“The principle of new large loads paying their fair share is gaining consensus across states, industry groups, and political parties,” Gramlich said. “The rules that have been in place for years did not ensure that.”
But Gramlich highlighted that Friday’s plan will run into the same state-vs.-federal jurisdictional conflicts that have stymied PJM’s efforts to reform data-center interconnection to date.
First off, PJM’s capacity auctions operate by allowing power plants, battery projects, demand-response providers, and other “supply-side” providers to bid their capacity into the system. Those capacity costs are then passed along to utilities, he noted. Utility customers themselves — including data centers — are not part of that equation.
“Even if the large loads voluntarily participate, there’s no mechanism currently for direct participation of a retail customer in a wholesale auction,” Gramlich said.
What’s more, data centers remain customers of utilities regulated at the state level. “It might require changes in state law in any PJM state” to alter those facts, he said.
Even if such state policies were put in place, there’s no guarantee that the prospective data centers would play ball, he said. “It’s easy to hold an auction, but the hard part is compelling anyone to participate.”
The new agreement faces other fundamental challenges, too.
While the text doesn’t specify the exact type of power plants it wants PJM to build, its call for “reliable baseload power generation” is code for fossil fuels or nuclear power. That will pose problems. Demand for gas turbines has pushed delivery orders for new power plants out to 2028 or later. Almost all of the new gas-fired power plants secured in PJM’s fast-track procurement last year aren’t set to come online until 2030 or later. And nuclear power plants usually take about a decade to build.
Meanwhile, more than 100 gigawatts of potential new grid resources, the vast majority of which are solar, wind, and batteries, remain stuck in PJM’s badly congested interconnection queue. PJM is still working on efforts to fast-track these resources by, for example, pairing batteries with existing solar and wind farms.
Ultimately, an auction of the kind the White House plan envisions could drive investment in more power plants, according to Julia Hoos, head of USA East at Aurora Energy Research — but it could also “exacerbate some other elements of PJM’s challenges.”
“Everyone agrees that PJM is struggling to bring online new generation fast enough, and that some sort of intervention is required,” Hoos wrote in a Friday email. But she added that “PJM already has several ongoing reform processes to address these issues — and it’s pretty unprecedented for this sort of top-down intervention to direct PJM’s efforts.”
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Great Job Jeff St. John & the Team @ Canary Media Source link for sharing this story.
