A Fast-Path to Affordability: Understanding the Benefits of Energy-Only Resources in PJM

How PJM can quickly add cost-saving new generation by improving the path for “energy-only” resources to connect to the grid.

Rapid load growth is putting tremendous pressure on PJM, the regional transmission organization covering 13 states and Washington, D.C., to deliver  necessary power while maintaining affordability and reliability. This demand surge has collided with a constrained transmission grid and a slow generator interconnection process (which PJM is making efforts to address).

Fortunately, PJM can quickly add cost-saving new generation by improving the path for “energy-only” resources to connect to the grid. Recent conversations surrounding fast, flexible load interconnection highlight a broader principle: whether connecting load or generation, faster connection can be offered in exchange for modest operational curtailment, and the interconnection process can be streamlined accordingly.

While capacity price spikes and the need for “firm capacity” have dominated headlines and PJM-led interventions to date, the reality is that energy prices remain the largest share of electricity bills. Energy market prices were up 50% in 2025 compared to 2024, driven by factors such as higher gas prices and higher demand, which results in the dispatch of less efficient, higher-cost generators.

To meet load growth and deliver downward pressure on energy costs, PJM needs not just additional capacity, but also more low-cost energy generation on its system. Energy-only resources (those that seek energy resource interconnection service, or ERIS) are well positioned to support PJM’s needs and reduce costs, but they must have a path to come online quickly and at a scale.

Encouragingly, new Aurora Energy Research analysis shows ERIS resources are financially viable in PJM, would reduce customer bills, and even contribute to reliability.

Interest in ERIS has been limited to date, due to implementation of ERIS study procedures that do not meaningfully differentiate these projects from those seeking NRIS, or capacity status. There is little upside to developers in forgoing capacity revenues and pursuing ERIS if the interconnection study timeline and costs are not significantly reduced. Additionally, grid operators and utilities have tended to prefer firm capacity resources and disfavor ERIS projects. ERIS resource uptake in PJM is particularly low.

Yet today, with interconnection serving as a primary bottleneck to new generation supply and affordability pressures mounting, there is good reason to re-examine ERIS resources and the potential value add they could bring to customers and the grid. RMI commissioned an analysis and report conducted by Aurora Energy Research to explore ERIS resources’ viability in PJM. Aurora’s analysis indicates that the value add could be notable: consumers could realize nearly $11 billion in savings over the next decade, from deploying just 10 GW of energy-only resources in PJM.

Highlights from Aurora’s “Viability and Benefits of ERIS in PJM” analysis

• Analysis scope and set-up: In order to realize the opportunity for expanded use of the ERIS interconnection pathway in PJM, it is important to assess the financial viability of energy-only service for project developers and financiers, as well as to understand the potential benefits that a reformed study process might yield. Aurora’s recently published report [hyperlink] undertook this analysis by adding hypothetical “ERIS resources” to four load zones in PJM with a 2028 commercial operation date. The ERIS resources analyzed were wind and solar generators, given the greater likelihood of these resource types electing ERIS service due to their lower capacity accreditation values and thus lesser reliance on capacity revenues.
• ERIS financial viability assessment: First, Aurora assessed the expected internal rate of return (IRR) for these resources across the four zones (American Electric Power, Commonwealth Edison, Dominion, and Pennsylvania Power and Light) and a range of scenarios, to account for uncertainty in future price projections and load growth. An energy generator’s expected IRR, or hurdle rate, is a key metric for project finance: investors require a certain IRR to ensure their investment will return a profit. Based on Aurora’s industry expertise, they used a 9% hurdle rate as the benchmark for a project’s financial viability.

  For the initial assessment, they assumed no interconnection costs beyond the point of interconnection, which would represent an ideal ERIS interconnection pathway. Aurora found that ERIS resources are financially viable in all four zones and across nearly all scenarios (with the exception of the Low scenario, which reflects low energy prices and low load growth). Central Scenario results revealed IRRs of 9%–10.2% for solar, and 9.2%–13.6% for wind. Wind resources are particularly profitable because the timing of their power output aligns well with higher-priced energy hours in the zones where they were studied.

