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PJM has proposed rule changes that would let different parts of a hybrid power project sell energy and capacity separately, potentially making it easier to add batteries at existing grid connections. No new surplus interconnection service project has moved forward in PJM since earlier study-process changes, and the proposed reforms still need regulatory approval.
PJM has proposed changes to its market rules that could make it easier to add batteries to existing solar, wind and power projects without treating every technology as one indivisible market unit. The proposal targets a barrier that has kept surplus interconnection service—adding generation or storage at an existing grid connection—from producing a new project in PJM since earlier changes to its study process.
The proposed changes would allow the separate resources in a hybrid project to have their contributions accounted for separately in PJM’s energy and capacity markets. That could help project owners keep existing power purchase agreements for an original generator while arranging a separate buyer for a newly added battery’s capacity, according to the clean-energy advocates and market participants cited by Canary Media.
Under PJM’s current rules, a hybrid project combining technologies such as solar and batteries is generally treated as a single market unit in both markets. Katie Siegner, a manager on RMI’s Clean Competitive Grids team, said that can make deals difficult when the resources have different customers or contractual obligations. She compared the proposed change to an “itemized receipt” that separates the contributions.
The proposal follows changes to PJM’s process for studying the grid effects of adding resources to an existing project. Clean-energy groups asked the Federal Energy Regulatory Commission in 2024 to require a revised approach, arguing that PJM imposed technical barriers not used by other grid operators. But Advanced Energy United’s Gordon said those changes have not been enough: no new surplus-interconnection project has moved forward in PJM since they took effect, because the market and contract rules remain an obstacle.
How Separate Battery Sales Could Help
The proposed rules could create a way to add storage at existing grid connections rather than waiting for an entirely new interconnection process. That matters because batteries can store electricity and deliver it later, including during periods when solar or wind generation is low. If the approach works, storage could add capacity and help meet demand peaks, while using projects or connections already in development.
Canary Media reports that the pathway could apply to existing projects and to clean-power developments totaling tens of gigawatts that have permission to connect to PJM’s grid. That figure describes the scale of projects that could potentially be relevant; it does not mean those projects will add batteries or that the proposed rules will bring that capacity online.
Data center developers are one possible source of demand for the batteries. They face pressure from regulators to provide resources that help cover their electricity needs rather than shift costs onto other customers. Siegner said developers and other stakeholders seeking faster options may be interested in surplus interconnection. Whether any particular developer will fund a battery or sign a contract for its capacity remains unknown.
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The Interconnection Rules Behind the Proposal
When a generator connects to the grid, its owner may have a power purchase agreement requiring it to deliver electricity or capacity to a utility, company or public entity for years. Adding a battery to that site can create a separate product: stored power, or capacity available when the original generator is not producing. The owner may want to sell that product to a different customer, but existing contracts and PJM’s treatment of hybrid projects can make those arrangements difficult.
Connor Valaik, a senior transactions manager at LevelTen Energy, pointed to the Southwest Power Pool as an example of an operator with rules that he said make it easier to add storage alongside an existing resource, including when a different party holds the original power purchase agreement. PJM’s proposed changes seek to address a related problem by separating how each resource’s contribution is recognized in its markets.
The proposal comes amid wider concern about PJM’s ability to meet demand. Earlier this month, FERC rejected PJM’s plan for requiring data centers and other large electricity users to provide their own capacity or face possible power cuts during grid emergencies. That decision is separate from the battery proposal, but it adds to the search for ways to expand capacity and manage peak demand.
““We’re not talking about physical limitations to the grid. We’re just talking about this quagmire of administrative processes and legal rights.””
— Advanced Energy United’s Gordon
Approval and Project Demand Remain Open
The proposed market changes are not yet in force. The report says that even if PJM advances them quickly, FERC approval could take until late next year. The exact approval schedule, final wording and outcome are not established in the source material.
It is also unclear how many project owners would add batteries under the revised rules, what the projects would cost, which customers would buy their capacity, or how quickly any resulting storage could come online. The tens of gigawatts of clean-power projects with permission to connect represent potential sites, not a confirmed pipeline of battery installations. Gordon’s assessment that added storage could make a large difference to PJM’s capacity position is an attributed view, not a measured forecast.
PJM and FERC Face the Next Steps
PJM must move its proposed market reforms through its process before they can take effect, and FERC would then need to review them. Project developers, existing offtakers and prospective battery buyers would also need to work out contracts and project plans under any approved rules. Until those steps occur, the proposed pathway remains an opportunity, not an operating program.
Further developments to watch include whether PJM advances the proposal, whether FERC approves or changes it, and whether specific projects or data center customers commit to adding storage. The timing and scale of any battery buildout have not been confirmed.
Key Questions
What is PJM proposing?
PJM has proposed changes that would let different resources within a hybrid project have their contributions recognized separately in its energy and capacity markets.
Why could the change help batteries?
It could make it easier for an owner to add a battery at an existing grid connection while keeping the original generator’s contract and arranging a separate buyer for the battery’s capacity. That outcome is possible, not guaranteed.
Are any new surplus-interconnection projects already moving forward?
According to Advanced Energy United’s Gordon, no new surplus-interconnection project has moved forward in PJM since changes to its study process took effect. The proposed market-rule changes address a separate remaining barrier.
When could the rules take effect?
The proposal still needs to advance through PJM and receive FERC approval. The report says that approval could take until late next year even if PJM proceeds swiftly; a final date is not confirmed.
Does this guarantee batteries for data centers?
No. Data center developers may be interested in storage as a source of capacity, but the report identifies no confirmed buyer, contract or battery project resulting from the proposal.
Source: canarymedia.com
