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PJM has proposed changes that could make it easier to add batteries to existing generation projects and sell their energy and capacity separately. The changes could help bring storage online faster, but no new surplus interconnection projects have advanced since earlier reforms, and FERC approval of the latest proposal could take until late next year.
PJM has proposed market-rule changes that could let developers add batteries to existing power projects and sell the resources’ energy and capacity separately. The proposal could open a faster route to storage in the grid operator’s territory, where capacity is in high demand, but the changes still need approval from the Federal Energy Regulatory Commission (FERC).
The proposal addresses a problem with surplus interconnection service, a process for adding a new resource at a grid connection point already used by an existing power plant or renewable project. Clean energy groups pressed FERC in 2024 to make PJM change how it studies the grid impacts of adding resources. Those changes addressed technical barriers, but no new surplus interconnection project has moved forward in PJM since they took effect, according to the Canary Media report.
A remaining obstacle is how PJM treats projects that combine different technologies. Current rules generally require a hybrid project to act as a single market unit in both energy and capacity markets. That can make it difficult for an existing solar or wind project to keep serving one customer under its power contract while a newly added battery sells capacity to another customer.
PJM’s proposed changes would allow the different resources in a hybrid project to have their contributions accounted for separately in both markets. The reform could make it easier to arrange contracts with different customers and could apply to batteries added to existing projects or included in clean energy projects already approved to connect. The report says this capacity could be valuable to data center developers seeking power resources, though it does not identify specific projects or commitments.
How Separate Market Treatment Could Help
The proposal could give PJM a way to add storage without waiting for entirely new grid connections. Batteries paired with existing solar or wind projects can store electricity and deliver it when generation is low or demand is high. If the resources can participate separately in PJM’s markets, developers may have more flexibility to find customers for the different services each one provides.
That flexibility matters amid rising pressure to meet electricity demand and secure capacity. Data centers and other large electricity users are among the potential customers for storage, but the report describes this as an opportunity, not a settled outcome. It also notes that a recent FERC rejection of a separate PJM plan to require large loads to provide their own capacity has renewed interest among stakeholders in other options. Whether batteries can be added quickly depends on the proposed rules, contracts, project economics and regulatory approval.
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Why Existing Connection Rules Matter
Generators typically have long-term power purchase agreements with utilities, companies or public entities. Adding a battery to an existing project can change what the project delivers and when, especially if the battery’s capacity is intended for a customer different from the one buying the original project’s power. PJM’s current requirement to treat a hybrid project as one market unit can make those arrangements difficult.
Connor Valaik of LevelTen Energy pointed to Southwest Power Pool as an example of a grid operator with rules that make it easier to add storage to existing resources, including when an existing power purchase agreement has a different buyer. The Canary Media report says PJM’s earlier study-process changes did not resolve the separate market and contracting barrier. RMI’s Katie Siegner described PJM’s proposed treatment as an “itemized receipt,” separating the contributions of the technologies in a hybrid project.
Potential demand could come from projects already connected or from clean energy developments with permission to connect to PJM. The report also identifies state policies as a possible source of support, citing storage targets in Illinois, Maryland and New Jersey, as well as laws in Indiana and Virginia requiring major utilities to identify and analyze surplus interconnection opportunities.
“We’re not talking about physical limitations to the grid. We’re just talking about this quagmire of administrative processes and legal rights.”
— Rob Gordon, Advanced Energy United
Approval, Contracts and Project Timelines
The proposal is not yet an approved market rule, and the report says FERC approval could take until late next year, even if PJM advances the reforms quickly. The source does not specify a final decision date, a schedule for PJM’s next steps, or whether FERC will approve the changes as proposed.
It is also unclear how many developers would pursue the pathway, how much battery capacity could be added, and which projects could secure financing and customers. Changes to market treatment may ease contracting, but they do not by themselves establish that a project will be built or resolve every technical, legal or commercial issue.
PJM and FERC Review the Proposal
The next steps are for PJM to advance its proposed rule changes and for FERC to review them. The report gives no confirmed timetable for PJM’s process beyond noting that approval could take until late next year. Until the rules are approved and effective, developers will still face the current market structure.
If the changes take effect, developers and potential buyers—including data center operators—could assess whether batteries can be added to existing projects under workable contracts. The amount of storage that ultimately comes online, and how soon it can contribute capacity, remains unknown.
Key Questions
What is PJM proposing?
PJM has proposed changes that would let different resources in a hybrid project have their energy- and capacity-market contributions treated separately. That could make it easier to add batteries to existing power projects.
Why have batteries been difficult to add to existing projects in PJM?
The report identifies both technical study barriers and market-rule barriers. Although earlier changes addressed parts of the study process, current rules that treat a hybrid project as one market unit can complicate contracts with different buyers.
Have any new surplus interconnection projects moved forward?
According to the Canary Media report, no new surplus interconnection service project has moved forward in PJM since the earlier study-process changes.
When could the proposed changes 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 through its process quickly.
Could data centers use the proposed pathway?
They are a potential source of demand for battery capacity, according to the report. It is not yet clear whether particular data center developers will fund or contract for batteries under the proposed rules.
Source: canarymedia.com
