In the months since PJM’s capacity auction prices cleared at record-high prices last summer, the RTO’s efforts to address resource adequacy and interconnection problems have been in the national spotlight.
It’s not just data center load growth making things challenging in PJM. The region is bogged down by a clogged interconnection queue, supply chain shortages for gas turbines, and complex state-level siting ordinances. Without substantive policy changes, PJM will have insufficient capacity as soon as this upcoming June.
The groundwork for certain changes is underway. But whether the RTO, which has one of the lowest penetration of renewables in the country, will seek to fix its core problems by doubling down on gas, remains to be seen. The direction it chooses will have serious implications for both reliability and affordability in the very near future.
According to a Synapse study prepared for Advanced Energy United, allowing for increased deployment of renewables in PJM via near-term policy changes would reduce the frequency of outages in 2030 by 97%, and the number of customers affected by 87%.
The report compares a “status quo” scenario that assumes limited deployment of advanced energy solutions through 2035 with an “advanced policy” scenario. The latter assumes a suite of policy interventions including interconnection queue reforms, streamlined siting and permitting processes, expanded pathways for demand response to participate in wholesale markets, and better integration of advanced transmission planning technologies like reconductoring and dynamic line rating.
Deploying those changes, Synapse found, would lead to the deployment of 11 gigawatts of extra large-scale renewables by 2030 (a 25% jump over the base scenario) and 21 GW of storage. The advanced scenario also predicts 28 GW of extra capacity from demand response, and 3 GW from transmission upgrades.
If PJM opts for the second track, Synapse found the results would be staggering and fairly immediate: The region will save $178 billion in cumulative system costs between now and 2035. In addition to a decrease in outage frequency and magnitude, outage duration would also drop by 92% by 2030, the report found.
But is that likely?
This report lands in a landscape already crowded with proposed policy changes. There are several parallel processes underway — both with the PJM board itself and at the federal level — addressing interconnection, forecast uncertainty problems, whether to rely on data centers to flex their load, and how to ensure co-located data centers pay their fair share of grid costs.
In January, the Trump administration waded into the crowded field, urging PJM to hold a separate, emergency backstop auction for data centers this fall. The proposal, backed by a bipartisan group of governors from the PJM region, would require hyperscalers to sign 15-year contracts with new power plants.
That suggestion could, in theory, spur renewables deployment and move PJM towards the advanced policy scenario, said Jon Gordon, a senior director at Advanced Energy United. But the impact of this two-track approach to capacity ultimately comes down to the auction design, which hasn’t been clearly outlined. In the wake of the proposal, clean energy developers expressed concern that they would be barred from the auction — concerns fueled by the Trump administration’s ongoing efforts to block the construction of offshore wind projects and rescind previously-allocated funding for other clean energy projects.
That said, PJM’s use of the forward capacity market structure, despite its many challenges, isn’t the biggest obstacle to clean energy, Gordon said: “The biggest obstacle has been the interconnection process — if you can’t connect, then you can’t even bid into the capacity market.”
In its own proposal, published the day after the administration’s order, PJM outlined a plan for an expedited interconnection track, designed to help “shovel-ready” projects bypass standard queue delays. But that new track, which PJM said it intends to have in place by August, is only open to large-scale generators over 250 MW, which prioritizes gas plans and sidelines clean energy projects, Gordon said.
The status quo problem
Without key policy reforms, PJM’s “status quo” scenario confirms the RTO’s reliability fears, with outages expected 1.6 days per year by 2030, 16 times higher than the industry standard.
And unless something changes, it appears PJM is again turning to natural gas as the primary solution for its supply crisis. But that approach is “magical thinking” on the part of PJM, Gordon said. The current wait time for natural gas turbines is five to seven years, meaning a turbine ordered in 2025 may not be online until 2032 — years too late for the late decade capacity crunch.
Clean energy, meanwhile, is smaller, more modular, and faster to deploy, without the same supply chain bottlenecks.
Meanwhile, the delayed gas and coal retirements that have become common in PJM, are essentially uneconomic bandaid solutions. More than half of PJM’s fossil fuel plants slated for retirement in 2025 have either delayed or canceled their shutdowns, adding supply for the next few years, but leaving an even steeper capacity crunch in their wake.
“Time is just ticking away here,” Gordon said. “It’s a race against the clock to try and get supply proposed, built, permitted, constructed, and the timelines [for new thermal generation] just don’t add up right now.”
Putting numbers to the benefits advanced energy solutions could offer in PJM, he added, is an effort to remind stakeholders that gas isn’t the only option: “We’re trying to keep telling people that this could be the answer, if we move quickly.”
