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PJM's energy emergency | Factor This Policycast · Factor This

• 0:04
  SPEAKER_03: I think the challenge is to meet the moment.
• 0:05
  SPEAKER_03: We have to do sort of everything all at once.
• 0:08
  SPEAKER_03: You know, we have to optimize our our transmission with advanced transmission technology.
• 0:12
  SPEAKER_03: We have to build more transmission.
• 0:13
  SPEAKER_03: We have to, you know, maximize all of this distributed generation.
• 0:17
  SPEAKER_03: We need to get new iron in the ground in the form of, you know, clean energy plants and battery storage to back them up.
• 0:24
  SPEAKER_03: I mean, uh, this is why it's so difficult.
• 0:27
  SPEAKER_03: Um, all these things have to happen all at once, and everyone has to pull in the same direction.
• 0:31
  SPEAKER_03: And there's, you know, a federal component, there's a state component.
• 0:40
  SPEAKER_01: PJM Interconnection, the largest wholesale electricity market and grid operator in the United States, is at a crossroads.
• 0:47
  SPEAKER_01: Demand is surging across its footprint, accelerated by the needs of artificial intelligence data centers, and PJM is struggling to keep up, to put it lightly, spurring some rather existential examinations of the grid operators' processes, markets, and even its own governance.
• 1:04
  SPEAKER_01: It's clear that changes are needed, but what those changes should be and who should have input, like PJM states, for example, is much murkier.
• 1:12
  SPEAKER_01: And there's no time to waste.
• 1:14
  SPEAKER_01: PJM predicts a more than 6.8 gigawatt capacity shortfall as soon as 2028, underscoring the need to bring more generation online as soon as possible.
• 1:24
  SPEAKER_01: And many of the 67 million customers under PJM's 13 state plus Washington, D.C.
• 1:29
  SPEAKER_01: purview would agree.
• 1:31
  SPEAKER_01: They're seeing electricity prices march upward, in part because recent power auctions got so out of control that PJM, with federal approval, had to cap them.
• 1:41
  SPEAKER_01: Interconnection bottlenecks and market barriers have also inhibited deployment of some of the cheapest and often quickest to power solutions like renewables, energy storage, and demand side resources.
• 1:51
  SPEAKER_01: PJM is also trying to make it easier for data center developers to come online with their own power supply, but how should that even work?
• 1:59
  SPEAKER_01: We're going to dive into all of that and more on this episode of the Factor This Policycast, presented in partnership with Advanced Energy United, as we tackle the PJM energy emergency.
• 2:10
  SPEAKER_01: How can the nation's largest grid operator modernize its operations in time to avoid a capacity cliff while simultaneously satisfying a diverse group of stakeholders clamoring for affordability?
• 2:21
  SPEAKER_01: If you don't know me, I'm Factor This Content Director Paul Gurky, Adam Stern of Clean Energy Developer Clearway Energy, and Kamaya Abreyu, a virtual power plant operator, Voltis, will be joining the podcast shortly to share their perspectives on how we can get more electrons online fast while mitigating the impacts of large load growth.
• 2:39
  SPEAKER_01: I'd like to start the conversation, though, with Advanced Energy United Senior Director John Gordon, a nationally sought after PJM expert to frame our discussion.
• 2:48
  SPEAKER_01: John, first thanks for joining the program.
• 2:50
  SPEAKER_01: I know you are a busy man right now, a very sought-after PJM expert.
• 2:54
  SPEAKER_01: I just want to say that this show is being recorded September 30, 2026, and we're talking about a moving target here.
• 3:00
  SPEAKER_01: So some of the things you hear may have already changed by the time this show goes live next week.
• 3:05
  SPEAKER_01: But let's start with what sounds like the devil at PJM's doorstep, John, that looming capacity shortfall.
• 3:12
  SPEAKER_01: How concerned should we be for the reliability of PJM's system moving forward?
• 3:16
  SPEAKER_01: And what are some of the recent things that FERC and PJM are doing about it?
• 3:22
  SPEAKER_03: Well, thanks, Paul.
• 3:23
  SPEAKER_03: It's great to be here.
• 3:23
  SPEAKER_03: You did an awesome job teeing all this up.
• 3:26
  SPEAKER_03: We have a lot to cover in an hour.
• 3:28
  SPEAKER_03: There is just an incredible amount of activity in PJM.
• 3:32
  SPEAKER_03: And uh, you know, I think folks who watch PGM closely, like all of us and others, are concerned.
• 3:38
  SPEAKER_03: Um, you know, PJM uh is really getting into a really tight spot in terms of just not having enough power generation to meet soaring demand.
• 3:48
  SPEAKER_03: And it's a problem that's been in increasing slowly, and it it couldn't have happened at a worse time because demand is soaring with the data center load that you alluded to.
• 3:57
  SPEAKER_03: Uh right at a time at a time a lot of infrastructure is older, retiring.
• 4:02
  SPEAKER_03: A lot of these inefficient, you know, frankly, polluting fossil power plants are retiring.
• 4:08
  SPEAKER_03: And uh, you know, the plan was years ago that there would be a nice smooth transition toward clean energy resources and uh the PGM Interconnection queue that we've all kind of heard about sort of uh put the kibosh on that smooth transition.
• 4:24
  SPEAKER_03: Um they got overwhelmed with all the clean energy that wanted to connect to the grid, and they were stuck in that queue for years.
• 4:30
  SPEAKER_03: And uh meanwhile, demand just kept chugging along, kept growing, and uh we just kept getting further and further behind.
• 4:37
  SPEAKER_03: And now PGM finds itself really, you know, at a point where they're getting worried about keeping the lights on.
• 4:43
  SPEAKER_03: So the challenge for all of us is how to get new supply on as quickly as we possibly can and how to keep that affordable because that's become such a huge uh political issue.
• 4:57
  SPEAKER_03: So uh we we have many challenges before us, uh, you know, and PGM is working uh on multiple fronts to try and address these issues.
• 5:05
  SPEAKER_01: Fortunately, we've got some unique perspectives to shed light on how we can make that happen.
• 5:10
  SPEAKER_01: Let's let's go over to Adam Stern with with Clearway.
• 5:13
  SPEAKER_01: Adam, tell us a little bit about what you do and the perspective you bring to this topic and how we can do exactly what John said.
• 5:21
  SPEAKER_02: Yeah, thank you so much.
• 5:22
  SPEAKER_02: Happy to be here.
• 5:23
  SPEAKER_02: Thank you for the opportunity and definitely a very timely and important discussion.
• 5:27
  SPEAKER_02: Um, so I am a director of market policy at Clearway Energy.
• 5:31
  SPEAKER_02: For those who are not familiar, Clearway is an IPP, an independent power producer.
• 5:36
  SPEAKER_02: So we develop, own, and operate um utility scale generation projects across the country.
• 5:42
  SPEAKER_02: We have uh over 14 gigawatts of um operating capacity in about 27 states, and it's mostly comprised of clean energy with wind, solar, storage.
• 5:52
  SPEAKER_02: Uh, we have also some dispatchable gas as well in the mix.
• 5:56
  SPEAKER_02: And so, you know, we were very active in the PJM region.
• 5:59
  SPEAKER_02: The one component that that we've been focusing on that we think could have a major impact is is the continued focus on the interconnection queue for getting the line to get generators onto the system.
• 6:10
  SPEAKER_02: Uh PJM has done a lot over the last few years to reform that system to allow for generators to get online quicker uh with more certainty.
• 6:18
  SPEAKER_02: However, you know, there the issues still remain.
• 6:21
  SPEAKER_02: Um it starts uh at the beginning of the process, and this is something that many other RTOs face.
• 6:28
  SPEAKER_02: And that's that's the unfortunate factor that uh generators who are getting in line into the queue won't know their full cost for what they're going to be assigned in terms of like what's going to cost connect to the system until they're in the queue itself.
• 6:42
  SPEAKER_02: And so the queue therefore becomes somewhat of a cost discovery tool.
• 6:46
  SPEAKER_02: Um and so without having that certainty and cost ahead of time, you really have to perhaps submit a lot of projects into the queue, and then knowing that you may only develop and you know finalize a handful of them.
