PJM Interconnection, the largest wholesale electricity market and grid operator in the United States, is at a crossroads.
Demand is surging across its footprint, accelerated by the needs of artificial intelligence data centers, and PJM is struggling to keep up- to put it lightly- spurring some rather existential examinations of the grid operator’s processes, markets, and even its governance. It’s clear that changes are needed, but what those changes should be and who should have input- PJM states, for example- is much murkier.
There’s no time to waste. PJM predicts a 6.8 gigawatt (GW) capacity shortfall as soon as 2028, underscoring the need to bring more generation online as soon as possible. Many of the 67 million customers under PJM’s 13-state-plus-Washington-D.C.- purview would agree. They’re seeing electricity prices march upward, in part because recent power auctions got so out of control that PJM, with federal approval, had to cap them.
Interconnection bottlenecks and market barriers have also inhibited deployment of some of the cheapest and often quickest-to-power solutions, renewables, energy storage, and demand-side resources. PJM is trying to make it easier for data center developers to come online with their own power supply- but how should that work?
This episode of the Factor This Policycast, presented in partnership with Advanced Energy United, tackles the PJM energy emergency. How can the nation’s largest grid operator modernize its operations in time to avoid a capacity cliff while simultaneously satisfying a diverse group of stakeholders clamoring for affordability?
Hosted by Factor This content director Paul Gerke, the show features special guests Adam Stern of clean energy developer Clearway Energy and Kimaya Abreu of virtual power plant operator Voltus, alongside Advanced Energy United senior director Jon Gordon, a nationally sought-after PJM expert. The assemblage addresses PJM’s looming capacity shortfall, identifies roadblocks to speed-to-power, and opines on how to mitigate the impacts of large load growth on the system. Also up for debate: PJM’s backstop auction, interconnection queue, and governance.
Listen to the audio version of the podcast:
In This Episode
Interconnection reform
It’s no secret that the largest grid operator in the U.S. has a lot going on all at once, as Advanced Energy United’s Gordon detailed on the Factor This Policycast.
“PJM is getting into a really tight spot in terms of just not having enough power generation to meet soaring demand, and it’s a problem that’s been increasing slowly. And it couldn’t have happened at a worse time because demand is soaring,” he explained.
Planned fossil fuel generator retirements (and orders to keep some open) are slowing PJM’s transition to clean energy, Gordon noted, further exacerbated by the grid operator’s notorious interconnection queue.
“They got overwhelmed with all the clean energy that wanted to connect to the grid, and they were stuck in that queue for years. And meanwhile, demand just kept chugging along, kept growing, and we just kept getting further and further behind,” Gordon recalled. “And now PJM finds itself at a point where they’re getting worried about keeping the lights on.”
Thus, interconnection reform is a focus for many, including utility-scale developers Clearway Energy. PJM has done a lot over the last few years to improve its processes, but core issues remain, argued Stern.
“It starts at the beginning of the process, and this is something that many other RTOs face. And that’s the unfortunate factor that generators who are getting in line into the queue won’t know their full cost until they’re in the queue itself, and so the queue therefore becomes somewhat of a cost discovery tool,” he lamented.
“One thing we would encourage PJM to do, which I think they’re already thinking about, is how can they produce that cost certainty ahead of time, so developers can have confidence in what their costs are going to be.”
Tapping into distributed capacity
Virtual power plant operators don’t have to worry about PJM’s interconnection queue, since they aggregate distributed energy resources (DERs) that aren’t subject to the same treatment as utility-scale endeavors. Companies Voltus coordinate the capabilities of those DERs to make the load side of the grid more flexible, reducing PJM’s capacity crunch quickly. This year, Voltus signed a first-of-its-kind deal with Google providing 100 megawatts (MW) of distributed capacity.
“PJM has really run with that idea in the current IRAS (interim resource adequacy service) processes in terms of developing this ‘bring your own new capacity pathway.’” Abreu pointed out. “The big picture here is that large loads are being incentivized to go to the market and fund solutions, including distributed capacity solutions that allow those loads to carry their own capacity costs while providing the investments the grid needs to meet load growth and hopefully modernize in the process.”
Aggregating DERS has a wide array of perks, including potential transmission benefits, Abreu explained.
“Zooming way out, what are the drivers of cost on the grid? It’s how much infrastructure we’re building out that then needs to be paid for over a long period of time. So if we can use what we already have as efficiently as possible and add less, avoid some of those network upgrades, that has long-term affordability benefits for all ratepayers.”
A new customer class
Another core item PJM is tussling with is how to treat large loads AI data centers. If one particular type of developer is driving up costs and straining the system, should they be treated everyone else, or as something separate?
“I want to emphasize the the unprecedented nature of what PJM is is trying to do here,” Gordon pontificated. “We’ve never isolated a customer class, large load data centers, to be interrupted… Traditionally, all customers are sort of treated the same. If there’s a shortfall in power, there might be rolling blackouts, but it’s not a customer class is singled out to be interrupted. So this is very new, and that’s what PJM has been struggling with.”
While flexible or interruptible service might sound good to the grid operator, data center folks are less thrilled. They’d much prefer firm service and to operate close to 24/7/365.
“Being interrupted for a data center is a big, big problem, and so the speed at which we can bring these resources online really matters to the data centers,” said Gordon. “They want to get their resource needs met as soon as possible and not be subject to this involuntary interruption.”
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Renewableenergyworld.com
