Why PJM Is ‘A Conveyor Belt Heading Into a Volcano’

This week’s conversation is with Evan Vaughan, executive director of the Mid-Atlantic Renewable Energy Coalition. The trade group is at the center of things right now, representing many of the 13 states in the PJM Interconnection region, including power-hungry Virginia. MAREC reached out to me so we could talk about how it sees various energy trends, from the rise of a new transmission build-out to the resilience of renewable energy in the Trump 2.0 era.

The following conversation was lightly edited for clarity.

So where does your membership stand as the Inflation Reduction Act starts to fade into the distance?

The momentum we’ve seen coming out of the Inflation Reduction Act has largely kept pace up until this point. We’re entering into a little bit of unknown territory going forward given that tax credits are phasing out their primary eligibility by July, and we have some significant PJM milestones coming up, including the first post-transition cluster study happening with allocations due in April. In some ways, that first post-transition cluster is going to be really indicative of what direction we see the future energy mix shaping up like in PJM going forward. It’s an interesting time to have this conversation because we’re at such an inflection point.

How much is local siting conflict holding up development?

Local siting challenges are a big problem for getting new generation onto the grid, and it’s not just a wind and solar issue. It’s any generation source. It often gets couched as a wind and solar issue because that’s been the vast majority of the megawatts coming out of the PJM queue over the last five years or so. Even with that being said, there’s been local opposition with the Chesterfield gas plant in Virginia, too.

If you watch what PJM says about the state of their queue, they rightly point out that they’ve processed a number of queue applications, almost cleared out the backlog from their queue transition, and point out supply chain and siting issues for projects once they’ve exited the queue.

The PJM queue is a conveyor belt heading into a volcano. Projects, when they get to the end, they either encounter issues like local denials of their permits, or supply chain issues, or increasingly, interconnection cost challenges, in which case they fall into the volcano. Of those three issues, local siting is the one most readily apparent today.

I still think it’s a sleeper issue for politicians and the general public because there’s confusion over who holds the authority over our electricity generation future. Obviously PJM holds a lot of levers, and the states have a lot of power, and federal policy matters. But in the end, whether there’s enough generation to meet that demand comes down to thousands of local officials across PJM’s 13 states making enough “yes” decisions to make sure we have enough megawatts in place to keep the lights on.

Last week I wrote a feature on transmission development in the PJM region, the need for more wires on the grid, and conflicts over those projects. From your vantage point, how are these conflicts going to be resolved? Is it with local decision-making? Or does some of this interstate tension need to be fixed in other ways?

It’s not the local governments that are the bad guys here. It’s that they have a decision-making framework mismatch from what they care about – valid local issues – and the electricity supply-demand balance. If the lights go off or bills continue to rise and someone in the political realm loses their job, the average voter isn’t going to blame the local government. They’ll blame the state and broader government for these issues.

There’s a real problem with the storytelling aspect of transmission. I’m really optimistic as states come together around FERC’s order 1920, which is finally getting to the implementation stage, as the PJM region will be the first to file a complete planning and cost-allocation filing with the commission. The vision of 1920 is to create more state input with how lines are planned. That’ll hopefully provide some relief to the transmission controversies.

Do you think that whack-a-mole approach is why we’re seeing the level of tension we are on the ground over transmission?

Yes.

Well, that’s a simple answer.

I can elaborate. Essentially, the way transmission is planned is that reliability faults pop up on the system, PJM’s engineers identify faults, and then they identify the kinds of upgrades needed to address faults. It’s a backwards-looking process. It’s not tangible to an everyday person.

Starting from where we want to go in terms of state needs for energy generation and then asking people for input is a much better way to get public buy-in and reduce opposition.

What is the biggest issue that’s top of mind for MAREC?

I worry that for all the activity happening at the state level, the PJM level, and the federal level to try and address the supply-demand imbalance on the grid, it is mostly not adding up to a picture resulting in more generation coming online at the scale we need.

Many of the solutions proposed tend to miss some of the fundamental needs of businesses to draw them to invest in a new generation resource. Many of the solutions being worked on at the states and PJM level are trying to address an urgent near-term need, but what we see is all the changes are actually being disruptive in and of themselves.

What in this moment gives you hope? What makes you optimistic about the future?

I think we are still seeing a huge amount of enthusiasm from our member companies to invest in the PJM region, even with all the headwinds we have. It speaks to a fundamental value that our resources – wind, solar and storage – provide to the grid.