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The wave of generator interconnection queue reforms hit PJM

Pennsylvania New Jersey Maryland Interconnection (PJM), the grid operator based in Valley Forge, Pennsylvania, is preparing for the queue reform process. At a recent workshop, PJM heard stakeholder concerns about the current process. Like grid operators in the Midwest, we can expect a federal filing before mid-2021 from PJM. Renewable developers are waiting to see if PJM will improve upon current Midwest grid operators’ experience with their queue reform.

Developers are wary of transmission cost allocation for upgrades on the border of PJM and other regional grid operators. Hopefully, PJM can balance renewable developers and PJM transmission owners for the sake of meeting the PJM state’s renewable policy goals.

Renewable Developers want TOs to have a “skin in the game”

In general, renewable developers were consistent across the board in their presentations at the PJM workshop on the delays caused by PJM project managers and PJM Transmission Owners (TOs) regarding interconnection studies and access to detailed transmission planning models.

Some complained about year-long delays in receiving updates on their studies. This concern led to a suggestion echoed by quite a few developers that both PJM and PJM TOs need to have a “skin in the game” with strict PJM guidelines around the model review and study updates. Exelon, one of the presenting PJM TOs, said they are already operating under tighter deadlines.

PJM Transmission Owners don’t want speculative projects

Once an interconnection customer submits a request to interconnect at a specific transmission substation, the role of PJM RTO is limited under the current process. In a project manager role, PJM oversees the study processes and coordinates with the PJM TO, who owns the transmission substation. Some of the PJM TOs complained about PJM’s tight deadlines to turn around the review on their end. Renewable developers’ strategy to hit the PJM queue at multiple substations in the same county to assess transmission upgrade costs was also called out specifically as a leading cause for delays on the TOs end.

With speculative projects in the queue, renewable developers are increasing PJM and PJM TOs work, which leads to delays in model verification and data management. That upfront model delay leads to downstream impacts on generator interconnection agreement negotiation. However, according to one of the developers, there is not much to negotiate.

PJM Workshops Schedule

PJM started down this path of stakeholder workshops given the increase in renewable projects in the PJM queue. This second workshop was a listening session. The first workshop laid out what was at stake, given several clean energy mandates and PJM states’ goals. PJM also indicated at the first workshop that PJM, like any Federal Energy Regulatory Commission (FERC) jurisdictional RTO, must make a FERC filing if tariff changes are needed.

The third workshop (scheduled for the end of Jan 2021) is about PJM reporting back on what they heard are the main issues and possible initial thoughts on the queue reform at PJM.

Evidence is mixed from queue reform at other ISOs because of upgrade costs

Both MISO and SPP saw growth in renewable project requests much sooner than PJM. As a result, both MISO and SPP have new FERC-approved generator interconnection processes. But that does not mean these RTOs have a perfect solution that is working for renewable developers.

There continue to be delays in this new process at MISO, even with a high financial commitment. Some developers are quitting after 500 days in the queue once they see the network upgrade costs, which could be true even with PJM’s new process. Renewable developers need to know those upgrade costs sooner in order to determine the financial viability of their projects.

Technology companies did not present

PJM’s capacity market was in turmoil lately at FERC. Only recently did FERC approve a revised schedule for PJM’s capacity auction. Once initial results from PJM’s capacity auction start to roll out – renewable developers would see their zones’ capacity price. If past PJM capacity prices are any indication, future auctions could increase renewable project requests in certain regions.

Interestingly, technology companies with big renewable ambitions and large cash flow such as Google, Amazon, and Microsoft didn’t present at this PJM workshop but could still submit written comments to PJM by January 6th, 2021. Some of the commenters, given their MISO and SPP process experience, did bring up the cost allocation of network upgrades across the border. Only Earth Justice brought up small renewable developers’ perspective by mentioning the opportunities afforded under FERC Order 2222 on DER Aggregation.

Conclusion

As an RTO, PJM must follow the FERC tariff. Any tariff change takes time to collect stakeholder concerns, put together a PJM proposal, collect stakeholder concerns with the initial PJM proposal, and finally, a PJM FERC filing. All this takes time that some large capital renewable developers may have, but small renewable developers don’t. In this new yet to be defined process, perhaps PJM would take a more active engineering study role without sharing responsibilities with its TOs.

If PJM can strike a balance between small-scale renewable projects and continue to encourage distributed energy resources and provide a transparent queue process for utility-scale developers and PJM TOs – the PJM States would be proud of PJM’s queue reform.