• 6:59
  SPEAKER_02: And so with that, you know, you see those clusters get bigger and bigger and bigger.
• 7:04
  SPEAKER_02: And I think you know, PGM recently saw with uh News Cycle One, um, I forget the actual statistics, but you know, a very large uh cluster has been formed.
• 7:14
  SPEAKER_02: And you know, I think one big reason for that is the uncertainty and cost that remains.
• 7:20
  SPEAKER_02: And so, you know, one thing we would encourage PGM to do, which I think they're already thinking about, is how can they um produce that cost certainty ahead of time so developers can have confidence in what their costs are going to be and make those decisions that want or which projects to submit um before they actually enter the queue in more of a binding way.
• 7:41
  SPEAKER_02: Um so that's the beginning of the process.
• 7:43
  SPEAKER_02: But I would also say, and you know, happy to get into this more as part of this conversation, that there are also problems at the end of the process.
• 7:50
  SPEAKER_02: So you get through the entire queue, maybe you sign your GIA, your interconnection agreement.
• 7:55
  SPEAKER_02: Um, but then after that, there are timelines and cost estimates for how long it will take and how much it's going to cost for those upgrades to be built to accommodate your project.
• 8:07
  SPEAKER_02: Um, and there's actually a lot of uncertainty that's still that we experience in that stage of the process, which is even more impactful because then you really want your costs and your timelines to be locked down so you can start talking to customers who maybe want to offtake your power and you want to sign contracts that have a specific time and a specific cost that you're going to be delivering.
• 8:30
  SPEAKER_02: So when that uncertainty remains and costs go much higher than expected, or timelines go a year or two later, uh, that's you know very problematic.
• 8:39
  SPEAKER_02: So I think there's a lot of work that could be done on that side of the equation too, to bring a lot more certainty to the process.
• 8:46
  SPEAKER_02: Um so you know, in general, I'll just say on the data connection queue, um, PGM PGM has a shortfall, like you like you mentioned, Paul, and you know, the market is showing up.
• 8:56
  SPEAKER_02: I think that was one sign is that news cycle one and how many projects submitted there.
• 9:01
  SPEAKER_02: So it's just a matter of like how to get that capacity from the queue online as quick as possible and as efficient as possible to be able to meet that need.
• 9:09
  SPEAKER_01: Let's bring Kamaya into the conversation.
• 9:11
  SPEAKER_01: Kamaya, Vultis doesn't have to worry too much about the interconnection queue, but you can also promise a lot of power to PJM.
• 9:18
  SPEAKER_01: Tell us about why and how that works and uh how you think they could improve some systems uh from a bird's eye view.
• 9:24
  SPEAKER_00: Great segue, Paul.
• 9:25
  SPEAKER_00: Uh Kimaya Breu from Voltus.
• 9:28
  SPEAKER_00: We are a uh virtual power plant operator and developer.
• 9:31
  SPEAKER_00: And what that concretely means is we aggregate the capabilities of distributed energy resources that are already on the system or able to be added to the system.
• 9:42
  SPEAKER_00: And the benefit there from a speed perspective is that those resources don't need to go through the PGM interconnection queue.
• 9:49
  SPEAKER_00: They can be interconnected at the distribution level based on local processes, which tend to be a lot faster.
• 9:54
  SPEAKER_00: And they might already exist.
• 9:55
  SPEAKER_00: We might have uh battery setups that are already at residential homes, uh, at businesses.
• 10:02
  SPEAKER_00: Uh, and what Voltus can offer is to coordinate and aggregate the capabilities of those resources uh to make the load side of the grid more flexible and provide those capabilities to reduce the capacity crunch that PJM is experiencing and to reduce that capacity crunch quite quickly.
• 10:23
  SPEAKER_00: So there are investments needed.
• 10:25
  SPEAKER_00: Um, and in particular, large loads uh can provide those investments through bring your own capacity or bring your own new capacity.
• 10:34
  SPEAKER_00: Um, Voltis uh last year signed a first of its kind deal uh to provide Google 100 megawatts of uh distributed capacity.
• 10:44
  SPEAKER_00: Um, and PGM has really um uh run with that idea in the current uh iris processes uh in terms of developing this bring your own new capacity pathway.
• 10:56
  SPEAKER_00: I mentioned Iris without without uh providing the acronym.
• 11:00
  SPEAKER_00: That's the interim resource adequacy service.
• 11:02
  SPEAKER_00: We can get more into that later, but the big picture here is that um large loads are being incentivized to go to the market and fund uh solutions, um, including distributed capacity solutions that allow those loads to carry their own capacity costs while providing the investments the grid needs uh to meet load growth and hopefully modernize in the process to accommodate more of the kinds of large renewable projects that Adam is talking about.
• 11:32
  SPEAKER_00: Uh, the more flexible our loads are, the more renewables we can bring onto the system.
• 11:37
  SPEAKER_01: There's symbiosis there.
• 11:38
  SPEAKER_01: And I feel like we're swimming in a very deep pool when we're talking about PJM's energy emergency.
• 11:43
  SPEAKER_01: So that's as good of a place to start as any.
• 11:45
  SPEAKER_01: Uh Kamaya, John, and Adam would love to open it up to any of you who want to share thoughts on how PJM is thinking about that co-generation, that bring your own power, the BYOP stuff that we like to talk about.
• 11:58
  SPEAKER_01: How does that really work and how does that fit into the larger planning that PJM is conducting to try to make sure its system stays reliable?
• 12:06
  SPEAKER_03: Well, I mean, I think the reason PJM is was was looking at this approach is um, you know, the data centers obviously are are moving very quickly.
• 12:15
  SPEAKER_03: They're anxious to connect to the grid.
• 12:17
  SPEAKER_03: And there just simply wasn't the power uh available to provide them.
• 12:22
  SPEAKER_03: I mean, I mean, you just can't let them connect when you don't have enough generation to serve them.
• 12:26
  SPEAKER_03: So so PJM tried to come up with an approach that sort of allowed them to connect while they were securing power supplies.
• 12:35
  SPEAKER_03: Um, and this is the whole reliability backstop procurement along with the uh uh the iris service, the uh the interim resource adequacy service that uh uh allows uh PJM uh to curtail these large loads, uh assuming they haven't been able to get generation online quickly enough to meet all their own needs, to keep the whole system stable.
• 12:58
  SPEAKER_03: So other consumers, other ratepayers aren't affected.
• 13:00
  SPEAKER_03: I mean, the whole the whole thing PGM is trying to do is allow these data centers to start moving forward without harming other consumers in any way.
• 13:09
  SPEAKER_03: And that's where these sort of complex proposals uh uh how how they evolved.
• 13:16
  SPEAKER_03: And um, you know, we we just we just heard that PGM's reliability backstap procurement that was supposed to get underway in September.
• 13:23
  SPEAKER_03: It looks like uh, you know, FERC had some concerns.
• 13:26
  SPEAKER_03: Uh they they approved the general concept, but there were some uh uh concerns with specific details where they decided that what they weren't gonna let PGM move forward in September, and it looks like uh they're shooting for February now for that reliability backstop procurement, which is uh how data centers can begin uh supplying their own needs and avoid uh curtailment.
• 13:49
  SPEAKER_00: I'm happy to add a little bit more detail in terms of the incentives that have been um set up here because I think they're important and how they fit together is important.
• 13:58
  SPEAKER_00: Um the idea is that that PGM wants to make sure, and and all of the political actors really want to make sure the data centers are not imposing either costs, financial costs on other ratepayers, and also reliability consequences, reliability impacts.
• 14:14
  SPEAKER_00: Um and, you know, on the cost side, things were so bad these past couple of years that Governor Shapiro in Pennsylvania implemented a price cap on the normal capacity market to make sure that uh ratepayers costs weren't uh going through the roof.
• 14:30
  SPEAKER_00: Um and that, of course, uh dampened the market signal uh that was being sent to actually get sufficient uh capacity online to meet load growth.
• 14:41
  SPEAKER_00: Um and so that's the kind of political context that we're in.
• 14:45
  SPEAKER_00: Uh and so the solution we have here is to say um those large loads aren't actually gonna go into the normal capacity market.
