Natural Gas Dominates PJM’s First Reformed Grid Queue, Driven by Data-Center Demand
Natural gas projects are now dominating PJM Interconnection's reformed grid queue, largely driven by the surging electricity demand from data centers. This marks a significant shift from previous years when renewable energy projects were more prevalent but often failed to materialize. Talen Energy's request to rezone land near its Montour Steam Electric Station for data center development exemplifies this growing demand.
PJM Interconnection's first round of projects under its new "first-ready, first-served" grid interconnection process reveals natural gas projects now dominate the queue, accounting for nearly half of the over 200 gigawatts of capacity. This represents a stark contrast to three years prior when solar, wind, and battery storage projects comprised over 90% of the backlog, many of which ultimately failed to secure interconnection due to prolonged delays.
The current surge in natural gas proposals, totaling 99.8 gigawatts across 147 projects, is largely propelled by an anticipated 70 gigawatts of demand growth by 2038, predominantly from data centers. The revamped PJM rules necessitate developers to demonstrate project viability through upfront financial commitments and proof of site control. While battery storage and solar projects individually outnumber gas proposals, their combined capacity remains lower.
Industry experts, including Jon Gordon from Advanced Energy United and Abe Silverman from Johns Hopkins University, link the "gold rush" for new gas generation directly to the booming data center sector. Silverman suggests PJM is implicitly favoring gas-fired resources, partly due to federal policies hindering offshore wind development. Concerns persist, however, regarding the actual materialization of these projects, with potential obstacles including supply chain issues, state permitting processes, and the risk of elevated electricity rates and reliability issues if demand outpaces new generation.
PJM defends its overhauled system, asserting that stricter requirements and readiness deposits are designed to filter out speculative projects and expedite viable ones. The grid operator acknowledges that external factors such as state permitting, local opposition, supply chain backlogs, and financing can still impede projects, an example being Talen Energy's request to rezone 800 acres near its Montour Steam Electric Station for data center development.