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PJM has proposed rules that could make it easier to add batteries at existing power plants and renewable-energy sites, potentially giving storage projects a faster route onto the grid. The proposal would address market rules that currently make it difficult to separate the energy and capacity sold by different parts of a hybrid project. No new surplus-interconnection project has moved forward in PJM since earlier study-process changes, and the proposed reforms still need regulatory approval.
PJM has proposed market-rule changes that could make it easier to add batteries to existing power projects and sell their output or capacity separately. The changes would address a contracting barrier that clean-energy groups say has kept projects from moving forward in the grid operator’s territory, where additional capacity is in demand.
The proposal would let a hybrid project—such as a solar farm paired with a battery—separate the contributions of its different resources in PJM’s energy and capacity markets. Under current rules, PJM generally treats the combined technologies as one market unit, which can make it difficult for each resource to serve a different customer under separate contractual arrangements.
That issue matters when an existing generator has a power-purchase agreement with one buyer, while a new battery could sell capacity to another. The battery might store electricity and deliver it when the renewable facility is not generating. But project owners may need to revise existing contracts, and PJM’s current treatment of hybrid resources can obstruct deals that would assign different obligations and benefits to different buyers.
Clean-energy groups sought changes to PJM’s process for studying additions to existing grid connections in 2024. According to the report, those changes have not led to a new surplus-interconnection project moving forward in PJM. The separate market-rule question remains unresolved. PJM’s latest proposal is intended to address that second barrier, but it has not yet taken effect.
A Faster Route for Grid Batteries
If adopted, the changes could let developers use existing grid connections to add storage, rather than relying only on new projects and connection processes. That could offer a quicker way to bring capacity onto a constrained system, though the proposal itself does not guarantee that projects will be built or that they will meet PJM’s needs.
The potential buyers include data center developers facing pressure to provide or fund resources to support their electricity use. The report notes that the Federal Energy Regulatory Commission recently rejected a PJM plan requiring data centers and other large loads to supply their own capacity or risk power cuts during grid emergencies. With that plan rejected, battery additions are one possible option for stakeholders seeking new capacity and ways to limit upward pressure on electricity costs.
Storage could also be relevant in PJM states with energy-storage targets, including Illinois, Maryland and New Jersey. Whether the proposal produces investment will depend on regulatory approval, market design and whether developers can secure buyers for the added capacity.
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Two Barriers at Existing Connections
The proposed changes follow a 2024 effort by clean-energy groups to get PJM to alter how it studies the grid effects of adding a resource to an existing generation or battery project. Those groups pointed to technical barriers they said other grid operators did not impose. The study changes addressed one part of the problem, but the report says no new surplus-interconnection project has proceeded in PJM since they were made.
The remaining obstacle concerns how PJM distinguishes old and new resources connected at the same point. Other regional operators have established rules allowing new storage to be added even when an existing project has a power-purchase agreement with another buyer. Connor Valaik of LevelTen Energy cited Southwest Power Pool as an example, saying it allows surplus storage to be added and its capacity rights sold separately, including in some cases where the existing project has a different offtaker.
PJM’s proposal would change how hybrid resources are represented in its markets. RMI’s Katie Siegner described the approach as an “itemized receipt,” meaning the contributions of the different technologies could be split out. The report also identifies laws in Indiana and Virginia requiring major utilities to identify and analyze surplus-interconnection opportunities as potential support for deployment.
“We’re not talking about physical limitations to the grid. We’re just talking about this quagmire of administrative processes and legal rights.”
— Jeff Gordon, Advanced Energy United
Approval and Project Timing Remain Open
The proposed rules are not yet in force, and the report says FERC approval could take until late next year, even if PJM advances the reforms quickly. The available information does not establish when PJM will complete its process, when the proposal will reach the commission, or whether FERC will approve it as written.
It is also unclear how many projects would use the pathway, how much battery capacity they could add, or how quickly developers could arrange contracts with buyers. The proposal may ease market participation rules, but it does not by itself settle every existing power-purchase agreement or guarantee financing and construction.
PJM and FERC Review the Proposal
The next steps are PJM’s consideration and advancement of its proposed market changes, followed by review by the Federal Energy Regulatory Commission. Until those steps are complete, the changes remain a possible route for battery projects rather than an available market option.
Stakeholders will also need to see how the final rules handle separate buyers, contractual obligations and the treatment of energy and capacity from each part of a hybrid project. If the reforms are approved, developers and potential offtakers can assess whether existing sites offer workable opportunities to add storage.
Key Questions
What has PJM proposed?
PJM has proposed changes that would let different technologies in a hybrid project be accounted for separately in its energy and capacity markets.
Why are the changes relevant to batteries?
They could make it easier to add a battery at an existing power project and arrange for the battery and original generator to serve different buyers or contractual obligations.
Have surplus battery projects already moved forward in PJM?
The report says no new surplus-interconnection project has moved forward since PJM changed its study process. The separate market-rule barrier has not yet been resolved.
When could the rules take effect?
There is no confirmed effective date. The report says FERC approval could take until late next year, even if PJM moves the proposal forward quickly.
Would the proposal require data centers to build batteries?
No such requirement is described in the proposal. Batteries are presented as a possible option for data centers and other stakeholders seeking capacity; the report says FERC rejected a separate PJM plan concerning large loads’ capacity obligations.
Source: canarymedia.com