• 14:52
  SPEAKER_00: Um, they're gonna stay out, first of all.
• 14:54
  SPEAKER_00: Um second of all, so so PGM is not gonna procure on their behalf as a default if these loads are new starting the cutoff date is June 1st, 2027, with some more details, but that's that's the general date.
• 15:07
  SPEAKER_00: Um so PGM won't procure for them.
• 15:10
  SPEAKER_00: That protects ratepayers on the cost side.
• 15:12
  SPEAKER_00: And in addition, from the reliability perspective, they're allowed to come on, but they're first in the queue to get curtailed before any other emergency procedures.
• 15:20
  SPEAKER_00: So if someone's load needs to be shed, uh it's gonna be the data centers first.
• 15:26
  SPEAKER_00: Um and uh, you know, really we're gonna take those actions before hitting other sorts of emergency procedures, way before, you know, load shed as a that is uh in the technical sense.
• 15:40
  SPEAKER_00: Um, and the way a data center can buy its way out of this is to go to the private market and get capacity and not just any old capacity.
• 15:47
  SPEAKER_00: It has to be new additive capacity to the system.
• 15:51
  SPEAKER_00: So we're not basically cannibalizing the power that's already on the system to serve existing load.
• 15:57
  SPEAKER_00: So that's the the there's a stick that's been set up.
• 16:00
  SPEAKER_00: Data centers want firm service, they don't want this risk that they're gonna get turned off before anyone else.
• 16:06
  SPEAKER_00: And that's what's uh creating this this pathway to uh develop resources um kind of innovatively outside of the the PJM uh price signals.
• 16:18
  SPEAKER_01: Just curious, does distributed capacity, if it's new, qualify?
• 16:21
  SPEAKER_01: Or is does it just large-scale projects like the one Adam's Adam puts together?
• 16:26
  SPEAKER_00: It sure does.
• 16:27
  SPEAKER_00: Uh and BOLTUS and others um were very active in the stakeholder process to make that happen.
• 16:34
  SPEAKER_00: Um, there's no reason um why distributed resources uh cannot provide those same capacity benefits.
• 16:40
  SPEAKER_00: And in fact, they bring all these other benefits.
• 16:43
  SPEAKER_00: Uh they can provide local resiliency benefits.
• 16:46
  SPEAKER_00: Um, you know, when we're talking about distributed resources, we're talking about, for instance, putting batteries uh on at um businesses at residential homes, and those can provide benefits to those end customers totally outside of the benefits that the data centers are paying for.
• 17:03
  SPEAKER_00: Um, they also tend to be clean and as we discussed earlier, faster to come online.
• 17:07
  SPEAKER_00: So it was a it was really important to make that part of the overall framework.
• 17:11
  SPEAKER_00: Uh and we're really gr glad that PJM and FERC as well has indicated uh a recognition of those benefits.
• 17:19
  SPEAKER_03: I just wanted to highlight the fact that the you know these data centers, you know, aren't real happy about being on this interruptible service.
• 17:27
  SPEAKER_03: You know, they these the they uh they operate 24-7, 365.
• 17:30
  SPEAKER_03: Uh being interrupted for a data center is is a big, big problem.
• 17:34
  SPEAKER_03: And and so s the speed of which we can bring these resources online uh really matters to the data centers.
• 17:41
  SPEAKER_03: They they want to get their resource needs met as soon as possible and not be subject to this uh involuntary interruption.
• 17:50
  SPEAKER_03: Uh and that's where you know these these resources Voltus uh uh makes available can come online very quickly.
• 17:56
  SPEAKER_03: They don't even have to deal with the interconnection queue.
• 17:59
  SPEAKER_03: Um and the kind of resources Adam brings online, these much larger resources, while they have to deal with the interconnection queue like everyone else, um, often their time to construction uh and so forth is much faster than uh many of these other resources, these large natural gas plants, uh, the timelines to construct these plants is really, really long.
• 18:20
  SPEAKER_03: And the prices have absolutely gone through the roof with all these supply chain disruptions.
• 18:24
  SPEAKER_03: So um, you know, the economics of clean energy and this and the speed, you know, still matters, even though they've come up with this curtailment approach for the data center load.
• 18:33
  SPEAKER_02: Yeah, and maybe I could add um just you know, from our perspective as a developer, and you know, um the these conversations have been very just large and you know, taking up all the space in the room for for obvious and valid reasons, the reliability backstop and connect to manage now, formerly known as connect to manage now iris.
• 18:54
  SPEAKER_02: Um and you know, for a connect to manage piece and the you know, the threat to curtail and and the the stick to push uh entities to find their own capacity.
• 19:04
  SPEAKER_02: Um, as a developer, you know, you know, we I guess we welcome that.
• 19:07
  SPEAKER_02: Uh obviously we we're already in discussions with those entities to try to provide and and service their needs, especially those entities that have a preference for renewable energy or just looking for low-cost energy.
• 19:19
  SPEAKER_02: And you know, with renewables, especially combined with storage, you know, we can provide a lot of the reliability needs that other entities can as well.
• 19:26
  SPEAKER_02: Um, at the same time, I we you know, what we're hearing too, I think what John is alluding to, is that you know, the there's still some wrinkles maybe to iron out here in terms of how this is going to be implemented.
• 19:38
  SPEAKER_02: And, you know, I'll just say in general, kind of going back to the position PJM is in, um, you know, I think a lot of us are sympathetic in that there's a lot of pressure coming down on PJM from the administration, from the states, and you know, that pressure is coming from places that are are warranted and the prices are high, customers are facing extremely high prices, and that's that's a problem that needs to be addressed.
• 20:02
  SPEAKER_02: Um, you know, but there's you know, it's just showing how complicated this process is and that you know it's hard to find a silver bullet that can like easily solve it.
• 20:12
  SPEAKER_02: And so, you know, just to say just the message that you know PJM, I think is is doing a lot to try to address that, but at the same time, they can only do so much, I think is what we're sort of seeing.
• 20:23
  SPEAKER_02: And and for some people maybe to understand who who don't already, that you know, there's a role in in this multi-state RTO.
• 20:31
  SPEAKER_02: Um, there's a big active role for the states in what they need to do in terms of like changing new regulations or maybe even introducing new legislation to allow for, for example, the curtailment function to work.
• 20:45
  SPEAKER_02: Um, and so you know that's not a small thing.
• 20:49
  SPEAKER_02: Um and um, you know, just it's important people to keep that in mind, especially if you're thinking about things from a data center perspective, which obviously that's that's not us, but you know, those are our customers.
• 20:59
  SPEAKER_02: Um they they want to be online.
• 21:01
  SPEAKER_02: They want to be in line fast.
• 21:02
  SPEAKER_02: They also have already had contracts in place before this came up.
• 21:06
  SPEAKER_02: And they, you know, like any entity needs certainty into like what this is all going to look like and how are they expected to operate, you know, when they're trying to just do their thing like right now, you know.
• 21:18
  SPEAKER_02: And so all to say is that um, you know, I think you know, a lot of us, especially some of the higher decision makers, you want things to happen like that.
• 21:26
  SPEAKER_02: And you know, PGM has moved pretty fast on these things.
• 21:29
  SPEAKER_02: However, you know, the this is just kind of the factor of this kind of multi-state process.
• 21:35
  SPEAKER_02: Um, not to say the RTO does not provide many, many benefits that, you know, uh I think bring down prices for everybody, but just that, you know, just to say expectations that things could still take a little bit longer to implement.
• 21:48
  SPEAKER_03: And just just to add to that, I wanted to emphasize the the unprecedented nature of what uh PJM is is trying to do here.
• 21:56
  SPEAKER_03: You know, that they've we've never uh isolated uh a customer class, large load data centers for uh to be to be interrupted.
• 22:05
  SPEAKER_03: And, you know, traditionally PGM, when they operate the system, all customers are sort of treated the same.
• 22:09
  SPEAKER_03: Uh if there's a a uh a shortfall in power, there may be rolling blackouts, but it's it's not like a customer class is like singled out to be interrupted.
• 22:19
  SPEAKER_03: So this is very new and that's what PGM has been struggling with.
