PJM is exploring options to accelerate its surplus interconnection pathway after limited results compared to MISO and SPP.

PJM Interconnection is pursuing a second reform effort to streamline the connection of new generation to the grid by leveraging surplus interconnection capacity at existing power facilities. Following an earlier initiative that proved ineffective, the grid operator introduced revised Surplus Interconnection Service (SIS) rules in early 2025. SIS enables new generators or energy storage systems to connect at an existing facility’s interconnection point by utilizing that asset’s excess capacity interconnection rights (CIRs). According to Gavin Ahern, co-founder of advisory firm Surplus Interconnection, these reviews are typically significantly faster than standard interconnection studies and bypass costly network upgrades. Despite the regulatory update, PJM’s SIS program has yielded minimal results. Since 2023, the grid operator has received eight SIS applications and approved only two, according to a late November presentation—the most recent data available. PJM spokesman Jeffrey Shields noted in an email that the organization does not publicly disclose SIS request details beyond periodic updates to its Interconnection Process Subcommittee.

The sluggish pace stands in stark contrast to other regional transmission organizations. As of June 30, the Midcontinent Independent System Operator (MISO) was evaluating 14.8 GW of surplus interconnection requests, followed by the Southwest Power Pool (SPP) at 14.3 GW, Western utilities at 6 GW, and Southeastern utilities at 1 GW, per an analysis by Surplus Interconnection. PacifiCorp was simultaneously reviewing 33 projects across five Western states totaling 5.2 GW as of August 13, filing five surplus interconnection agreements with the Federal Energy Regulatory Commission over the preceding 60 days. The vast majority of pending requests at MISO, SPP, and PacifiCorp are for battery storage projects. To date, 44 surplus interconnection projects have come online in MISO and 22 in SPP’s footprint. Since 2024, MISO projects have averaged one year to reach commercial operation, while SPP projects have taken nearly two years. “MISO and SPP built surplus interconnection processes that actually work operationally, for example allowing for parallel operation of an existing and surplus generator at the same point of interconnection, which is critical for surplus projects to pencil out,” Ahern said in the report.

Within PJM, thermal and renewable facilities possess surplus interconnection capacity capable of supporting approximately 150 GW of solar, wind, and storage development, though the expiration of federal tax credits has curtailed that potential, according to a UC Berkeley working paper published in August 2025. Accelerating SIS adoption has become increasingly urgent for PJM, which missed reserve margin targets in its two most recent capacity auctions. Shortfalls expanded from 6.5 GW for the 2027/28 delivery year (beginning June 1) to roughly 6.8 GW for 2028/29. “When PJM is looking around trying to answer the question, ‘How are we going to fill this deficit?’ resources coming online using surplus interconnection should be one of the first things that they grab for,” Grant Glazer, senior manager for regulatory and market affairs for MN8 Energy, a renewable energy and storage developer, said in an interview. He emphasized that SIS represents the fastest route to grid capacity by utilizing existing CIRs, eliminating the need for new interconnection rights or upgrades and reducing overall costs.

Nevertheless, Glazer noted that PJM’s current framework lacks a viable mechanism for surplus additions to tap into the CIRs tied to existing generators. For instance, a battery paired with a solar farm must choose between a co-located or hybrid market participation model. The co-located approach denies the battery access to the CIRs required for PJM’s capacity market, while the hybrid model fails because the combined facility is assigned a single market participation ID. That single identifier prevents operators from isolating which component participates in energy and ancillary services markets, thereby blocking the settlement of existing offtake agreements for the legacy resource. To resolve this, PJM staff recently proposed an “issue charge” under review that would permit hybrid resources—currently treated as a single entity in the capacity market—to operate independently in the energy and ancillary services markets. Any resulting rule changes would be drafted by PJM’s Market Implementation Committee. Glazer described the proposal as a “workable” pathway for numerous prospective projects.

Industry groups have welcomed the proposed adjustments. Advanced Energy United, a clean energy trade association, endorsed PJM’s reform efforts. “We think these fixes are relatively easy, and given how desperately PJM needs new resources, we're optimistic that this is going to move forward quickly,” Jon Gordon, AEU senior director, said in an interview. He added that more complex reforms targeting CIR allocation could follow once initial hurdles are cleared. Meanwhile, developers are actively scanning portfolios for underutilized rights. Glazer explained that many PJM projects, particularly solar installations, hold CIRs covering only 40% to 60% of their nameplate capacity, leaving substantial spare interconnection headroom. Coupled with declining battery costs and surging demand for capacity resources driven by large industrial loads, the economic case for surplus interconnection is strengthening. State-level momentum is also building; Indiana and Virginia enacted legislation this year mandating utility studies on surplus interconnection feasibility within their grids. Utilities themselves are showing openness to the model, whether integrating solar farms or pairing storage with thermal generators. “There's definitely receptiveness to it because they're getting requests from large loads to plug in, and/or they’re short capacity for their own systems needs already,” Ahern said in an interview.