PJM’s Speed to Power Problem and How to Fix It

Overlooked interconnection improvements are key to alleviating PJM’s cost and capacity crises.

The mid-Atlantic grid, operated by PJM, desperately needs to add electricity generation to meet surging demand. PJM is home to “data center alley” and thus its ability to serve the rapid rise in new large loads requested by data centers has great bearing on American economic competitiveness. Therefore, the generation capacity crisis looming in the region has profound implications not only for the electricity bills of the 67 million people living within PJM’s boundaries, but for the broader economy as well.

As awareness of PJM’s capacity crisis has spread, an array of stakeholders and policymakers have called upon the grid operator to act. A combination of forces, some within and some outside of PJM’s control, are contributing to this challenge. So, what should PJM do?

Of the factors within PJM’s control as a regional transmission organization (RTO), interconnection — the process for studying and adding new generation resources to the grid — is central. The best way to bring new generation online quickly is to prioritize speeding the process that allows queued generators to compete. These projects entered the queue in response to market signals and have already spent years in development.

On October 21, PJM completed its “Transition Cycle 1” (TC1) interconnection study process, the first of two study clusters that implement PJM’s 2022 interconnection reforms. TC1 projects have been in PJM’s queue for years, entering between 2018 and 2020. The TC1 results provide new insights into PJM’s interconnection improvements.

Unfortunately, the TC1 results reveal two significant barriers to new, competitive supply entry into PJM’s wholesale markets: (1) inordinately long interconnection study timelines and (2) extremely high transmission network upgrade costs. While PJM has made some headway in its efforts to accelerate the queue process, it must do much more to address rising demand and ratepayer costs.

PJM’s interconnection process is stifling new generation additions, contributing to the capacity crisis the grid is now facing

PJM, like other RTOs, operates competitive markets where generators compete to provide grid services, such as providing energy in every moment to ensure there is a balance between supply and demand. PJM also holds a capacity auction to ensure there will be enough cost-efficient generation to meet future demand (three years after the auction) by incentivizing new generation to come online and older, higher-cost generation to retire.

Unfortunately, PJM’s slow interconnection process has broken its capacity market. To put it plainly, PJM is taking eight years to process generator interconnection requests but runs auctions to secure future generation capacity on a two- to three-year forward basis. As a result, developers of new generation resources simply cannot respond fast enough to market signals. And consumers are paying the price.

PJM’s capacity market clearing prices have skyrocketed in recent years. In just two auctions, prices jumped over 10 times, from $29 per megawatt-day to the market cap of $330 per megawatt-day. The total capacity bill in the latest auction, to be paid by ratepayers, rose from $2.2 billion in the December 2022 auction to $16.1 billion.

Because PJM’s slow queue is preventing developers from responding to high capacity prices, PJM customers are paying the existing generation fleet an additional $13.9 billion to deliver the same service they were already providing. In a complaint to the Federal Energy Regulatory Commission (FERC) earlier this year, Pennsylvania Governor Josh Shapiro described this as “the largest unjust wealth transfer in the history of US energy markets.”

In response to mounting pressure, PJM has advanced proposals to address its projected capacity shortfall. Unfortunately, these proposals do not address the root problem: expanding new supply. The most enduring way to bring both capacity and energy market prices down is ensuring sufficient supply through functional interconnection queues.

Time-intensive studies and high network upgrade costs are driving project attrition in the interconnection process

PJM’s supply crunch has been years in the making. While PJM is the largest wholesale electricity market in the United States, it has only connected a trickle of new energy resources for the past five years. Other US regions are doing far better: when accounting for size, PJM has brought on less new capacity relative to its peak demand than either the Texas (ERCOT) or California (CAISO) grid operators (Exhibit 1).

Exhibit 1

This is because PJM’s interconnection queue has become a major chokepoint on the pace of new entry: the timeline from interconnection application to commercial operation has risen from an average of less than two years in 2008 to over eight years in 2025 (Exhibit 2). While PJM anticipates faster timelines moving forward as it implements the 2022 reforms, there is clearly much room for improvement.

Exhibit 2

The recently released results for the first cycle of projects going through PJM’s new queue process offer an instructive status update: of the over 100 GW that applied to TC1, 40 GW were studied in the first phase, and XX received interconnection agreements by the study’s end. Some amount of attrition is expected in interconnection studies to screen out non-viable projects, yet given the supply scarcity the region is facing, it’s important to understand the drivers of project dropouts and seek to increase efficiency.

Part of the problem is the time-intensive studies, which now take years longer than they have in the past due to the proliferation of new interconnection requests coming up against an increasingly maxed-out grid that has stagnated amid years of underinvestment in transmission infrastructure. FERC recently granted PJM’s request for an independent entity variation in its Order 2023 compliance filing for a 540-day interconnection study cycle (longer than what was required in the Order); PJM completed TC1 in 544 days. When we account for the time between when projects enter the queue and when cluster studies end, the TC1 process suggests PJM’s interconnection queue will still take 1.75 years. This exceeds the one-year target grid experts have identified as the goal for an efficient interconnection process, and is not fast enough to keep pace with an economy undergoing rapid technological innovation and demand growth.