• 22:23
  SPEAKER_03: And there's all sorts of you know engineering complexity associated with that, actually effectuating that interruption.
• 22:29
  SPEAKER_03: And then dealing with all of the costs and cost allocations associated with that.
• 22:33
  SPEAKER_03: And that's that's part of the the thing that FERC got tripped up on uh in in approving this reliability backstop procurement, they realized uh you know that there there's more work that needs to be done to ensure that these data center related costs are isolated, allocated properly, consumers are protected.
• 22:50
  SPEAKER_03: So it's um unprecedented activity in a really short period of time because of this urgency.
• 22:57
  SPEAKER_03: You know, we really don't have the time one would really like to have to really sort out these really complex issues.
• 23:03
  SPEAKER_03: So uh there's a lot of people working really hard to make this happen fast.
• 23:06
  SPEAKER_01: And John, there's a lot of disparate stakeholders involved here.
• 23:09
  SPEAKER_01: Adam, you mentioned the role that PJM states play in all this.
• 23:13
  SPEAKER_01: I'd love to open up that question to all of you.
• 23:15
  SPEAKER_01: How do we sort out what's best for everyone when everyone wants something a little different, whether it's a PJM state or it's the FERC or it's PJM itself.
• 23:25
  SPEAKER_01: How do we balance the utility interests in all this?
• 23:28
  SPEAKER_01: Because I'm sure they'd love to hit their rate bases with these large infrastructure additions that they're trying to specifically keep out of those rate bases.
• 23:35
  SPEAKER_03: Well you know that's a funny you bring that up that's the other major process that's underway right now.
• 23:40
  SPEAKER_03: I mean the states really entered this game uh about two years ago when prices spiked in that capacity auction that the uh Kamaya alluded to earlier that that's when they sort of woke up the states and realized how big an impact PJM has on on state consumers and and prices.
• 23:58
  SPEAKER_03: And uh they were very frustrated to find out that they had very little uh say in what happens at PJM they they had virtually no uh authority over PJM whatsoever and uh have been working hard to change that and there's been a uh a process at FERC of mediation going on on PGM governance to sort of decide uh what voice uh the states should have in in in PJM policy um and it's been you know quite contentious um and as prices have increased and as uh uh you know the reliability issues have become more acute all these different stakeholders you're talking about the generation owners in PJM the transmission owners uh the the states the consumers uh everyone has concerns and something to say and is wanting to have a voice and that's being sorted out by FERC in a uh in a uh uh a mediation process that's unfolding right now in real time uh that could very change significantly how PJM is is sort of governed internally and how they make their decisions.
• 25:02
  SPEAKER_01: Those of you listening to this podcast don't know that John Gordon actually has a second computer open just next to him where he's monitoring I'm I'm not making this up the live vote on PJM governance with hopes of being able to have a resolution at some point while he does this show in the background, the epitome of multitasking I appreciate you having one eye on each monitor, John let us know if some breaking news happens.
• 25:24
  SPEAKER_03: Well I I will say that uh a a uh proposal did come pass out of PJM.
• 25:30
  SPEAKER_03: It doesn't resolve all the issues but it allows PJM to say to FERC we have uh at least consensus internally amongst our members on a on a path forward um and we would like uh PJM is going to say to FERC we would like to continue uh to have these discussions um before turning it you know FERC has threatened PJM that if they can't figure it out for themselves FERC will figure it out for them and I think everyone's trying to avoid that outcome um so the good news is uh I think it was the member proposal did get voted out and uh but uh the it's not over yet there's there's still uh a process till we know what the new governance is is actually going to look like FERC and with the old I'm not mad at you I'm just disappointed.
• 26:13
  SPEAKER_01: Yeah kinda go back to the table and come back with better Sonny.
• 26:18
  SPEAKER_01: Adam and Kamaya let's talk about affordability because John brushed up against it a little bit uh your solutions provide very different paths to affordability but ultimately affordability is what we're striving for in the PJM system.
• 26:29
  SPEAKER_02: What are some of the roadblocks standing in the way specifically for each of you uh to getting where you want to go yeah I can start um and I'll just kind of call back to you know my introduction comments and and focusing maybe on the interconnection reform and um mainly because you know the interconnection queue is is mainly filled with renewable energy resources which as we know you know are are extremely low cost and and can do a lot to bring down cost ratepayers immediately as soon as they can come online.
• 26:56
  SPEAKER_02: And so you know getting those projects out of the queue and onto the system would do a lot to to alleviate and and help with that affordability issue.
• 27:05
  SPEAKER_02: But then you know there's you know if I can you know the it there's implications for how PJM is is designing that interconnection process uh which then you know has a direct correlation as to the final cost that those projects incur and the you know the cost that a project incurs eventually will go to the cost of that power which ratepayers pay for.
• 27:29
  SPEAKER_02: And so you know major connections implications for how that interconnection process is being designed.
• 27:35
  SPEAKER_02: Right now, you know amongst everything else that PJM is doing they've decided to also drastically significantly reform their interconnection process after just doing so you know not long ago.
• 27:50
  SPEAKER_02: They you know for those who are not following within the co-located order workshop which is not one of their main stakeholder venues they have introduced a proposal to reform the generator interconnection process where they would bring large loads into the generator interconnection process and they'd be studied alongside each other.
• 28:13
  SPEAKER_02: Furthermore they plan to shrink the process down to 12 months using some automation tools that we haven't seen used yet, but they said we'd be able to do that.
• 28:25
  SPEAKER_02: And that's a pretty big change in a lot of different ways.
• 28:29
  SPEAKER_02: And you know we you know first I'll say we applaud PJM and and support where they're where their heads at in terms of like finding you know trying to find optimization where it exists in terms of like finding one solution that could accommodate multiple needs in the transmission space and also accommodate PJM trying to find a way to bring more efficiency to the queue to be able to get power online faster.
• 28:54
  SPEAKER_02: You know those are things we continue to push for.
• 28:57
  SPEAKER_02: However, you know as the proposal what the proposal currently looks like there's still some big open questions and one of which is directly related to the affordability issue and also the timing issue in terms of getting power online.
• 29:11
  SPEAKER_02: So just real quick, you know, part of the proposal is for large loads like I said and generators to be studied together.
• 29:19
  SPEAKER_02: However there's no like co-location component of that like other RTOs have created you know individual or separate interconnection paths where projects like a generation and load are studied together at like the same point of interconnection.
• 29:34
  SPEAKER_02: And when that happens I think you're more likely to see some optimization in terms of like you may need less network upgrades for those two entities as you would if they were studied individually.
• 29:46
  SPEAKER_02: But the way PGM has currently proposed this, the loads in the generation essentially would be you know separate in at in their respective places.
• 29:54
  SPEAKER_02: And because of that distinction I think we're concerned that we're more likely to see um kind of more upgrades or larger upgrades than we would otherwise in the traditional generator interconnection queue and mainly just it comes down to there's this more stuff now in the cluster.
• 30:10
  SPEAKER_02: And so you know with that not only could we see higher upgrade costs, you know and that would have to be figured out in terms of allocation of who pays for that generators or load.
• 30:21
  SPEAKER_02: But I think even more importantly that if larger upgrades are needed because there are just essentially more entities in the cluster triggering that need, those larger upgrades take longer to be built and that's going to kind of further delay a project like ours from coming online even if we're not even paying more to do it.
• 30:43
  SPEAKER_02: And you know we may have projects right now that like we're ready to go, but if we have to wait two or three years for an upgrade to be built that we're contributing only a fraction to but then 20 other load and gen combinations are also contributing to, you know, that's that's a problem.
• 30:59
  SPEAKER_02: And so it's something that you know we've been vocal with PGM about and we want them to take a look at and consider before moving forward with this warrants discussion.
• 31:10
  SPEAKER_02: I'll say um you know doesn't get too deep here I'm happy to touch more on this later but something we've been pointing PGM to as an example for a direction they could move into is something what SPP is doing and that's called the consolidated planning process.
• 31:28
  SPEAKER_02: And so they've they've actually gone one step further and fully integrated all of their essentially transmission studies into one.
• 31:35
  SPEAKER_02: So they have one study that's looking at generation, load and regional transmission needs all together.
