State Strategies to Accelerate Speed to Power Through Surplus Interconnection in PJM

April 2026

Overview

Surplus interconnection service (SIS) lets states add new energy resources faster and cheaper by using existing grid capacity and existing power plant footprints instead of building new transmission and greenfield sites. SIS is a concept that allows projects to avoid long interconnection queues, which can take three to five years or longer, by utilizing already-approved grid connections. SIS enables new resources like solar, battery storage, or hybrid systems to connect at existing power generation sites, as long as total output does not exceed the site’s approved capacity. Surplus projects are well suited to sites where the existing generator is not fully utilizing its interconnection rights, as is the case with intermittent resources like solar, or peaking resources like some gas plants, which may be used only a handful of hours out of the year. This makes it possible to bring new power online more quickly while maximizing the use of infrastructure that has already been studied and built. 

Within PJM specifically, studies estimate approximately 52 GW of the 141 GW of thermal capacity operates at capacity factors below 15%. Similarly, solar operates at about a 19% capacity factor, and wind at 16%. Through SIS, PJM has a significant opportunity to increase low-cost energy production at existing thermal sites and firm renewable generation by adding storage. In total, PJM could add up to 153 GW of new energy capacity – including low-cost rapidly-deployable solar, wind, and storage – at existing power plant sites using SIS. In addition, by firming renewables with surplus storage additions, PJM also has the opportunity to add approximately 13.6 GW of accredited capacity in the near-term, helping resolve the capacity shortfall yielded by the most recent capacity auction.

This approach is particularly important as states face rising electricity demand from data centers, manufacturing, and electrification. By reducing costs, timelines, and permitting challenges, SIS offers a near-term strategy to improve grid efficiency, support reliability, and accelerate deployment of new energy resources. Surplus interconnection has the potential to unlock significant additional energy and capacity on the existing grid without the need for major new infrastructure investments.

Issues in PJM’s Process are Hindering Surplus Opportunities

PJM filed changes to its regulations governing SIS in 2025 that streamlined the study process and expanded eligibility to include more resource types (including storage). The changes expand access to SIS by allowing earlier project initiation, enabling storage resources to participate, and removing certain restrictions, which FERC approved. However, uptake remains limited due to remaining issues with market participation rules for the surplus resource, which challenge projects’ commercial viability). Since 2023, 14 surplus requests have been officially submitted in PJM, of which two have been approved, eight are under review, three have been withdrawn, and one is on hold (PJM Surplus Interconnection Request Summary, 2025). For contrast, the Southwest Power Pool has 74 SIS requests totaling about 10,000 MW, according to its generation interconnection queue. 

FERC Order 845 requires transmission providers to allow generators to pursue SIS to utilize unused interconnection service at existing points of interconnection. PJM complies with the order by offering a study pathway for SIS; however, some stakeholders contend that PJM’s restrictive rules on sharing CIRs and limiting access to capacity market revenues are inconsistent with the intent of the order, which was to enable practical and economic use of surplus capacity. This conflict has emerged as a barrier to SIS development, as generators and developers may be hesitant to pursue surplus arrangements that face regulatory uncertainty or limited revenue opportunities.

Additional Actions PJM Can Take to Advance Uptake of Surplus Interconnection 

  1. Clarify the legal interpretation of unused interconnection service in PJM: Clarify PJM manual language to reflect that “unused” interconnection service is based on the extent to which an existing resource is inputting less generation at any given point in time than the maximum output level approved during the interconnection study process. PJM currently has no definition of “unused” interconnection service in its manuals, and developers have concerns that PJM’s interpretation may be overly restrictive. That ambiguity makes it challenging for project developers to understand how their surplus resource would be treated, increasing risk and diminishing developer appetite to pursue such arrangements. Clarifying these rules would provide certainty to developers that may be interested, and help maximize the utilization of the SIS opportunity.

