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On ‘precariously low’ oil stockpiles, China’s ammonia milestone, and a PFAS destroyer
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A conversation with a long-time watcher of the PJM on its new proposals
America’s largest electricity market, the 13-state PJM Interconnection, is being forced to rapidly redesign how it works in order to meet its own reliability goals while trying to meet new demand from data centers and electrification.
The market has been in a multiyear rolling crisis as its auctions for capacity — the commitment generators can make to being available in times of high demand — hit a legal cap, resulting in billions of dollars of payouts from customers, leading to higher electricity prices in states like New Jersey.
Much of these payments are due to current and future demand from data centers, some $29.4 billion in the last four capacity auctions, according to the market’s independent monitor.
At the same time, the system isn’t able to procure enough capacity to meet its reliability goals, leading to tongue lashings and even threats of intervention from the Federal Energy Regulatory Commission, whose chair, Laura Swett, now regularly criticizes PJM in her public appearances.
On Monday, the market released a series of proposed reforms and initiatives to bring on new generation and attempt to make up for its reliability gap. This includes a supposedly one-off procurement of new capacity later this year that had been requested by the region’s governors and the White House, a new registry of large loads, and a kind of connect-and-manage system whereby new large loads that don’t have their own capacity will face curtailment during times of high demand.
In a letter to stakeholders, the PJM board said that new large energy users could be increasing demand by up to 70 gigawatts by 2038 (its all time record demand is around 170 gigawatts) while some 15 gigawatts of generation have been retired in the last few years. This combination has “placed increasing pressure on the region’s resource adequacy position” and “requires decisive action,” the board said.
I spoke to Jon Gordon, senior director at the clean energy trade group Advanced Energy United and a longtime PJM watcher about the proposals.
This interview has been condensed and edited for clarity.
Let’s start from the beginning: what was announced on Monday evening?
Just backing up a little bit, PJM has had two critical issue fast-path processes to try to determine how to protect ratepayers from data center related costs. The first one began in the fall and ended in December inconclusively. Then they started another one, which also ended somewhat inclusively. So that put the ball in the PJM board’s hands to review all the data, all the information that had been proposed, provided, and discussed, and come up with a plan of their own. And so they have officially done so. What we saw announced yesterday was PJM’s plan that they need to file at FERC very shortly in order to allow that September procurement.
And this is the backstop procurement that they agreed to with the White House and the governors?
Yes, in concept. The details needed to be ironed out. This is the board’s official proposal and it’s not going to happen until FERC approves it all, and FERC is under a lot of pressure to approve this.
In the letter to stakeholders, they presented three things: the registry, the procurement, and their version of connect and manage. How do these three ideas interact with each other? Why are they all proposed together?
The backstop procurement is the process whereby data centers can enter into contracts for their own power generation, and once they can demonstrate that they have a contract for power, they can then connect to the grid under this new proposal, connect and manage. And the registry is the tool by which to keep track of all this stuff: who are the data centers contracted that are eligible for this process?
Because you need all this detail to know how to curtail them. They’re going to be subject to involuntary curtailment up until the time that they are able to meet all their own needs with their own power generation. Meanwhile, they’re going to be curtailed by the local distribution companies — but the local distribution companies don’t have all the data they need to know which customers can be curtailed. So that’s where the registry comes in. They’re all part of the same overall package.
Let’s talk through the process here. Say, you’re building a new large load, maybe a 150-megawatt or 200-megawatt data center trying to get started in PJM. Under this process, what are the kinds of the things you have to check through to interconnect, and how will it be different than a few years ago?
Let’s talk about what’s going to happen now under these new rules. They’re going to have to enter into a bilateral contract with a supplier to demonstrate they’re making a good faith effort to secure the generation they need to meet all of their needs at some date in the future. Once they demonstrate that to PJM, they will then go to the registry for the connect-and-manage process. Which means that until their generation is 100% up and running, they will be subject to involuntary curtailment.
Before all this, a data center would connect like any other customer to the grid and start drawing power and any costs PJM would incur to connect them to the grid would be socialized across all PJM customers. That’s what’s been happening for many years. Ratepayers are paying for data centers that have come online previously.
How does this interact with PJM’s interconnection reforms? Would this allow data centers to interact more quickly while protecting customers from price increases? This is the dual goal of the White House and FERC.
Where the interconnection process comes into play is for the generator that wants to enter into a bilateral contract with the data center. They’re the ones that have to interconnect their generation.
So that generator hopefully is already in the queue. If not, it’s going to be a long while before they’re actually serving power to anyone. The queue is still super important here in terms of how long that data center is going to be subject to voluntary curtailment. The slower the interconnection queue is, and the slower that overall process of building this new generation is, the longer those data centers are going to be subject to involuntary curtailment. My understanding is that a lot of data centers are not very happy about that.
Is this set of proposals biased in any way towards a particular type of generation?
On its face, it really isn’t. The data centers are free to contract with whatever generation source they like.
We know that many of the hyperscalers committed to meeting their data center needs with carbon-free energy. I’m hopeful they’re going to make an effort to contract to the extent possible with solar and battery resources.