• 31:42
  SPEAKER_02: And the the result of that study is an interconnection fee which I think they just released today that is known to interconnection customers ahead of time and that's what I was talking about before that actually maybe for the first time will provide that actual binding cost certainty that developers like us can use to make a more informed decision about what projects to enter the queue.
• 32:05
  SPEAKER_02: And also by including regional planning in that in that one study that you're more likely to find that optimize those optimized solutions where like maybe you could find a few backbone you know projects that could accommodate many needs that could you know mitigate the need for like more piecemeal upgrades.
• 32:23
  SPEAKER_02: And so you know PJM has been sort of saying like hey this is a step towards that but I think you know without and going all the way I think it actually is almost a step backwards because we're we we see more kind of piecemeal upgrades as opposed to optimal solutions.
• 32:39
  SPEAKER_02: So um all to say PJM like let's keep the discussion going.
• 32:43
  SPEAKER_00: I'd like to pick up uh where Adam left off in terms of these um uh network upgrade costs and and their impact on affordability um distributed energy resources so far have been recognized for a number of benefits capacity benefits how they can uh provide energy a whole host of things uh but the transmission benefits the potential transmission benefits of distributed energy resources that's a that's a newer area uh that I think is is is very live very underdevelopment uh and you know zooming way out uh what are the the drivers of uh of cost on the grid it's like how much infrastructure we're we're building out that then gets that then needs to be paid for over a long period of time so if we can um use what we already have as efficiently as possible and add less uh avoid some of those network upgrades uh that has long-term affordability benefits for all ratepayers and distributed energy resources you know if if you think about a load coming online and then you think oh there are a number of nearby businesses that might be able to put batteries in place that help to absorb some of the the local impacts of that of that new load um that might mean we have to you know build less add less to our transmission lines to to serve more load and it means that we're squeezing more juice out of the system that that we already have.
• 34:13
  SPEAKER_00: So getting that right um having those conversations and and developing the market rules the RTO rules such that there is a study of virtual power plants and a recognition of those potential uh technical benefits um is is kind of a a new way that we can um drive affordability with uh distributed energy resources um I think uh load flexibility um in in general uh you know demand response traditional commercial and industrial demand response like that's that's a pretty mature product um but there are a lot of barriers in um moving those abilities into the residential space and and a key one that we find is data access uh in order to package up the capabilities of of residential customers whether it's their smart thermostat uh or their ability to uh you know uh change when they're using energy uh based on signals that the market is providing um aggregators like Voltus um need to be able to see how much energy that customer is using um either in real time or at the very least after the fact uh so you can measure that response.
• 35:32
  SPEAKER_00: And you know we we believe that that that data is owned by the customer, but often it is held by their local utility.
• 35:40
  SPEAKER_00: And for a variety of reasons um getting that data both the customer getting their own data and then passing it on to the aggregator has been a really thorny ongoing challenge that we're kind of taking up both at the RTO and federal level and at the state by state level.
• 35:59
  SPEAKER_00: I think if we can if we can remove that barrier, if we can get that right, we'll really see an explosion of demand response participation on the residential side to provide both like distribution level benefits, but also those wholesale integrate integrated benefits that are kind of where where ROLTIS most traditionally comes in.
• 36:19
  SPEAKER_00: We've had some recent success uh FERC listen to us um with respect to our request to uh use statistical sampling at PJM when we don't aren't able to get the data from every single meter in a residential aggregation but there's some some work there at that level and and we still need to solve the core issue um which is that uh we need the the data from every meter um and you know to just just make it really concrete here because this is this is so important uh generally speaking we're asking that every utility have a robust and functional green button connect implementation that's the name of the protocol uh that lets uh third parties and customers themselves programmatically access meter data about energy usage and if we can get that across the footprint and and take advantage of past investments in advanced metering infrastructure that ratepayers have have already paid for it, continue to pay for, then we're really doing justice uh by by the cap by by those investments and the capabilities that that residential consumers can bring.
• 37:28
  SPEAKER_03: Yeah and this is really low-hanging fruit I mean if speed and affordability are your are your primary issues with which they are uh I mean it's really frustrating that more isn't being done we should be doing everything in our power to use every bit of these resources that Kamaya is is our is detailing here and and there is a role for the states uh in in terms of working with the local utilities and making the data available and so forth there's a big state role in maximizing these resources and there's a PJM role as well in in terms of recognizing uh the value they bring and compensating them for that and and and the PGM region is really lagging behind other parts of the country in in terms of what they're doing for these kinds of resources and uh and that that's really just a no-brainer uh given given where we're at to really maximize those opportunities.
• 38:21
  SPEAKER_01: And the technology is there.
• 38:22
  SPEAKER_01: On a recent policy cast we were just talking about a record setting virtual power plant dispatch out in California, some 580 megawatts I believe which would have been enough to come very close to staving off one of the California blackouts that rolled through in 2020.
• 38:37
  SPEAKER_01: So we're talking about a lot of uh megawatts here and not small scale stuff that when we're talking about potential problems very shortly down the road in PJM, this could be a tool as you mentioned John that we go to in the short term I don't mean to be Mr.
• 38:51
  SPEAKER_01: Doom and gloom but if we don't enact some of these suggestions and policy solutions and clear some of these roadblocks what are we facing in 2028 and beyond in PJM's system?
• 39:03
  SPEAKER_03: Well I don't I don't want to be doom and gloom either but I opened the door didn't I let the devil in I mean there's real concern about you know rolling blackouts and and actual power shortages and uh along with that comes very high prices.
• 39:17
  SPEAKER_03: I mean it's it's simple economics you know scarcity uh drives prices that's why we see these prices spiking in capacity markets.
• 39:24
  SPEAKER_01: Um so those two go hand in glove the two things we we do not want higher prices and uh and and to be short on on power um it's it's it's a real concern I think everyone recognizes how what a critical place we're in PJM has said it um that they they are concerned um but the solutions uh not only are they uh complicated um um but they they they take time to implement it you know in in this in industry uh the types of critical infrastructure that we're building here isn't uh isn't built overnight you know with the with the exception of the the resources Kamaya's talking about and and why those are so important that those can can be uh deployed very quickly um and but generally clean energy resources are faster to market um but time and again uh you know PGM is is relying on traditional resources natural gas plants that uh um you know we're looking at seven or eight years uh right now with uh supply chain disruption and all the work involved to actually get a natural gas plant built and in the ground and and that's way beyond the timeframe that PGM's concerned about for uh keeping the lights on we're talking about this in the shadow of another major issue that's sort of been percolating on Capitol Hill this week and past few weeks and actually years preceding that but federal permitting reform we finally have language in a bill and talking about speed to power in this conversation it I'd be remiss without mentioning that there's some pretty big legislation potentially in a lame duck session that could catch a vote that could really fundamentally change the way that we look a lot of a lot of these speed to power issues.
• 41:03
  SPEAKER_01: I don't anticipate that any of you had a chance to pour through I think it was more than 400 pages or whatever, but any thoughts about maybe you know beyond PJM ways that we could achieve some of these same goals whether that's through federal permitting reform or maybe some other means?
• 41:18
  SPEAKER_02: You know in general permitting reform is something you know a lot of us in our industry have been strongly supporting um you know both you know we have permitting issues for our respective you know development projects uh you know and those are permitting issues that we see in the local level the state level and and federal to a certain extent however you know I think even more importantly in regards to this legislation is how um permanent reform can unlock some of the very needed transmission development uh that that you know we really need to um you know access uh areas that have you know really great renewable resources um but also alleviate congestion and you know again bring down cost to ratepayers um you know the transmission as has been proven and you know in and out uh time and time again to uh be a great investment from a cost benefit perspective um for those reasons and you know more connections that we can have you know within RTOs and then you know maybe even more importantly across and connecting RTOs that's more opportunity for electrons to flow in a way that can bring low-cost resources to customers when they need them and you know reduce the need to you know maybe turn on the most expensive uh generators during times of of high demand.
• 42:40
  SPEAKER_02: And so you know one of the biggest barriers to seeing that transmission build out has been uh permitting you know and I think you know this is this is it's not an easy easy topic and it's been a discussion for a long time.
