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July
5, 2023
By Kathiann
M. Kowalski
Country’s Largest Grid Operator Must Process and
Connect
Backlogged Clean Energy Projects, a New Report Says
PJM could benefit numerous states with thousands of
jobs and billions in investment by implementing recent reforms,
including priority for proposals ready to proceed and a “fast lane”
for smaller deals.
![](images/images_07_06_2023/power-lines_thomas-simonetti-washington-post-getty-2048x1306.jpg)
Power lines
in Alexandria, Virginia. Credit: Thomas Simonetti/The Washington Post
via Getty Images
Virginia, Illinois, Ohio and Indiana
have the most to gain in jobs and new investment if PJM, the country’s
largest grid operator, can fix some of the problems now leading to
long delays in clean energy projects, a new report says.
To make that happen, PJM would need to approve projects at the
same rate it did about a decade ago.
But that requires clearing two big hurdles. The grid operator
needs to make major progress on roughly 3,000 active matters in its
new service request queue, where 97 percent of more than 250 gigawatts of
proposed new generation is for renewable energy, battery storage or a
combination of the two. And PJM, whose territory runs from Chicago to
New Jersey, would need to add enough interstate power line capacity to
connect those projects to the grid.
The June 28 report from the American Council on Renewable
Energy (ACORE), a trade group, focuses on roughly 2,000 projects
totaling 167 gigawatts of proposed land-based clean energy generation,
which PJM is due to process as it implements reforms approved by
federal regulators in November. Those reforms include a switch to
prioritizing the projects that are the most ready to be built and a
“fast lane” for smaller projects, among,
among others.
Report author Noah Strand at ACORE and other contributors
acknowledge that not all those projects will ultimately be approved
and built. So, the report assumes a completion rate of 20.3 percent,
which is comparable to that for 2011 to 2016. It then makes estimates
for job creation, investments and other benefits for the resulting 34
gigawatts of clean energy.
With more than 43,000 megawatts of proposed capacity in the PJM
queue awaiting approval, Virginia stands to gain roughly a quarter of
the $33 billion in capital investment and 198,716 job-years those
projects, totaling 34 gigawatts, could provide, the report estimated.
A job-year represents one job for one year. Because each
project’s largest employment demands come during the construction
phase, that’s a fair way of estimating job creation, said Brendan
Casey, who contributed to the report and is deputy director for
economic analysis for the American Clean Power Association.
A good rule of thumb for estimating permanent jobs is to divide
the total job-years by three or four, he said.
Illinois, Ohio and Indiana rank second, third and fourth in
potential benefits for proposed projects. Each state stands to gain
between $4.7 billion and $5.5 billion in capital investments and
roughly 29,000 to 32,000 in job-years, with other states in the grid
footprint gaining smaller amounts of investments and jobs.
Additional grid-wide benefits would include an estimated
reduction in wholesale electricity costs of more than $16 per
megawatt-hour from 2021 levels, due to an increase in renewable energy
on the grid and incentives from the Inflation Reduction Act, the
report said, citing a December 2022 analysis by Princeton University
researchers. Displaced coal generation could also provide substantial
public health benefits, valued at roughly $44 per megawatt-hour, the
report said.
![](images/images_07_06_2023/PJMSolarPowerRegion700px.png)
Multiple factors contributed to the backlog at PJM, including a
dramatic increase in interconnection applications as technological
advances and market forces drove the clean energy transition forward.
But an outdated first-come, first-served, one-project-at-a-time review
process slowed progress down. If one project dropped out, for example,
it would trigger additional studies and more delays for other projects
still in the queue.
Some projects have been in the PJM queue for seven years or
more. The new approach approved by federal regulators will use a
first-ready, first-served approach, permit reviews of some projects in
clusters and allow fast-track processing for some smaller projects.
Of course, any new generation will need somewhere to plug into
the power system. Generally, that has called for making improvements
to the existing connection points. And PJM’s practice has been to
require applicants to bear those upgrade costs.
Average interconnection costs for renewable projects in PJM’s
territory increased eightfold from 2017 to 2022, the Lawrence Berkeley
National Laboratory reported earlier this year. And “renewables paid
disproportionately high connection costs relative to natural gas,”
Strand said. The Berkeley Lab report noted that average
interconnection costs for wind, solar and storage run five to 14 times
more than natural gas plants’ average costs of $24 per kilowatt.
Those higher costs were often due to broader network upgrades,
“suggesting that new renewable generation was getting assigned the
cost of upgrades that benefited others on the system,” the ACORE
report said. And because the price tag for required upgrades often
isn’t known until the end of the review process, some projects were no
longer commercially viable.
“The development of new transmission is key,” Strand said.
Among other things, the new research recommends proactive transmission
upgrades by PJM, especially high-voltage transmission lines that will
be able to handle more intermittent resources coming onto the grid.
The Federal Energy Regulatory Commission should also make the
cost-allocation process more equitable for clean energy resources, the
report said.
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