Another issue fueling project attrition is high network upgrade costs, which resource developers must pay to ensure the grid can deliver their new generation to load during all hours of the year. Most projects in TC1 were assigned expensive and extensive network upgrades starting in the first study phase (Exhibit 3), resulting in dropouts throughout the process. Generators seeking interconnection in PJM today face network upgrade costs much higher than the estimated generator connection costs in NREL’s Benchmark and the Department of Energy’s target interconnection costs. If those costs render their projects uneconomic, they drop out of the queue.

Exhibit 3

The solutions to speeding up interconnection

PJM has many tools at its disposal should it choose to pursue additional interconnection reforms. PJM leadership has also indicated this is a problem they are eager to fix. Yet PJM has advanced several solutions that attempt to circumvent — rather than improve — the interconnection queue. The recently proposed Expedited Interconnection Track mechanism and last year’s Reliability Resource Initiative are band-aid fixes that allow certain projects to receive special, expedited treatment. These solutions are antithetical to competition and unfairly exacerbate delays to already-queued projects that now have to wait for select projects to be studied.

As demand projections and costs climb, PJM should prioritize fast and low-cost solutions that speed the interconnection process and allow queued resources to come online with lower costs. These include:

1. Implement available, third-party software to speed the interconnection study process. PJM can significantly reduce study timelines by deploying available, modern software solutions that can speed and automate the study process. Several companies have demonstrated impressive results that are already being used by grid operators and developers today. For example, Pearl Street Technologies’ software has been deployed in the Midcontinent Independent System Operator (MISO) region, and is capable of automating its study process in 10 days. Other vendors, such as Nira Energy, have offered their tools to developers to vet and replicate interconnection study results, and are achieving similarly speedy study timelines with extremely high accuracy in results and costs.

Promisingly, PJM announced a collaboration to implement advanced software in April 2025; at this time, the scope of the application, potential benefits, and implementation timeline remain unknown. PJM should implement these solutions as fast as possible and issue a request for proposals to identify and solicit support for additional needs. This transparency can help build awareness of grid operator needs and surface best practices for using software tools to expedite interconnection.

2. Reform Energy Resource Interconnection Service (ERIS) so that it serves as a meaningfully faster and cheaper pathway for new resources. This FERC-sanctioned pathway to speedy interconnection is underutilized despite the many benefits it was intended to bring to regional transmission systems. ERIS resources should be quicker to study and interconnect because of their agreement to operate on an “as available” basis, which would allow the grid operator to curtail the proposed generator instead of requiring them to pay (and wait) for transmission upgrades that might only be needed to deliver power during a few hours out of a year.

PJM’s current interconnection process studies ERIS resources much like Network Resource Interconnection Service (NRIS) capacity resources. This undermines the potential for faster, cheaper ERIS generators to come online quickly and clogs the queue with resources that might prefer the speedier route. Similar to how PJM moved quickly to reform surplus interconnection service, PJM must turn its attention toward its ERIS and provisional offerings to ensure its study methodology appropriately limits the scope and costs of network upgrades and values the flexibility these fast-to-connect resources can provide.

3. Rigorously consider advanced transmission technologies (ATTs) as network upgrade options and provide transparent evidence of their applicability, as per Order 2023 requirements. The conventional network upgrades that interconnection customers might face are significantly more expensive and take longer to build than available ATT alternatives. ATTs can be quickly deployed to maximize the efficient flow of power across existing transmission lines, and thus could help reduce both network upgrade costs and construction timelines. The 2024 RMI and Quanta study of PJM’s TC1 showed the viability of three types of ATTs to serve as network upgrades that could more cost-effectively and quickly interconnect 6 GW of new resources; however, none of the TC1 interconnection agreements seem to rely on these technologies, nor is there evidence of their consideration.

Real-world deployments of ATTs have surged in recent years, and a growing library of resources, such as Quanta’s recent ATT Planning Guide, provide guidance on integrating these technologies into planning processes like interconnection studies. Software vendors like GridAstra even offer products and services that automate and streamline such analyses.

4. Plan for and build more transmission. The high network upgrade costs faced by TC1 projects reflect a deeper issue: the interconnection process was never meant to build out the transmission network in this piecemeal, expensive fashion, which risks passing higher costs along to consumers due to inefficiencies. Rather, new transmission must be proactively planned. Even with its current generation emergency, PJM must continue to prioritize its regional transmission planning to ensure there is adequate grid capacity to support growing load through the 2040s.

Unleashing the resources waiting in the queue

PJM’s interconnection bottlenecks are slowing the deployment of new, low-cost generation, driving up costs for consumers, and hindering the emergence of a new economic industry in the region. Unleashing the thousands of resources waiting in its queue — with the support of the same modern technologies fueling the demand for power — is the best way for PJM to address the dual challenges of resource scarcity and rising rate pressures on consumers.