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PJM has proposed rules that could make it easier to add batteries to existing power projects and sell the resources’ energy and capacity separately. The changes could speed battery development without requiring a new grid connection, but they remain proposals and may need FERC approval, potentially as late as the end of 2027.
PJM has proposed market-rule changes that could make it easier to add batteries to existing power projects and sell their energy or capacity separately. The proposal addresses a contractual and market-design obstacle that has kept projects from moving forward, but it still needs to advance through PJM and receive approval from the Federal Energy Regulatory Commission.
The changes would address the way PJM treats a project that combines existing generation, such as a solar farm, with a new battery. Under the current rules described in reporting by Canary Media, PJM generally treats a hybrid project as one market unit in both its energy and capacity markets. That can make it difficult for the original generator and the battery to have different customers or contractual obligations.
A solar farm, for example, may already have a long-term power purchase agreement with one customer. A battery added to the site could store electricity and provide capacity at other times, potentially for a different customer, such as a data center. PJM’s proposed approach would separate the contributions of the different technologies in the markets, making it easier to account for them individually.
The proposal follows an earlier effort to address technical barriers to adding resources at existing grid interconnection points. Clean-energy groups asked FERC in 2024 to require changes to PJM’s study process. But Advanced Energy United’s Gordon told Canary Media that no new surplus interconnection service project had moved forward in PJM since those changes. He said the remaining rules governing existing and new resources at the same connection point are another obstacle.
Batteries Could Use Existing Grid Connections
If the rules change, developers could add storage at sites that already have permission to connect to PJM’s grid, rather than relying solely on new standalone projects and connection processes. RMI’s Katie Siegner told Canary Media that the opportunity could include existing power projects as well as tens of gigawatts of clean-energy projects that have received permission to connect. The source does not establish how much battery capacity would actually be built.
Storage can hold electricity and deliver it later, including during periods of high demand. That capacity could matter in a grid region facing pressure to meet growing electricity needs. Data center developers are among the potential customers: they are facing calls to provide resources for their power demand rather than shifting more costs to other customers. Battery projects could offer one option, although the proposed PJM rules do not guarantee that developers will finance them or that they will be built quickly.
The pathway may also be relevant in states with storage targets, including Illinois, Maryland and New Jersey, Siegner said. Laws in Indiana and Virginia requiring major utilities to identify and analyze surplus interconnection potential could support deployment as well, according to the report.
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Why PJM’s Hybrid Rules Matter
Power generators commonly sign long-term contracts with utilities, businesses, municipalities or other buyers to provide energy or capacity. Adding a battery to an existing site can create a second product with a different delivery schedule and value. If the battery and original generator are expected to serve different customers, market rules must allow their output and obligations to be treated separately.
Canary Media reported that other grid operators have made such arrangements more straightforward. Connor Valaik of LevelTen Energy pointed to the Southwest Power Pool, where, he said, a project can add surplus storage even when the existing generation has a power purchase agreement with another buyer, and sell the battery’s capacity rights separately. PJM’s rules, by contrast, have made that kind of arrangement difficult.
Storage is one proposed response to PJM’s capacity needs, but it is not the only issue facing the grid operator. Earlier this month, FERC rejected a PJM plan requiring data centers and other large electricity users to provide their own capacity or risk having power cut during grid emergencies, according to Canary Media. That decision left stakeholders seeking other ways to address demand and capacity pressures.
“We’re not talking about physical limitations to the grid. We’re just talking about this quagmire of administrative processes and legal rights.”
— Gordon of Advanced Energy United
Approval, Timing and Project Demand
The proposal is not a final rule. It is unclear when PJM will complete its process or whether FERC will approve the changes as proposed. Canary Media reported that even a swift PJM process could leave FERC approval until late next year; the report’s timing is relative to its publication and does not specify an exact approval date.
It is also unknown how many developers would use the pathway, how much battery capacity it could bring online, or which customers would sign contracts for the resulting energy or capacity. No new surplus interconnection service project had moved forward in PJM since the earlier study-process changes, according to Gordon, underscoring that rule changes alone may not immediately produce projects.
PJM and FERC Review the Proposal
The next steps are for PJM to advance its proposed market-rule changes and for FERC to review them. Until that process is complete, the pathway remains a proposal rather than an available, approved route for developers. The schedule and outcome of both reviews have not been confirmed.
Developers, potential battery customers and state policymakers will also be watching whether the market changes make it practical to pair storage with existing projects. Any deployment would still depend on project economics, agreements between generators and buyers, and the ability to complete the necessary grid and market processes.
Key Questions
What is PJM proposing?
PJM has proposed market-rule changes that would let different technologies in a hybrid project have their contributions treated separately in its energy and capacity markets.
Why have batteries been difficult to add to existing projects in PJM?
According to Canary Media, PJM’s rules treat a hybrid project as one market unit. That can make it difficult for an existing generator and a new battery to serve different customers or meet separate contractual obligations.
Would the proposal guarantee new batteries are built?
No. The changes could make some projects easier to arrange, but construction would still depend on developers, buyers, contracts and project economics. The amount of battery capacity that might result is unknown.
When could the rules take effect?
No effective date has been confirmed. Canary Media reported that FERC approval could take until late next year even if PJM moves quickly; that estimate is relative to the report’s publication.
Source: canarymedia.com
