FERC Approves PJM Plan to Transfer Capacity Rights from Retiring Power Plants to Replacement Generation

The Federal Energy Regulatory Commission on Feb. 2 accepted a proposal from PJM Interconnection to create a new process for transferring Capacity Interconnection Rights from a retiring power plant to a replacement resource at the same site, separate from the traditional interconnection review. The decision is intended to accelerate replacement generation and support reliability as electricity demand growth increasingly challenges available supply.

The approved framework creates an expedited replacement generation interconnection process that allows a successor resource to inherit capacity rights under defined conditions. To qualify, the replacement facility must interconnect at the same substation, operate at the same voltage level, and not exceed the maximum generation output of the retiring resource. CIR allows generators to inject power into the transmission system at a specific interconnection point and enable participation in regional capacity auctions.

Under existing rules, a retiring generator could retain its capacity rights for one year. The new process, effective Jan. 30, provides a clearer and faster pathway for developers seeking to repower or replace existing sites without triggering a full interconnection study. The regulator approved the amended filing after the grid operator addressed concerns by allowing developers a one-time opportunity to revise projects within 15 business days following a determination that system impacts could be significant.

The capacity rights transfer mechanism is part of a broader package of reforms that PJM and its stakeholders have launched to address mounting reliability risks. Large new electricity loads are emerging faster than new dispatchable generation can be connected, increasing the importance of streamlined processes that make use of existing infrastructure.

Other initiatives underway include the Reliability Resource Initiative, a one-time effort to advance shovel-ready projects that could quickly contribute to system reliability. That program initially selected 51 projects, with 41 projects representing roughly 8,000-megawatt of generation continuing in the study process. PJM has also revised its interconnection rules to enable Surplus Interconnection Service, allowing facilities with unused interconnection capacity to add complementary resources such as battery storage.

In parallel, the grid operator is investing in planning automation and advanced tools, including a collaboration with Google’s Tapestry platform, to reduce administrative burdens and improve study efficiency. PJM is also developing an Expedited Interconnection Track for certain state-sponsored generation projects with contractual commitments, enabling a limited number of large, shovel-ready resources to move more quickly toward construction.

Together, these measures reflect a coordinated strategy to reuse existing sites, shorten development timelines, and preserve reliability as demand growth accelerates across the region.