  2. Enable surplus projects to share Capacity Interconnection Rights (CIRs) but offer into markets as separate resources: PJM currently only allows sharing of CIRs if resources are combined into a single hybrid project, but surplus interconnection often works best when separate (co-located) projects can share that capacity — which PJM restricts. A surplus project that is co-located but not hybrid cannot receive capacity revenues, which severely restricts the surplus opportunity. Hybrid projects lack separate market participation options, which can challenge project offtake agreements. If surplus projects could be accredited as hybrids but maintain the separate market participation options of co-located resources, they would be more viable from a commercial perspective. 

Actions States Can Take Now to Advance Uptake of Surplus Interconnection in PJM

States have an important role to make sure that utilities are taking full advantage of surplus resources and providing certainty and transparency to help developers build surplus projects quickly. Some state actions will be more effective in vertically integrated states than in states with restructured markets. Specifically, states with restructured markets may see a greater benefit from the recommended actions listed for governors offices and state energy offices where vertically integrated states may have an easier time implementing the full range of recommendations.

States are already working to make SIS opportunities more accessible. In Indiana, SB 240, passed unanimously by the legislature, directs utilities and the state public utilities commission to conduct a study evaluating surplus interconnection opportunities. The commission must report its findings, helping inform how surplus interconnection can be incorporated into future planning processes. It also requires an examination of surplus interconnection opportunities as a prerequisite condition for permitting new energy generation. In Virginia, HB 1065 requires the state’s utilities commission to evaluate SIS capacity. Additionally, it requires utilities to incorporate SIS into resource procurement through the use of RFP’s to prioritize new clean energy capacity at surplus interconnection as a lower-cost alternative to new generation.

All 13 PJM states can take action to enable new energy resources to be deployed faster in PJM. Those actions include:

  • Governors offices

    • Engage with PJM on the RTO rules that are restricting surplus uptake and seek speedy resolution of remaining barriers to unlock the opportunity across the region, at a similar scale seen in other RTOs 

    • Convene project developers, existing generation owners and utilities together for a discussion about maximizing the state’s surplus interconnection opportunity.

    • Incorporating surplus into state siting initiatives to develop a fast track for surplus

    • Utilize surplus as an economic development tool for local tax revenues

  • Public Utility Commissions

    • Open a regulatory docket on SIS

    • Direct utilities to evaluate and report on opportunities to use surplus interconnection capacity at existing generation sites prior to the procurement of new resources.

    • Require analysis of SIS in Integrated Resource Plans.

    • Ensure utilities assess surplus interconnection alongside greenfield alternatives in planning processes.

    • Require reporting on available interconnection headroom and potential surplus sites.

    • Incorporate surplus into procurement processes.

    • Conduct procurement, where appropriate, for low-cost, readily-available generation and storage projects utilizing surplus interconnection capacity. 

    • Ensure surplus projects can compete in utility solicitations and resource planning decisions.

  • State Energy Offices  

    • Issue Requests for Information (RFIs) for developers interested in accessing SIS.

    • Conduct or commission surplus opportunity studies to identify high-potential sites and quantify deployment opportunities within the state.

    • Convene utilities, developers, and regulators to enable project matchmaking and information sharing.

    • Support policymakers and regulators in understanding surplus interconnection opportunity and available policy levers to maximize SIS.

  • State Legislatures 

    • Pass legislation that requires entities to evaluate SIS capacity such as that in Indiana.

    • Pass legislation similar to Virginia which requires utilities to procure and prioritize new energy projects using surplus interconnection capacity.

    • Establish requirements for utilities, transmission providers, and power generators to evaluate and report on surplus interconnection opportunities.

    • Require utility procurement of resources using surplus interconnection. (VA bill is an example of this.)

    • Authorize or encourage processes (e.g., RFPs, data sharing) to connect developers with existing asset owners.

States can act now, through planning, policy, and coordination to unlock faster, lower-cost energy deployment by making better use of existing grid infrastructure in PJM.

For questions contact: Katie Siegner ksiegner@rmi.org or Rachel Chamberlain rachel@s2strategies.org