholesale electricity market across 13 states and the District of Columbia, has proposed a fast-track review process for shovel-ready generation projects. Known as the Reliability Resource Initiative (RRI), this proposal aims to address potential near-term reliability concerns on the grid by expediting the interconnection process for 50 pre-qualified projects, promising to bring at least 10 GW of capacity online by 2028. The initiative has ignited a spectrum of responses from various stakeholders, which the Federal Energy Regulatory Commission (FERC) is now tasked with evaluating. The RRI aims to develop criteria focused on reliability, viability, and availability, particularly emphasizing projects with high effective load carrying capability (ELCC) ratings. PJM’s underlying justification for the proposal is driven by concerns about upcoming power plant retirements, the slow integration of intermittent generation sources, and overall load growth which might challenge its reliability targets.
Support for the Reliability Resource Initiative
Supporters of the RRI include state utility regulators, PJM’s market monitor, the PJM Power Providers Group, and several electric utilities such as Dominion Energy, East Kentucky Power Cooperative, Exelon, FirstEnergy, and PPL Electric. These groups argue that the initiative is a necessary step to ensure grid reliability amid significant retirements of traditional power plants and the slow development of newer, often intermittent, generation resources. They emphasize the urgent need for such a measure by pointing out potential shortfalls in PJM’s reserve margin by 2026. Typical power plant retirements, coupled with the sluggish progress of integrating newer renewable sources, have created a precarious situation for the region’s power grid.
One main theme among supporters is the assertion that PJM’s existing interconnection process is too slow to accommodate the pressing reliability needs posed by market dynamics and regulatory directives pushing for cleaner energy. The Organization of PJM States, Inc. (OPSI), representing state utility regulators, supports the RRI as a timely response to current interconnection challenges that prevent new resources from responding to market signals efficiently. Advocates argue that streamlining the interconnection process for these pre-qualified projects is essential to bridge the gap and prevent potential future shortfalls. Additionally, the emphasis on high ELCC ratings is seen as a vital component in ensuring the stability and dependability of the grid amidst ongoing transitions.
Reservations and Conditional Support
The PJM Power Providers Group (P3) backs the proposal, albeit with reservations. P3 considers the RRI justifiable given the near-term grid reliability issues but highlights that the proposal is seen as a one-time measure rather than a permanent solution. They caution that while the initiative addresses immediate concerns, it should not be viewed as a long-term fix for systemic issues within the interconnection process. Similarly, Monitoring Analytics, PJM’s market monitor, supports the initiative but criticizes its criteria, suggesting that it overvalues ELCC ratings instead of a project’s ability to dispatch energy as needed. The criteria, they argue, could unintentionally favor battery projects over more consistently reliable gas-fired plants.
Monitoring Analytics further suggests that selecting projects based solely on total capacity rather than a fixed project number would be more effective. They advocate for a more nuanced approach that takes into account each project’s dispatch capabilities to provide a well-rounded solution to the current reliability concerns. Nonetheless, the support from these groups underscores a recognition of the urgent need to address the imminent reliability challenges, even if the proposed RRI is seen as an imperfect and temporary measure.
Opposition from Renewable Energy Developers and Advocacy Groups
The proposal has met significant opposition from renewable energy developers like Invenergy and advocacy groups such as the Sierra Club and Appalachian Voices, as well as industry groups like the American Council on Renewable Energy (ACORE). Opponents argue that the RRI is discriminatory, favoring thermal projects while undermining projects already in PJM’s queue, potentially delaying overall interconnection processes. They contend that more efficient mechanisms for bringing new capacity online, such as the surplus interconnection service and generator replacement proposals pending at PJM, should be prioritized. Critics believe that these alternatives would provide a more balanced and fair approach to enhancing grid reliability.
Key points raised by the opposition include claims that the proposal violates the filed rate doctrine and the prohibition against retroactive ratemaking by allowing PJM to give preferential treatment to certain projects. Critics argue that such preferential treatment disrupts existing market dynamics and price signals essential for fair competition and market reliability. Invenergy warns that the RRI would create regulatory unpredictability, likely deterring future investments by destabilizing settled expectations for market participants. The potential for delayed projects and unanticipated costs adds another layer of complexity to an already contentious issue.
Concerns Over Reliability and Market Dynamics
Detractors reference data from the North American Electric Reliability Corp. (NERC), which indicates that PJM’s reserve margins are not likely to fall below critical levels until 2034. These groups emphasize that PJM’s reliability concerns are overstated, especially regarding cold weather-related risks that more often impact thermal resources. The Sierra Club and Appalachian Voices conclude that the RRI might distort PJM’s capacity market by unduly influencing market responses and failing to reflect the true availability of resources during critical periods. They argue that such interventions may cause more harm than good, masking the need for more comprehensive and sustainable solutions.
Overall, the divergent views on PJM’s RRI proposal underscore a broader conversation about balancing near-term grid reliability with a fair, transparent, and efficient interconnection process that serves the evolving energy landscape. While some stakeholders prioritize immediate reliability needs justified by current market dysfunctions, others advocate for maintaining rigorous, nondiscriminatory processes that promote competitive fairness and investor certainty in the transition towards more sustainable energy sources. This debate reflects the complexity and interconnectedness of grid management, economic factors, and the ongoing shift towards renewable energy.
FERC’s Challenge in Weighing Competing Perspectives
PJM Interconnection, which manages the electric grid and wholesale electricity market across 13 states and the District of Columbia, has introduced a proposal called the Reliability Resource Initiative (RRI). This fast-track review process is designed for shovel-ready generation projects to address near-term grid reliability issues by accelerating the interconnection of 50 pre-qualified projects. The initiative aims to add at least 10 GW of capacity by 2028. The Federal Energy Regulatory Commission (FERC) is currently evaluating this proposal, which has sparked a range of responses from stakeholders. The RRI will develop criteria centered on reliability, viability, and availability, with a particular focus on projects demonstrating high effective load carrying capability (ELCC) ratings. PJM is motivated by concerns about the upcoming retirement of power plants, the slow pace of integrating intermittent generation sources, and overall load growth—all of which could threaten to meet its reliability targets.