• 42:52
  SPEAKER_02: I think this permitting conversation in Congress has been happening for years.
• 42:56
  SPEAKER_02: And you know there's still some hope that we can get there.
• 42:58
  SPEAKER_02: And from a bipartisan perspective like you mentioned and so I think that's a really uh big point to keep in mind is that you know transmission in general should not be thought of as a renewable only issue.
• 43:09
  SPEAKER_02: Like that's needed for for all generation and it's needed like I said just to to relieve congestion and to and to lower costs to ratepayers regardless of where that power is coming from.
• 43:20
  SPEAKER_02: You know not to mention that it's it's also a thorny issue for for local communities because you know just like any other generation project or a data center people sometimes don't want to see you know transmission uh built in their backyard.
• 43:37
  SPEAKER_02: However at a time when it's it's extremely critical for this nation to have transmission to to bring down costs to open up access for new resources I think it's it's it's it's a place where you know uh some federal direction can come in and be really helpful um to kind of direct that and allow for that.
• 43:58
  SPEAKER_00: Yeah there's there's a real opportunity John mentioned some of the um you know gloom and doom scenarios that that we could see in a few years if we continue with status quo and that that status quo was built, was developed for pretty slow load growth.
• 44:14
  SPEAKER_00: Consider PJM current peak is like 90 gigawatts, and we're looking at tens of additional gigawatts projected to come online.
• 44:21
  SPEAKER_00: So this is like a significant step change that demands a step change in uh you know how we plan for the grid, uh, how we coordinate things, um, you know, how we manage uh impose the costs of um both build-out and and reliability.
• 44:40
  SPEAKER_00: Um but it also means that there's a ton of money, a ton of people who really want to improve the grid and increase its capacity.
• 44:49
  SPEAKER_00: And that uh provides an opportunity to do things right, uh, to use modern technologies uh to improve our transmission, not just traditional transmission, but various grid enhancing technologies and to really make the grid as as flexible as it can be, uh, to not just meet the needs of the moment, but uh absorb the nation's like long-term goals in terms of electrification and and decarbonization.
• 45:17
  SPEAKER_00: So if if this money and this attention and this energy is used well, uh, we could be stepping into a real grid of the future while mitigating some of the uh very real anxieties that that folks have about load growth.
• 45:30
  SPEAKER_03: Yeah, I think the challenge is to meet the moment.
• 45:32
  SPEAKER_03: We have to do sort of everything all at once.
• 45:34
  SPEAKER_03: You know, we have to optimize our our transmission with advanced transmission technology.
• 45:38
  SPEAKER_03: We have to build more transmission.
• 45:40
  SPEAKER_03: We have to, you know, maximize all of this distributed generation and and all of this uh uh all of this new technology and virtual power plants.
• 45:49
  SPEAKER_03: We need to get new iron in the ground in the form of you know clean energy uh plants and and battery storage to back them up.
• 45:56
  SPEAKER_03: I mean, uh this is why it's so difficult.
• 45:59
  SPEAKER_03: Um all these things have to happen all at once, and everyone has to pull in the same direction.
• 46:02
  SPEAKER_03: And there's you know a federal component, there's a state component.
• 46:06
  SPEAKER_03: Um and uh and that's what makes it so challenging, is all of those different dynamics trying to make it everyone work together.
• 46:14
  SPEAKER_01: Yeah, and the other part of that, John, is we don't know exactly how much of this stuff is going to come online.
• 46:18
  SPEAKER_01: Um, you know, when you talk about doom and gloom, there's a lot of doom and gloomers out there who say that AI bubble is ready to pop, and when it does, what happens?
• 46:25
  SPEAKER_01: Who's gonna be holding the bag in PJM?
• 46:27
  SPEAKER_01: And I think that's exactly what a FERC is driving at with its concerns over cost allocation.
• 46:31
  SPEAKER_01: How do you anticipate PJM handling the possibility that we're talking about gigawatts that maybe don't come online or maybe worse, they do?
• 46:42
  SPEAKER_03: Well, that's that that's part of the issue that they're running into in RBP is things around you know collateral and uh you know who who what happens if parties default, who gets left holding the bag.
• 46:53
  SPEAKER_03: Um and these are you know massive amounts of dollars at stake.
• 46:57
  SPEAKER_03: I mean, that's the the other side of the equation.
• 47:00
  SPEAKER_03: I mean, if if you're a generator and and and you build and you're you know dedicated to a data center and that doesn't materialize, where does where does that leave you?
• 47:08
  SPEAKER_03: Um and and all of that just creates this vast uncertainty.
• 47:12
  SPEAKER_03: And uh, along with all these changes, PGM is making simultaneously, changes in their governance, uh, these vast new market programs just create a really confusing marketplace which doesn't stimulate multi-billion dollar investments, you know, that that are 30-year investments.
• 47:32
  SPEAKER_03: Um so so that's that's a real dilemma.
• 47:35
  SPEAKER_03: And you you raise some you know uh really big issues that are being discussed is trying to build the right, the right amount of generation and and what's real and what isn't when it comes to data centers.
• 47:48
  SPEAKER_03: Um the electric utility industry would move very slowly.
• 47:52
  SPEAKER_03: Load growth would be be very incremental, you know, a percent or two a year would be big load growth over the last 20 years.
• 47:59
  SPEAKER_03: And and now the data centers have just changed everything.
• 48:02
  SPEAKER_00: If you really want to get into the the nitty-gritty of uh load forecasting and figuring out exactly which loads are coming on, uh come to a PGM load analysis subcommittee meeting.
• 48:13
  SPEAKER_00: Uh get more than you would ever want on how PGM is thinking through those questions.
• 48:17
  SPEAKER_01: Aaron Powell A through line to one of your previous responses, Kamaya.
• 48:20
  SPEAKER_01: You need data for that.
• 48:21
  SPEAKER_01: You're gonna need a lot of data to make sense of any of that.
• 48:24
  SPEAKER_00: Well said.
• 48:25
  SPEAKER_01: Um before we wrap things up here on the fact of this policy cast, I want to give each of you an opportunity to share some final thoughts, something we didn't talk about enough, or maybe something you really wanted to get to that we didn't have a chance to.
• 48:37
  SPEAKER_01: Before we get there, though, I want to open the door one more time to uh market reforms that PJM could uh embrace in the short term to maybe alleviate some of this pressure, some of this pain.
• 48:49
  SPEAKER_01: I'm not sure there's any silver bullet magical interconnection solution for projects like yours, Adam.
• 48:55
  SPEAKER_01: I'm not sure there's a perfect piece of legislation that they can pass to enable BPPs, Kamaya.
• 49:00
  SPEAKER_01: But if you had to throw something at the wall, what would it be?
• 49:03
  SPEAKER_02: You know, I hate to just harp on the same thing, but the PJM has been asking like pretty big questions too, amongst all this, like how can we stakeholders like significantly reform our market system to be able to address this capacity shortfall?
• 49:16
  SPEAKER_02: And they're looking at a lot of different big swings, you know, and and you know, we've offered some of our thoughts there, and you know, we you know part of that is just like you know, ensuring that renewables and energy storage, the value of those are are fully realized in the system, you know, within the the realm of the energy and capacity markets.
• 49:33
  SPEAKER_02: And part of that part of that is having an ELCC, a capacity accreditation process that um can be relied upon and then you know is is not going to fall off a cliff in a couple of years.
• 49:43
  SPEAKER_02: Um to whatever extent we can implement reforms to save that.
• 49:47
  SPEAKER_02: But you know, I think even before you even step to market reforms, like if if you if you believe me that the capacity that's needed is is stuck in this interconnection process, and and the solution is not is not an engineering solution.
• 50:00
  SPEAKER_02: The solution is just figuring out a better way to do it, to unstick that capacity uh with an interconnection reform, but also building transmission that's needed to unlock new generation.
• 50:10
  SPEAKER_02: Like that could go a really long way, I think, to to meeting that need, um, you know, even before you start looking at how to drastically you know alter the energy ancillary services market.
• 50:22
  SPEAKER_02: Um again, I'll just say I think that's both on the early part of the interconnection process and also um the end part.
• 50:29
  SPEAKER_03: I mean, I'll I'll second that on interconnection.
