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The Future of What Gets Built in PJM is Written by States – Energy Zones Can be Their Blueprint 

PJM is short on power, and its customers are paying record prices for it. The conversation about why has largely focused on data center demand, but that argument is incomplete: the slow pace of adding energy supply is also to blame, and that’s a problem states are uniquely positioned to solve.  

The ACORE Macro Grid Initiative’s new report, Energy Zones for PJM States: A Holistic Approach to Transmission Planning that Supports Resource Adequacy and State Energy Policy, outlines how states can leverage Energy Zones to build new electricity supply. It makes the case for deploying Energy Zones to empower states to prioritize and approve generation projects on their own. 

Why does this matter now? The numbers tell part of the story. After securing just enough capacity to meet forecasted demand and reserve margin in July 2025, PJM’s two subsequent capacity auctions fell short by over 6 gigawatts (GW) each. Capacity costs for these three auctions hit record highs, and ratepayers across the region are feeling the squeeze. A 2024 study of projects in the PJM interconnection queue identified siting and permitting challenges and long timelines for completion of transmission upgrades among the top reasons an energy project fails to move forward in a timely manner. Structural and procedural disconnects will continue to throttle new supply if they are not addressed – and states have the power to take action. 

PJM was never intended to be a ‘set-it-and-forget-it’ solution for states to manage energy needs – states have the leading role in the siting and permitting of new energy infrastructure within their borders. Reforms at the state level will help make sure PJM’s transmission planning processes meet the pace of development. Designated Energy Zones can deliver results by engaging communities and key stakeholders in designing the solutions we need, mitigating the key risks that delay or derail energy projects, while also ensuring that new sources of energy demand, generation, and transmission are built in a cost-effective fashion that aligns with local community interests.  

Energy Zones are an old idea finding new life. The two-decade-old Competitive Renewable Energy Zone initiative in Texas helped pave the way for Texas to add more than 80 GW of new wind and solar capacity since its passage. The state is now looking to build on that success with its Permian Basin plan designed to address new demand from oil and gas production in the region.  

Illinois is currently implementing a zonal planning process for new transmission and generation under its Renewable Energy Access Plan, while New York is soliciting comments on Clean Energy Zones to better align transmission and generation planning in the state. 

PJM states can use Energy Zones to focus the PJM transmission planning processes by identifying and prioritizing geographic zones best suited for new large loads, generation, and co-located generation alongside demand.    

This strategy can deliver even more value when coordinated across multiple states. PJM’s 2021 Offshore Wind Transmission Study found that a proactive, coordinated approach across five states for 74.5 GW of combined onshore wind, offshore wind, and solar capacity could be integrated for $3.2 billion, or roughly $43/kW. Meanwhile, a 2020 independent analysis of PJM queue data found that a project-by-project interconnection approach for 15.6 GW of offshore wind could trigger $6.4 billion in required onshore upgrades, at a cost of roughly $413/kW. These figures demonstrate the considerable cost savings potential of coordinated, holistic planning across multiple states. 

PJM governors are taking notice. The PJM Governors Collaborative discussed this approach in the strategic engagement function outlined in Section 2.B.v. of its October 8, 2026 Memorandum of Understanding, an encouraging sign that governors see Energy Zones as a way to better align PJM transmission planning processes with state policies. 

The time to act is now. Future transmission planning inputs and cost allocation methodologies are still being negotiated, which means states have little to lose, and much to gain, by initiating an Energy Zone process today. Done right, Energy Zones treat communities as partners instead of adversaries in building the grid. States that move first will shape what gets built, and at what cost, for years to come.

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