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PJM has proposed changing how it treats hybrid power projects, potentially making it easier to add batteries at existing grid connections and sell their capacity separately. The changes still need regulatory approval, and no new surplus interconnection service project has moved forward since earlier study reforms.
PJM has proposed market-rule changes that could make it easier to add batteries at existing power plants and renewable energy projects, opening a faster route to storage in a grid region facing capacity constraints. The proposal would let different resources within a hybrid project be treated separately in energy and capacity markets, but it still needs approval from the Federal Energy Regulatory Commission (FERC).
The proposal addresses a market-design barrier to surplus interconnection service, a process for adding a new resource at a grid connection already used by a power project. Clean energy groups asked FERC in 2024 to require changes to how PJM studies the grid effects of adding resources. That reform addressed technical barriers, but industry participants say a separate contracting obstacle remains. According to the Canary Media report, no new SIS project has moved forward in PJM since the study changes were made.
Under PJM’s current rules, a hybrid project combining technologies such as solar and batteries generally has to operate as one market unit in both energy and capacity markets. That can make it difficult to maintain an existing power-purchase agreement for the original project while selling the added battery’s capacity to a separate customer. PJM’s proposed changes would let the resources’ market contributions be separated, potentially allowing different buyers and obligations for each.
RMI’s Katie Siegner compared the proposal to an “itemized receipt”, making it easier to split the value and responsibilities of a combined project. The report cites Southwest Power Pool as an example of a grid operator with rules that allow surplus storage to be added even when an existing project has a power-purchase agreement with another buyer. That comparison describes a different market’s approach; it does not establish that PJM’s proposal will produce the same results.
Storage Could Ease PJM Capacity Pressure
Adding batteries at existing grid connections could make use of infrastructure and projects already in development, rather than relying solely on new standalone connections. Batteries can store electricity and discharge it when a project’s renewable generation is low or when demand is high. If the proposed rules make it practical to contract for that capacity separately, they could give developers and power buyers another way to bring resources online.
The issue has particular relevance as data centers and other large electricity users seek reliable power and face scrutiny over whether their demand adds costs for other customers. The Canary Media report says data center developers may be interested in financing batteries, while utilities and other buyers could also seek capacity. But the proposal alone does not guarantee projects, investment or lower electricity bills; those outcomes would depend on approvals, contracts, financing and construction.
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Why Existing Project Connections Matter
Power plants, wind and solar farms, and batteries often have long-term power-purchase agreements with utilities, companies or public entities. Adding a battery to an existing project can change what the project supplies and who receives its energy or capacity. A workable market structure needs to distinguish those contributions without undermining existing contractual obligations.
The 2024 request by clean energy groups focused on how PJM studies the grid impacts of additions to existing projects. The report says those study changes did not resolve the separate question of how PJM treats existing and new resources sharing an interconnection. State policies may also shape demand: Illinois, Maryland and New Jersey have energy storage targets, while laws in Indiana and Virginia direct major utilities to identify and analyze surplus interconnection opportunities, according to the report.
The proposal arrives amid a broader debate about how to meet rising electricity demand in PJM, which operates the wholesale electricity market and transmission system across parts of the eastern and midwestern United States. FERC recently rejected a PJM plan concerning requirements for data centers and other large loads to provide their own capacity or face curtailment during grid emergencies, the report says. That decision leaves stakeholders seeking other ways to add resources, though it does not itself advance the battery proposal.
““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, Timing and Project Demand
The proposal is not yet an approved market rule, and the report says FERC approval could take until late next year if PJM moves the reforms forward quickly. The report does not specify a final approval date or provide a confirmed implementation schedule. Until approval and implementation, it is unclear when developers could use the proposed pathway.
It is also not clear how many projects would proceed, how much battery capacity could be added, or which customers would sign contracts. No new SIS project has moved forward in PJM since the earlier study reforms, according to the report. The proposal may remove one barrier, but financing, contract terms, project economics and any other grid or regulatory requirements could still affect deployment.
PJM and FERC Review the Proposal
The next milestones are PJM’s handling of its proposed market-rule changes and a subsequent FERC review. The report says even a swift PJM process could leave the federal approval stage unresolved until late next year. Until those steps are complete, the potential battery pathway remains a proposal rather than an available, established route.
Readers should watch for details on how PJM would separate energy and capacity contributions, how existing power-purchase agreements would be treated, and what timeline the market operator sets for implementation. Project announcements or contracts would provide evidence of whether developers and buyers are acting on the opportunity, but the report does not identify any confirmed new PJM projects using the proposed approach.
Key Questions
What is PJM proposing?
PJM has proposed market-rule changes that would let different resources in a hybrid project, such as a solar farm and battery, separate their contributions in energy and capacity markets.
Why are batteries difficult to add to existing projects in PJM?
The report says PJM’s current rules generally treat a hybrid project as one market unit. That can complicate contracts when the original resource and a newly added battery have different buyers or obligations.
Has the proposal been approved?
No. It still requires FERC approval. The report says that, even if PJM advances the changes quickly, federal approval could take until late next year.
Could this reduce electricity costs?
The proposal could create another way to add capacity, but lower bills are not guaranteed. The report does not provide a cost estimate or confirm that any battery projects or customer contracts will result from the changes.
Are any new projects already moving forward under this pathway?
The report says no new surplus interconnection service project has moved forward in PJM since the earlier changes to grid-impact studies. It does not identify a project proceeding under the proposed market-rule changes.
Source: canarymedia.com