But I am concerned that just the sheer magnitude of the need means we can’t avoid building a lot of new natural gas to meet all that load. We really had to bring all of that wind and solar online.
Even though those sources are going to be faster and lower cost than gas, their intermittent nature and the sheer size of what’s required is going to make that challenging.
What are the next steps here?
Everything we’ve been discussing is completely unprecedented and is happening in a timeframe that’s unimaginable. Three years ago if PJM tried to take on what they’re taking on, it would be a three or four year stakeholder process and it’s taking months.
With all of that said, everything we’ve just discussed, according to PJM, is temporary. It’s meant to be a stopgap to get this market rolling with data centers that are anxious to connect and move forward.
PJM is calling this reliability backstop a one-time procurement.
A lot of folks have said — and I agree with them — there will probably be more than one of these.
The other thing that’s going on is that PJM has begun a process to redesign their entire market structure, what they’re calling a holistic market review. That’s in acknowledgment that the capacity market is broken and is not functioning as intended.
That’s another stakeholder process underway. That’s another heavy lift, which they hope to have in place in 2027. By the time this whole backup procurement process is over, they hope to have a new market in place. That’s an incredibly heavy lift.
Strip away the restaurant and the hype, and Tesla Diner is an 80-plug fast-charging station plunked right in the middle of a former charging desert.
They were projecting Spaceballs onto the wall the first time I pulled into the Tesla Diner. To kill time while my car charged outside, I stepped into the retrofuturist Los Angeles luncheonette and spent six dollars on an oversized chocolate chip cookie. It came in a “Cyberbox,” a cardboard container meant to mimic the shape of the Cybertruck. My wife got a good laugh out of this burger box of Elon’s dreams. Now the carton sits on the kitchen counter, concealing toddler ephemera.
One taste of the Tesla Diner was plenty. But I have returned there, and it wasn’t for the wagyu beef. It’s because a strategically located mega-station is exactly what the world needs more of.
It’d be easy to argue the diner, like the Cybertruck, has been a flop. Musk’s direct involvement with the Trump administration — and the diner’s aesthetic mirroring of his particular id, right down to the movie selections and the Optimus robots handing out popcorn — made the place a target for derision and ongoing protest since its debut a year ago. The restaurant has been a bit of a disaster, too.
Yet Tesla Diner was the most successful Supercharging station in the world in the past year, delivering nearly 1,600 charging sessions per day. And though plenty of people stopped by just to post the notorious joint on social media, its achievement may have less to do with food, Instagram, or politics, and more to do with putting a bunch of plugs where the people are. The times I’ve stopped by, after all, I didn’t need an overpriced carton of fried pickles. I just needed electricity, immediately.
Strip away the restaurant and the hype, and Tesla Diner is an 80-plug fast-charging station plunked right in the middle of Hollywood. This had been a charging desert, a giant hole in the map of red dots around Greater L.A. Besides creating a bizarre new tourist attraction on Santa Monica Boulevard, the diner gave an enormous population of drivers a place to charge a Tesla — or just about any other new EV, now that most brands have moved to the NACS charging standard.
It’s an interesting case study in where, and what, charging stations should be as the nation continues to build out its various networks. Fast-charging stations tend to be built in particular kinds of places. Large outdoor malls and garages are overrepresented on charging maps because they offer plenty of parking spaces to lease and plenty of room to put in electrical infrastructure. Urban areas that don’t have those places, and instead have smaller strip malls and reasonably sized parking lots, are comparatively harder to wire up. That helps to explain the L.A. situation. This is perhaps America’s biggest electric car market, with a plethora of fast-charging stations on the affluent West side and outlying communities. Yet a huge swath of the city (all the way from the 405 to the 5) had practically nothing from Tesla for years, up until Musk decided to buy a parcel of land to build an edgelord’s drive-in.
Now that lots of charging stations exist along major highways to allow for long-distance travel, the next frontier of charging depots is the heart of the city, a place that’s been easy to overlook so far. Most of the drivers who’ve been affluent enough to become EV early adopters could charge at home and didn’t need urban fast-chargers to get around the city. But such charging depots could unlock new segments of American drivers, especially as EV prices begin to come down.
Consider, for example, that a few of the bluest counties in the country accounted for a disproportionate share of EV sales during the early part of the EV era, an unsurprising finding given the charged politics around electric cars. But those areas are not yet saturated. Many more residents would likely be interested in electrifying if they could afford the up-front cost of an EV and felt confident they could charge it — but may not have the option or the budget to install home charging infrastructure. That group needs lots of plugs close to where they live. If there’s a dearth of existing locations in which to install those chargers, then the solution may be to mimic what Musk has done with the diner: build a giant charging depot from scratch and give the people… something to do.
These issues are especially salient as stations scale up. Most urban and suburban depots to date have reached a maximum of around 20 plugs. Colossal depots with dozens of plugs had been limited to those on busy highway routes like L.A. to Las Vegas or San Francisco — at least until the diner popped up.
No, charging stations aren’t gas stations. We’re not headed toward a future with fast-charging plugs on every corner, in part because the ability to charge at home and at work negates the need for everyone to rely on public refueling. But until every house and apartment building has available plugs, we need a few more silly diners to remind people there’s plenty of juice out there.
