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In need of capacity, the PJM’s surplus interconnection process has produced limited results while MISO and SPP were studying roughly 15 GW and 14 GW each in the first half this year.
After an earlier reform effort proved ineffective, the PJM Interconnection is taking a second swing at creating a pathway for bringing generation online by using surplus interconnection capacity at existing power facilities.
Surplus interconnection service, called SIS, allows a new generator or energy storage system to connect to the grid at a power facility’s existing interconnection point, using that asset’s excess capacity interconnection rights.
Surplus interconnection reviews can be significantly faster than standard interconnection studies, and using existing interconnection capacity can avoid costly network upgrades, according to Gavin Ahern, a co-founder of Surplus Interconnection, an advisory firm.
PJM reformed its Surplus Interconnection Service rules in early 2025, but little has come from that effort.
Since 2023, PJM has received eight SIS applications and approved two of them, according to a late November presentation, the most recent information about the status of surplus interconnection requests by the grid operator.
PJM doesn’t release information about surplus interconnection service requests beyond periodic updates to its Interconnection Process Subcommittee, Jeffrey Shields, a PJM spokesman, said in an email.
In contrast, the Midcontinent Independent System Operator was studying 14.8 GW of surplus interconnection requests as of June 30, followed by the Southwest Power Pool at 14.3 GW, Western utilities at 6 GW and Southeastern utilities at 1 GW, according to an analysis by Surplus Interconnection. PacifiCorp was reviewing 33 projects in five Western states totaling 5.2 GW as of Aug. 13, according to its surplus queue. And in the last 60 days, it has filed five surplus interconnection agreements for approval by the Federal Energy Regulastory Commission.
The majority of the pending surplus interconnection requests are for battery storage projects.
Forty-four surplus interconnection projects have come online in MISO and 22 have started operating in SPP’s footprint, according to the report. Since 2024, it took one year for the project in MISO to come online, on average, and projects in SPP took almost two years, according to the report.
“MISO and SPP built surplus interconnection processes that actually work operationally, for example allowing for parallel operation of an existing and surplus generator at the same point of interconnection, which is critical for surplus projects to pencil out,” Ahern said in the report.
Thermal and renewable energy generating facilities in PJM have surplus interconnection capacity that could support about 150 GW of solar, wind and storage, although the loss of federal tax credits has reduced that potential, according to a working paper by University of California, Berkeley, researchers released in August 2025.
PJM is taking steps to make its SIS process more usable. The effort comes after PJM failed to meet its reserve margin targets in its last two capacity auctions, with the shortfalls growing to about 6.8 GW for the 2028/29 delivery from 6.5 GW for its 2027/28 delivery year, which begins on June 1.
“When PJM is looking around trying to answer the question, ‘How are we going to fill this deficit?’ resources coming online using surplus interconnection should be one of the first things that they grab for,” Grant Glazer, senior manager for regulatory and market affairs for MN8 Energy, a renewable energy and storage developer, said in an interview.
Surplus interconnection offers the fastest way to add new capacity to the grid by allowing the use of existing capacity interconnection rights, or CIRs, he said. Facilities that access the grid via SIS don’t require interconnection upgrades or new interconnection rights, making them less expensive, Glazer noted.
However, PJM’s current rules don’t allow a workable way for surplus additions to access the CIRs associated with an existing generator, according to Glazer.
Under PJM’s rules, a battery system added to a solar farm, for example, has two options to participate in the market: as a co-located resource or a hybrid resource, he said. But the co-located model doesn’t allow the battery access to the CIRs that may be needed to participate in PJM’s capacity market and the hybrid model doesn’t work because the entire resource can only have one market participation ID.
Having a single ID makes it impossible to untangle which resource in the hybrid facility is participating in the energy and ancillary services markets, so it is impossible to settle existing offtake agreements for the existing resource, Glazer said.
To address the issue, PJM staff earlier this month floated the idea of allowing hybrid resources — which participate in the capacity market as a single resource — to participate in the energy and ancillary services markets as separate and independent resources, according to an “issue charge” that is under review. Any rule changes would be developed by PJM’s Market Implementation Committee.
The plan will provide a “workable” pathway for many potential projects, according to Glazer.
Advanced Energy United, a clean energy trade group, supports PJM’s effort.
“We think these fixes are relatively easy, and given how desperately PJM needs new resources, we’re optimistic that this is going to move forward quickly,” Jon Gordon, AEU senior director, said in an interview.
Looking ahead, there are more complicated reforms that could be taken up later around CIRs that would further facilitate surplus interconnection, he said.
MN8 has been looking across its portfolio to find projects that have capacity interconnection rights that are being underused, according to Glazer. Many projects in PJM, especially solar projects, have CIRs that cover 40% to 60% of their nameplate capacity, leaving spare interconnection capacity, he said.
Battery costs have fallen and there’s a surge in demand in PJM for capacity resources, driven by large loads, according to Glazer.
Further spurring the potential use of surplus interconnection, Indiana and Virginia passed laws this year directing utilities in their states to study the potential for surplus interconnection on their systems.
In addition, utilities may turn to surplus interconnection as a pathway for adding capacity at their power plants, whether it’s a solar farm or a thermal generator, according to Ahern.
“There’s definitely receptiveness to it because they’re getting requests from large loads to plug in, and/or they’re short capacity for their own systems needs already,” he said in an interview.
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FERC’s response to the proposals will likely “influence utility capital investment, data center development timelines and the allocation of reliability risks and costs,” ClearView Energy Partners said.
Utility associations supported the 2024 efficiency requirements for distribution transformers and oppose their repeal. The rule may threaten national security, DOE says.
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