Federal regulators have approved grid operator PJM Interconnection's plan to overhaul its interconnection process, a move which could ease adding new renewables to the system but limit availability of new renewable energy certificate (REC) supplies in the near term.
The Federal Regulatory Energy Commission (FERC) on Tuesday approved the new review process and transition plan, which will be implemented in stages over the next three years.
"This order is great news for the many stakeholders who worked on and supported this proposal," PJM vice president of planning Ken Seiler said.
PJM plans to begin transitioning to the new process early next year.
Under the new process, PJM will review new projects on a "first ready, first served" basis. instead of first come, first served. The grid operator would determine readiness based on financial and site milestones.
In the interim, PJM will implement a two-year transition, during which it will prioritize about half of the 2,700 projects, with a combined capacity of 250,000MW, now under study. Nearly all of the proposed capacity is from standalone wind, solar or storage projects, or hybrids combining solar or wind with batteries.
At the same time, PJM will freeze new project applications for that two-year stretch as it works through the logjam. That anticipated moratorium is one of the factors that has helped keep PJM Class I RECs at or near record highs recently.
Argus assessed vintage 2023 RECs at $27.20/MWh and 2024 RECs at $27.15/MWh on Tuesday.
During the FERC review, the Organization of PJM States, an inter-governmental group regulatory agencies in 14 PJM jurisdictions, told the agency that new projects may not begin the review process until 2026, which would put them on track near the end of the decade. But the group ultimately supported the new process.
PJM, which manages the grid for 13 states and the District of Columbia, has been working for the past year to update its interconnection process. The discussions around the updates have involved an array of stakeholders, including renewable project developers, transmission owners and consumer interest groups.
