The Federal Energy Regulatory Commission just told PJM Interconnection to rewrite its playbook. In a December order targeting the nation's largest grid operator, FERC mandated changes to how PJM processes the crush of generation projects seeking grid access—including new cost allocation rules for network upgrades and stricter co-location provisions that could reshape how developers structure solar-plus-storage projects.
The timing is pointed. PJM's territory spans 13 states and serves 65 million people, yet its interconnection queue has become a graveyard for clean energy ambitions. Projects entering today won't complete studies until 2027 or later. The three-year wait reflects not bureaucratic indifference but accumulated backlog from prior cycles that reforms have yet to clear.
The Physics of a 2.6 TW Traffic Jam
Across all U.S. RTOs, the interconnection queue now holds 2.6 terawatts of proposed generation—twice the total installed capacity of every American power plant combined. Solar dominates at 947 GW, followed by battery storage at 684 GW. Wind trails at 297 GW as developers pivot toward hybrid configurations that pair generation with storage.
The raw numbers obscure the dysfunction beneath. Lawrence Berkeley National Laboratory analysis reveals that only 21% of projects entering queues between 2018 and 2022 reached commercial operation. The other 79% withdrew—nearly half because network upgrade costs exceeded project economics.
This creates a vicious cycle that FERC's Order 2023 attempted to break. Long study timelines encourage speculative filings from developers preserving optionality. More filings deepen the backlog. Longer backlogs incentivize yet more speculative filings. The queue becomes clogged with projects that will never be built, but processing them consumes the same staff resources as viable ones.
FERC's latest PJM directive addresses a specific friction point: how costs get allocated when new generation requires transmission upgrades that benefit the broader system. Under current rules, a 200 MW solar project in congested PJM territory might face $200 million in network upgrade assignments—a $1,000/kW burden that destroys project economics regardless of how cheap panels become. The new cost allocation framework attempts to distribute these burdens more equitably, though implementation details remain pending in compliance filings.
The 2.6 TW Queue Breakdown
The 2.6 TW Queue Breakdown. Source: Lawrence Berkeley National Laboratory. Solar and storage dominate the queue, reflecting the pivot to hybrid projects.
Why Order 2023 Hasn't Solved It
FERC's July 2023 interconnection reform—Order 2023—was supposed to break the cycle. The rule imposed readiness deposits requiring financial commitment proportional to project size, site control requirements demonstrating land access, and first-ready-first-served provisions prioritizing mature projects over speculative queue squatters.
Early results show uneven uptake. MISO's 2024 cycle saw withdrawal rates plummet to 12% from historical 45% averages—financial discipline screened out projects lacking genuine development commitment. The filtering worked.
CAISO tells a different story. The California grid operator's post-Order 2023 cycle still received 541 applications totaling 354 GW—volumes that overwhelm study capacity regardless of procedural refinements. Market attractiveness swamps administrative reform. When every developer wants California offtake agreements, deposits and deadlines merely raise the ante without reducing the crowd.
The PJM order signals FERC's recognition that Order 2023's one-size-fits-all approach requires regional calibration. PJM's specific challenges—legacy coal plant retirements, data center load growth in Virginia, and offshore wind interconnection along the Atlantic seaboard—demand tailored solutions that the generic 2023 framework couldn't provide.
What Other Markets Show Is Possible
The U.K. provides the clearest proof that queues can be tamed. After reforming its process in 2022 with strict milestone requirements—demonstrated funding, planning consent, and equipment procurement within specified timelines—the British queue dropped from 176 GW to 97 GW within two years. Average connection timelines fell from 12 years to 6. Projects that couldn't prove readiness lost their place.
Reform Impact: MISO vs. Historical Average
Reform Impact: MISO vs. Historical Average. Source: MISO 2024 cycle data. Financial discipline under Order 2023 screened out speculative projects, cutting withdrawals by 73%.
Australia attacked speculation through price signals. Application fees of A$50,000 plus study cost deposits screen out developers without genuine commitment. The approach trades accessibility for queue integrity.
India's model inverts the problem entirely. State transmission utilities identify renewable energy zones and build infrastructure before generation develops, shifting queue risk from developers to system operators. China's central planning eliminates queues through administrative allocation—State Grid builds to designated generation bases, and developers connect upon meeting technical requirements.
None of these models transplant directly to U.S. wholesale markets. But they demonstrate that the interconnection bottleneck is institutional, not inevitable.
The Strategic Calculus for Stakeholders
For developers, the PJM order reshapes project development timelines and risk allocation. Cost-sharing provisions for network upgrades could improve economics for projects in congested territories—but only if the details in compliance filings deliver on the order's intent. Projects targeting 2027 commercial operation should already hold queue positions; those entering now face 2028 at the earliest.
For utilities and load-serving entities, procurement strategies must internalize these constraints. RFP timelines that assume 24-month project delivery collide with interconnection realities requiring 36 to 48 months. The gap between contracted capacity and delivered megawatts will widen before it narrows.
U.K. Queue Reform: Before and After
U.K. Queue Reform: Before and After. Source: UK grid reform data. Strict milestone requirements cut both queue size and connection timelines nearly in half.
For investors, queue position now drives valuation as much as technology or offtake terms. Projects with completed studies and manageable upgrade costs warrant premium multiples. Early-stage queue entries carry option value, not asset value—and should be priced accordingly.
What to Watch
PJM's compliance filing, due within 90 days, will reveal whether the order's promise translates to operational change. Key variables: how the cost allocation methodology handles affected system upgrades that cascade across neighboring territories, whether study timeline commitments prove achievable given staff constraints, and how co-location rules treat hybrid projects pairing solar with storage.
FERC signaled in its December fact sheet that "all interconnection customers will be subject to" the new provisions—language suggesting limited grandfathering for projects already in queue. Developers with pending PJM applications should scrutinize the compliance tariff for transition rules.
The queue won't clear quickly. But trajectory matters. MISO's post-Order 2023 results show that well-designed reforms can filter speculation and accelerate throughput within a single cycle. Whether PJM's new framework achieves similar results—or merely shifts bottlenecks downstream—will shape clean energy deployment across the Eastern Interconnection for the rest of the decade.
About the Author
Dr. Sayonsom Chanda
Dr. Sayonsom Chanda is an electrical engineer and senior scientist with more than a decade of experience in developing AI, ML, and other advanced computing solutions for the electric utility industry in US and India. He is also an energy policy thinker and a published author with more than 20 papers and 1 book.