• 50:31
  SPEAKER_03: I mean, that's the thing you really need to fix.
• 50:33
  SPEAKER_03: I mean, if I could wave a magic wand and you could complete an interconnection study in a couple of months instead of m several years.
• 50:40
  SPEAKER_03: I mean, in the past it's taken PGM you know multiple years uh to complete interconnection studies.
• 50:47
  SPEAKER_03: And that's that's one reason we're in the mess we're in.
• 50:49
  SPEAKER_03: I mean, uh you've you've got to be able to figure out uh you know how to get uh generation online more quickly.
• 50:58
  SPEAKER_03: And uh, you know, time is sort of the enemy of the this project development.
• 51:02
  SPEAKER_03: When I think of all the resources uh that were stuck in the queue years ago and didn't get built, and then comes COVID and all these price increases and uh how much the market has changed, it's just such a shame.
• 51:13
  SPEAKER_03: All those resources that could have been in in the ground right now, if that process was functioning, um, you know, we we would be in a much better place.
• 51:20
  SPEAKER_03: So if I was waving a magic wand, it's you know, interconnection's a big one.
• 51:24
  SPEAKER_00: I don't have um uh a a silver bullet or or anything close, but uh I think I want to speak to to process here um and and just the the confusion of the current moment uh for market participants.
• 51:39
  SPEAKER_00: Um you know, at PGM we have like six or seven maybe highly interrelated processes uh that are partly at FERC, partly within the stakeholder process.
• 51:50
  SPEAKER_00: Um and it's difficult to understand uh as a market participant, whether you're on the load side or you're a supplier uh or you know, a consumer advocate, whoever it might be, um uh how the different pieces fit together and how all of these various incentives are going to line up.
• 52:10
  SPEAKER_00: Uh so if you're taking service under one of the new proposed uh non-firm transmission services that that PJM and on all of the RTOs will be offering, how does that interact with the fact that you might um be asked to curtail essentially be non-firm for uh reason because you're taking interim resource adequacy service and haven't brought your own new capacity under that totally separate framework?
• 52:38
  SPEAKER_00: Uh and um, you know, I I think an ask uh to well, not just PJM, but FERC as well.
• 52:47
  SPEAKER_00: There have been lots of signals in terms of what is the actual level of urgency?
• 52:50
  SPEAKER_00: Do we need the auction in September?
• 52:52
  SPEAKER_00: Are we okay with having it in March?
• 52:53
  SPEAKER_00: Um, you know, that's been a very evolving conversation.
• 52:56
  SPEAKER_00: Uh also the states who have made lots of commitments to figuring out their pieces of of this whole uh uh new resource adequacy setup.
• 53:08
  SPEAKER_00: Um let's get some coordination and let's make sure that there is alignment between all of those conversations happening.
• 53:14
  SPEAKER_00: That's far from an easy task.
• 53:16
  SPEAKER_00: Things are moving a mile a minute in lots of different places.
• 53:20
  SPEAKER_00: Um, but I think it maybe if I could wave a magic wand, uh, I would um, you know, uh design the conversation so everyone is is hearing everything all the time and able to weigh in on every issue and make sure that uh that things are lining up efficiently.
• 53:36
  SPEAKER_00: So I don't know of how satisfying an answer that is, but you know, I think I think some process improvements could really help.
• 53:42
  SPEAKER_01: No, it's doubly satisfying.
• 53:43
  SPEAKER_01: One, because it was a solid answer, but two, because we're trying to think of ways to make this show fun and exciting, and segments are one way to do that.
• 53:49
  SPEAKER_01: And I think wave a magic wand might be a future segment on the factor of this policy cast, because it's such an open-ended question.
• 53:56
  SPEAKER_01: You could ask a bunch of disparate policy experts or from all sorts of walks in the energy ecosphere to wave a magic wand, and they're gonna give you a different answer every time because everyone wants to change something else that makes their job just a little bit easier.
• 54:07
  SPEAKER_01: I like that.
• 54:07
  SPEAKER_03: It's much easier than saying what can really be done.
• 54:10
  SPEAKER_03: Yeah, exactly, because then you don't have to do any of the hard work.
• 54:13
  SPEAKER_01: Right.
• 54:14
  SPEAKER_01: And that's what this conversation has been about thus far is all of that legwork, the dirty stuff.
• 54:18
  SPEAKER_01: You often see the before and you see the after, but the during is sweaty and messy and ugly, and that's what PJM is in right now, the during.
• 54:26
  SPEAKER_01: So as we round out the show, some final thoughts from our speakers.
• 54:29
  SPEAKER_01: John, Adam, Kamaya.
• 54:31
  SPEAKER_01: What should PJM be focused on in the during, and what do you expect to see in the after whenever we get there?
• 54:37
  SPEAKER_02: I can start.
• 54:38
  SPEAKER_02: Um, yeah, I mean, there's a lot going on, as we mentioned, and um, you know, I I think there's there's their list is is long and and pretty immediate.
• 54:48
  SPEAKER_02: And so, you know, in the during, I think they need to obviously continue to to work to try to get to a solution for a lot of these big questions that um, you know, work for as many stakeholders as possible while also like meeting the objectives.
• 55:03
  SPEAKER_02: I think that's a very hard task given the pressure on them.
• 55:06
  SPEAKER_02: Um, however, I would just say, you know, like John mentioned, I think the focus, um the long-term focus should be creating an environment of certainty um in all the realms, because that really is is necessary for investment and for you know for financing for that investment.
• 55:26
  SPEAKER_02: Because you know, without that certainty, you won't be able to get the financing to develop a project or maybe even a data center.
• 55:32
  SPEAKER_02: And you know, if you don't know what your costs are going to look like or what's gonna change in a matter of years because things are so uncertain, that's just a really hard business environment to work under.
• 55:41
  SPEAKER_02: So that should be, I think, a you know a long-term objective.
• 55:44
  SPEAKER_02: Um I'll just say, you know, just one more piece on interconnection, you know, something that we've been thinking about is you know, we have some projects in some of the later uh clusters that are, like I said, are essentially ready to go.
• 55:56
  SPEAKER_02: And you know, if PJM were to allow some additional uh mechanisms for those projects to you know kind of exit the queue if they're ready, um, even if maybe there's uh a couple of upgrades they're waiting for, but they're willing to kind of like take that risk and um you know, and start kind of building while above paying for those costs later, like th those are some other solutions that you know we've been pushing for to be able to kind of like find just unique creative ways to get uh new capacity um online sooner that uh that that we think could be a quick, easy uh not easy, but maybe uh a quick low-hanging fruit um item to do that.
• 56:33
  SPEAKER_03: I I think yeah for for PJM to to meet this moment, um, you know, and I think we're starting to see some of this, but I mean we really need to see culture change at PJM.
• 56:43
  SPEAKER_03: Uh, you know, they've it's the kind of organization and and the whole industry was, as I said, was slow moving, it was stable, it was risk averse, um, you know, plotting along, and that's but that's sort of how we got into this mess.
• 56:56
  SPEAKER_03: And now we're in this really dynamic environment with data centers and load growth.
• 57:01
  SPEAKER_03: And and I think PGM, you know, culturally has to, you know, rethink how the their operations, their processes, how how they how they do things.
• 57:09
  SPEAKER_03: And I think, you know, again, going back to interconnection, you see how PGM really sort of failed to meet the moment on interconnection, you know, years back.
• 57:17
  SPEAKER_03: Um because they kept kind of doing those interconnection the same way they'd they'd always done them, even though the volume of requests had had gone from you know, maybe a hundred interconnection requests in a year to to several thousand, and they they didn't see it coming and they didn't adapt fast enough.
• 57:33
  SPEAKER_03: And and that's hard.
• 57:34
  SPEAKER_03: It's hard for an organization to do.
• 57:36
  SPEAKER_03: Uh and it's sort of a soft thing.
• 57:38
  SPEAKER_03: It's hard to really put your finger on it.
• 57:39
  SPEAKER_03: But but uh, you know, there's new leadership uh at PJM um uh you know, and and there's been some change there.
• 57:46
  SPEAKER_03: So we're we're optimistic.