  Unfortunately, other challenges limit development of onshore wind, even more than solar resources. This shows that ERIS resources can be profitable, even without capacity revenues, in an appropriately scoped ERIS study process.

• System benefits of ERIS resources: ERIS resources’ value-add does not just accrue to project developers and investors. These projects could yield system benefits as well, contributing to both grid reliability and affordability. In PJM, peak system risk moments typically occur in the winter, when winter storms drive up power demand and thermal generator forced outage rates. Those thermal generator outages may free up grid headroom for energy-only resource deliverability, and wind resources in particular have relatively high output during peak winter load days. As Aurora’s analysis found, onshore wind resources in PJM had an average 39% capacity factor on peak winter load days over the past decade. During Winter Storm Elliott, PJM’s onshore wind fleet saw higher generator availability rates (the share of capacity not in outage) than both coal and gas resources.

Finally, ERIS resources can help lower energy prices. If — in a scenario where PJM reformed and sped up its ERIS study pathway — 5 GW each of ERIS-accelerated wind and solar resources were added to PJM by 2028, PJM ratepayers could save almost $11 billion over the next decade.

 

Necessary interconnection process reforms to catalyze ERIS uptake

Across the country, most ERIS interconnection processes remain intertwined with NRIS resources, negating the potential time savings and cost benefits of ERIS. PJM and other grid operators should update their ERIS study pathways to ensure the following:

1. ERIS resources should be studied in a separate and parallel track from resources seeking NRIS. Study timelines should be short and clearly defined, and should leverage the most advanced modeling software available. We would also expect a separate study process for ERIS to support speedier and more streamlined study of NRIS clusters, as this would reduce cluster sizes and thus the potential for dropouts and re-studies.
2. Network upgrade costs and timelines should be minimal. The scope of the study should be limited to ensuring a reliable connection to the point of interconnection, as is the process in ERCOT. ERIS resources should not trigger deeper network upgrades due to network deliverability studies. An appropriate study for ERIS resources must include realistic dispatch assumptions that reflect how ERIS resources would be treated in the market and operationally. For example, if they will be subject to operator curtailment during times of grid congestion, that should be reflected in the study models. The interconnection study could be scoped to inform the operator of typical curtailment expectation, but network upgrades beyond the point of interconnection are unnecessary, as any broader system impacts could be managed by curtailment or redispatch.
3. Transmission system needs should be addressed in existing transmission planning processes. If grid congestion results in high curtailment of ERIS resources, that should be considered in transmission planning processes, like PJM’s Regional Transmission Expansion Plan (RTEP). That is where reliability and economic drivers of new transmission needs are assessed, and where consideration of any future transmission enhancements that might deliver system-wide benefits — such as reduced curtailment and greater ability for low-cost resources to serve load — should occur.

Additionally, grid operators should undertake a full evaluation of the reliability contributions of these resources, and the ways in which they may need to adapt market rules or operations to unlock the full capabilities of ERIS resources. Importantly, if these resources contribute non-zero capacity value, as Aurora’s analysis suggests they might, the region’s resource adequacy planning paradigm might need to be adapted to accredit the resources accordingly. And if operational practices impede system operators’ real or perceived ability to perform redispatch, opportunities to enhance those should be explored at the system-wide level.

Grid operators can look to ERCOT for effective tools and processes to manage these types of resources, where their “connect and manage” approach to interconnection has enabled rapid entry of new resources onto the grid while maintaining reliability. The influx of solar resources paired with battery storage has effectively eliminated ERCOT’s evening resource adequacy concerns in the summer.

ERIS resources are more than “energy-only” — they are fast-to-deploy, low-cost resources that can be important contributors to a balanced generation mix. Reforming their interconnection process to match their speedy development potential could unlock significant benefits for grid operators seeking near-term new generation resources to meet growing load.