After an earlier round of reforms failed to achieve the expected results, PJM Interconnection is making a second attempt to establish an interconnection pathway for generation projects that utilize the remaining interconnection capacity of existing generation facilities.

Surplus Interconnection Service (SIS) allows new generating units or energy storage systems to connect to an existing plant's interconnection point, using the facility's surplus interconnection capacity rights.

Gavin Ahern, co-founder of consulting firm Surplus Interconnection, noted that surplus interconnection studies are typically much faster than standard interconnection studies, and utilizing existing interconnection capacity can avoid costly grid upgrade expenses.

PJM reformed its surplus interconnection service rules in early 2025, but that effort has yielded little so far.

According to the latest presentation filed by the grid operator in late November, PJM has received eight SIS requests since 2023, two of which were approved. The document is PJM'sstatus of surplus interconnection requestslatest public information.

PJM spokesperson Jeffrey Shields said via email that, aside from regular briefings to the interconnection process subcommittee, PJM does not publish detailed information on surplus interconnection service requests.

In contrast, according to ananalysis reportpublished by Surplus Interconnection, as of June 30, Midcontinent Independent System Operator (MISO) was studying 14.8 GW of surplus interconnection requests, followed by Southwest Power Pool (SPP) with 14.3 GW, western utilities with 6 GW, and southeastern utilities with 1 GW.

PacifiCorp was reviewing 33 projects across five western states as of August 13, totaling 5.2 GW, according to itssurplus interconnection queue. Over the past 60 days, the company has submitted five surplus interconnection agreements to the Federal Energy Regulatory Commission (FERC) for approval.

Most of the pending surplus interconnection requests at MISO, SPP, and PacifiCorp are battery energy storage projects.

The report shows that MISO has 44 surplus interconnection projects in operation, and 22 projects have begun operations in the SPP region. Since 2024, MISO projects have taken an average of one year to interconnect, while SPP projects have taken nearly two years on average.

"The surplus interconnection processes established by MISO and SPP are effective in practice, such as allowing existing generators and surplus generators to operate in parallel at the same interconnection point, which is crucial to the economic viability of surplus projects," Ahern said in the report.

According to a working paper released by researchers at the University of California, Berkeley in August 2025, thermal and renewable generation facilities within PJM havesurplus interconnection capacitythat could support approximately 150 GW of solar, wind, and storage, although the elimination of federal tax credits has reduced this potential.

PJM considers rule changes to activate SIS

PJM is taking steps to make its SIS process more usable. This comes against the backdrop of PJMmissing its reserve capacity targetsin the two most recent capacity auctions, with the shortfall widening from 6.5 GW in the 2027/28 delivery year to approximately 6.8 GW in the 2028/29 delivery year (which begins June 1).

"When PJM looks around trying to answer 'how do we fill this gap,' resources coming online using surplus interconnection capacity should be one of the first directions they consider," Grant Glazer, senior manager of regulatory and market affairs at renewable energy and storage developer MN8 Energy, said in an interview.

Glazer noted that surplus interconnection is the fastest way to add capacity to the grid because it allows the use of existing capacity interconnection rights (CIRs). Facilities interconnected via SIS do not require interconnection upgrades or new CIRs, making them lower cost.

However, Glazer said that PJM's current rules do not provide a viable way for surplus additions to obtain CIRs associated with existing generators.

Taking a solar plant adding a battery system as an example, under PJM rules, the battery has two market participation models: co-located resource or hybrid resource. But the co-located model does not allow the battery to obtain the CIRs needed to participate in PJM's capacity market, while the hybrid model does not work because the entire resource can only have one market participation ID.

Glazer said the single ID makes it impossible to distinguish which resource in a hybrid facility is participating in the energy and ancillary services markets, making it impossible to settle existing offtake agreements for the existing resource.

To address this issue, PJM staff earlier this month proposed a concept that would allow hybrid resources—which participate in the capacity market as a single resource—to participate separately as independent resources in the energy and ancillary services markets. The concept is outlined in a"issue paper"under review. Any rule changes would be developed by PJM's Market Implementation Committee.

PJM reform proposal gains industry support

Glazer believes the proposal would provide a "viable" path for many potential projects.

Clean energy industry group Advanced Energy United (AEU) supports PJM's effort.

"We think these fixes are relatively easy, and given PJM's urgent need for new resources, we are optimistic that the process will move quickly," AEU Senior Director Jon Gordon said in an interview.

Gordon noted that looking ahead, there are more complex reforms around CIRs that could be pursued later to further promote surplus interconnection.

Glazer said MN8 has been reviewing its portfolio for projects where interconnection capacity rights are underutilized. Many projects in PJM, especially solar projects, have CIRs covering only 40% to 60% of nameplate capacity, leaving surplus interconnection space.

Glazer said battery costs have declined, and demand for PJM capacity resources driven by large loads has surged.

Further driving the potential application of surplus interconnection is that Indiana and Virginia passed laws this year directing their state utilities to study the potential of surplus interconnection in their systems.

Ahern said that, in addition, utilities may view surplus interconnection as a way to add capacity at their plants, whether solar or thermal.

"They are certainly open to it because they have received interconnection requests from large loads and/or are already facing capacity shortages in their own systems," he said in the interview.