• 57:47
  SPEAKER_03: We've been seeing signs of improvement.
• 57:49
  SPEAKER_03: And and FERC has said this too, FERC, uh, that PJM just needs to change the way they do things.
• 57:54
  SPEAKER_03: They need to move faster uh in in order to meet the moment.
• 57:58
  SPEAKER_03: So I think that that's gonna be a big challenge for PJM.
• 58:01
  SPEAKER_01: It's like if you were used to hand washing a couple of cereal bowls and then all of a sudden your sink had a hundred cereal bowls in it.
• 58:06
  SPEAKER_01: Would you invest in the dishwasher or would you keep washing them by hand?
• 58:10
  SPEAKER_01: PJM might need to figure out how to invest in the dishwasher.
• 58:13
  SPEAKER_01: Any parting words of wisdom, Kamaya?
• 58:15
  SPEAKER_01: Hey, I John's the inspiration on that.
• 58:17
  SPEAKER_01: Now I did come up with it on the fly, but he's the one that made me think of it that way.
• 58:20
  SPEAKER_01: I hadn't really thought about it through the lens of like you're just redundantly doing this old slow process when there are modern solutions that exist in the world.
• 58:29
  SPEAKER_01: I hadn't thought about it quite like that way, but uh props to you guys.
• 58:32
  SPEAKER_01: I like it.
• 58:32
  SPEAKER_01: That's a great analogy.
• 58:33
  SPEAKER_01: Well, thank you.
• 58:34
  SPEAKER_01: Um sorry, Kamai, I stole your thunder completely.
• 58:36
  SPEAKER_00: Oh no, you didn't at all.
• 58:38
  SPEAKER_00: I was I was impressed by the uh by the analogy.
• 58:41
  SPEAKER_01: I should have just signed off right then and ended the show on that thought.
• 58:44
  SPEAKER_01: And on a mic drop.
• 58:46
  SPEAKER_01: Yeah.
• 58:46
  SPEAKER_00: Exactly.
• 58:47
  SPEAKER_00: Adam, I thought you were gonna weigh in on that though.
• 58:50
  SPEAKER_02: No, I I okay.
• 58:51
  SPEAKER_02: Well, in spirit of being conversational and made more exciting for podcast listeners, the nether analogy, you know, that I've used before, others, many others have used for the interconnection process is somewhat similar, where you know, to talk about kind of the uncertainty and cost that that developers face.
• 59:08
  SPEAKER_02: It's like as if you you have a recipe for something that you want to make, and you go to the grocery store and you have an idea of what that's probably going to cost for all the different ingredients, and you get all the ingredients and you go to the checkout line, and instead of$20, it's like$100,000.
• 59:24
  SPEAKER_02: And like that just doesn't that doesn't work, you know.
• 59:27
  SPEAKER_02: And it shouldn't be the case that you have to go to the checkout line just to see what those costs are.
• 59:32
  SPEAKER_02: Like that should be a known entity, so then you can better plan what that recipe looks like.
• 59:36
  SPEAKER_02: And just in the spirit of throwing out analysis.
• 59:38
  SPEAKER_01: No, I like that because you're going home without groceries in that instance, and that's how those ghost projects end up in the queue.
• 59:43
  SPEAKER_01: Yeah, exactly.
• 59:45
  SPEAKER_00: There's so many costs associated with that.
• 59:46
  SPEAKER_00: I mean, sunk sunk costs at that point, but you know, the system has paid for all of those studies and PGM staff has put in all of those hours.
• 59:55
  SPEAKER_00: So um let's see.
• 59:58
  SPEAKER_00: I think if I want to emphasize something more uh I I haven't been in the trenches long enough to uh feel really super critical about PJM.
• 1:00:07
  SPEAKER_00: I I know there's a lot of criticism out there.
• 1:00:09
  SPEAKER_00: Uh I see the moment that they're in, you know, just just zooming in and have a lot of sympathy or a lot of empathy for for the the challenges uh the staff is dealing with uh and the various uh entities and political interest to which they're they're beholden or at least trying to be responsive.
• 1:00:27
  SPEAKER_00: Uh so it's it's a really tough job, and I wish everyone the very best in this dearing.
• 1:00:33
  SPEAKER_00: Um I think from from the distributed energy resource perspective, from the demand flexibility perspective, however, um, we haven't totally moved out of the old world that treats the the role of the grid operator as building generation to meet whatever the load shape might be, building up to that maximum peak peak that occurs for a few hours a year.
• 1:00:56
  SPEAKER_00: Uh and when we talk about new rules, um, you know, whether that's in the reliability backstop procurement or anything else at PJM, uh, demand side resources still um are kind of like the the sidekick.
• 1:01:11
  SPEAKER_00: I I don't think they're treated as the uh full half of the grid and the potential market that they represent.
• 1:01:20
  SPEAKER_00: Uh so if we can keep uh demand side resources load flexibility front and center uh in uh evolving market design, that's a real opportunity.
• 1:01:30
  SPEAKER_00: And to give um sort of a specific example of that, uh there's a lot of um opportunity in the commercial industrial space when we think about batteries.
• 1:01:40
  SPEAKER_00: So I think installed battery capacity in the US, it's like something like 1% of all of that battery capacity is at C and I sites.
• 1:01:49
  SPEAKER_00: Uh, the rest is you know resi.
• 1:01:51
  SPEAKER_00: Um, but like 60% of load on the grid is C and I.
• 1:01:56
  SPEAKER_00: So if you think about putting batteries on all of those C and I sites, you have a huge, which which is a very relatively efficient thing to do because these are larger loads that we're talking about than at the residential level.
• 1:02:08
  SPEAKER_00: Um you're talking suddenly about having, you know, 60% of the load that uh is able to um, you know, match what generation looks like on the grid and is able to be responsive to constraints and emergencies, however they they come up.
• 1:02:22
  SPEAKER_00: Uh so there's a lot we can get out of our infrastructure if we if we really think about the demand side and and design rules um that treat the demand side as as just as important.
• 1:02:32
  SPEAKER_03: The people at PJM are working so hard and they are so smart.
• 1:02:37
  SPEAKER_03: And I, you know, I don't I don't want to make it sound like uh disparage the the staff at PJM.
• 1:02:43
  SPEAKER_03: I mean, they are are really have a lot before them, and uh, and I I can't you can't give them enough credit for the work they're doing.
• 1:02:49
  SPEAKER_03: And and we at United are supportive of the PJM as an RTO.
• 1:02:53
  SPEAKER_03: I mean, we believe in the benefits that uh a well-functioning uh regional grid operator bring.
• 1:02:59
  SPEAKER_03: I mean, it's the only way to go, and there's you know in spite of all these problems, it still brings massive savings to consumers every day.
• 1:03:06
  SPEAKER_03: And and and you know, we're believers in the PJM marketplace.
• 1:03:10
  SPEAKER_03: It you know, we just need to get these reforms in place, and uh and and you know, it's an immense challenge for the for the team at PJM.
• 1:03:18
  SPEAKER_01: Well said, John.
• 1:03:19
  SPEAKER_01: I'm glad you brought that up.
• 1:03:20
  SPEAKER_01: And uh I'm a fan of Detroit sports teams, so I understand the whole yeah, we're not hating the the people, we're just pointing out that things aren't working the way that they're supposed to right now.
• 1:03:30
  SPEAKER_01: Um I really appreciate all of you, not just the speakers, John, Adam, and Kamaya for joining this edition of the Factor This Policy Cast, presented as always with our friends uh at Advanced Energy United.
• 1:03:41
  SPEAKER_01: But you, the listener, the viewer, I hope you took something out of this discussion.
• 1:03:44
  SPEAKER_01: If you made it this far, I humbly request that you like and subscribe for more media episodes just like this.
• 1:03:50
  SPEAKER_01: We put out a new policy cast every other Thursday, so keep your ears and eyes tuned for the next one.
• 1:03:55
  SPEAKER_01: Until then, you can find all sorts of other interesting energy industry stuff where this podcast lives on factorthis.com.
• 1:04:01
  SPEAKER_01: Until next time, I'm Paul Gurky.
• 1:04:03
  SPEAKER_01: Be good, people.