Surplus Interconnection Service and Retired Power Plant Sites: How Existing Grid Rights Get Reused

Every large generator connected to a transmission system has an interconnection agreement that sets how much power it may inject at a defined point. FERC Order No. 845, issued in April 2018, required transmission providers to add a service to their tariffs called surplus interconnection service: the unused portion of the interconnection service granted under an existing agreement, used in a way that does not increase the total service at the point of interconnection.¹⁷

The reason surplus exists is how plants are studied. A new generator is studied and connected as if it will run at full output all the time, yet solar, wind and peaking units often produce well below nameplate.¹ The wires, breakers and switchyard built for that worst case sit partly idle. A battery added beside a solar farm, or new generation added at a gas peaker, can fill that space without the transmission provider having to plan for more total injection.

Order No. 845 told transmission providers that their tariffs must do four things for this service:²

• Provide an expedited process outside the normal interconnection queue, so the added resource does not need its own queue position.
• Let affiliates of the original interconnection customer use the surplus for another generating facility.
• Allow transfer of surplus that the original customer or its affiliates do not intend to use.
• Specify the reliability studies and approvals the request must pass.

The same rule let customers request interconnection service below their facility’s full capacity, which matters for hybrid sites where some output is meant to stay on site.¹ Transmission providers filed compliance tariffs in 2019, so the exact study steps differ by region.⁷ For the general mechanics of grid studies, see interconnection studies.

Surplus service adds to a plant that keeps running. Generator replacement deals with a plant that is closing. Without a replacement path, an owner generally goes through the grid operator’s retirement process, may have to give up the interconnection rights tied to the old unit, and must file a fresh request for any new plant at the site, which then waits in a standard queue that can take two to four or more years depending on the region.³

Replacement procedures change that. As one FERC commissioner described them, they allow owners of an existing generating facility to keep the interconnection rights associated with it even after retiring it and replacing it with a new facility.¹¹ MISO’s procedure was approved in 2019 and SPP followed with a similar one in 2020; a 2023 utility presentation to PJM stakeholders lists FERC acceptance of SPP’s revisions on June 30, 2020, alongside similar approvals for MISO, PacifiCorp and Arizona Public Service.³⁸

The rules are not uncontroversial. The same commissioner asked whether they risk an undue preference for owners of existing plants over new market entrants competing for scarce grid capacity, and urged a broader review before more such procedures are approved.¹¹ For a site buyer, the practical point is that replacement rights belong to the generator owner and follow the owner’s plans, not the land.

The process can also serve a restart. In 2025 FERC granted NextEra a waiver of parts of MISO’s tariff so the retired Duane Arnold nuclear plant in Iowa could use the generator replacement process for its recommissioning, with a commercial operation date extended to December 31, 2029.¹² Our guide to nuclear and SMR siting covers restarts more broadly.

PJM deserves a close look because its rules for both retiring plants and co-located load changed in 2025 and 2026 (see data center site selection in PJM). Under PJM’s rules, the Capacity Interconnection Rights of a deactivated capacity resource terminate one year from the deactivation date unless the holder has submitted a completed interconnection request in that time, and an owner can associate those rights with a new resource’s application.⁹

On January 29, 2026, FERC accepted a separate, serial replacement generation process in PJM, effective January 30, 2026.⁴ A replacement qualifies if it connects at the same substation, at the same voltage, and does not exceed the deactivating unit’s maximum output. FERC had rejected an earlier version in August 2025 over concerns that it allowed open-ended extensions of commercial operation dates, and PJM refiled on October 31, 2025. FERC said the accepted process makes efficient use of existing infrastructure and reduces study timelines and costs.⁴

The co-location side moved at the same time. On December 18, 2025, FERC found PJM’s tariff unjust and unreasonable for lacking clear terms for generators serving co-located load, and directed PJM to make surplus interconnection service available to new generators that serve co-located load, along with provisional interconnection service and interconnection below nameplate capacity.⁶ On April 16, 2026, FERC accepted PJM’s compliance revisions clarifying interconnection pathways but rejected changes to the required definition of co-located load and ordered a further filing.¹³ The configurations themselves are covered in co-locating data centers with power plants.

FERC then went further: on June 18, 2026 it issued show-cause orders directing each of the six FERC-jurisdictional RTOs and ISOs, PJM included, to justify or reform their procedures for interconnecting large and co-located loads, with responses due in August 2026.¹⁴ The rules in MISO and SPP may therefore change through late 2026 and beyond.

The most common misunderstanding about retired plant sites is that the plant’s interconnection can simply be pointed at a data center. Surplus interconnection service and generator replacement are generator processes. They carry the right to inject power at a point on the grid, and the studies behind them test what happens when power flows out of the site. A data center draws power in, often at a steadier and higher level than the old plant ever exported.

That leaves three broad options at a retiring plant site:

1. 01Grid-served load. The data center takes service from the local utility like any other large customer, through the large-load interconnection process. The old switchyard may shorten the build, but the load study is new.
2. 02New generation plus co-located load. The owner uses replacement or surplus rights for new generation and serves the campus from it, which in PJM now runs through the pathways the December 2025 order required.⁶¹³
3. 03Fully separate supply. The campus is islanded from the grid, which avoids load interconnection but leaves the site without grid backup. See behind-the-meter vs. front-of-the-meter.

The second option is why these rules matter for data centers. A generator that keeps its rights at a retiring plant can rebuild faster than a new plant elsewhere, and a campus beside it can take power behind the same connection. The trade is dependence on one plant owner, one set of tariff rules and studies that are still being worked out.

The supply of sites depends on retirements, and retirements have slowed. U.S. power companies retired 2.6 GW of coal capacity at four plants in 2025, the least since 2010, after planning to retire 8.5 GW; 4.8 GW was pushed to later years and two plants totaling 1.1 GW cancelled retirement plans.¹⁰ For 2026, 6.4 GW of coal capacity was scheduled to retire, though EIA noted that renewed or new emergency orders could change that.¹⁰

Much of the delay comes from Section 202(c) of the Federal Power Act. DOE orders under it last up to 90 days but can be reissued, as happened at J.H. Campbell in Michigan.¹⁰ Campbell’s original retirement date was May 31, 2025, and by March 2026 it was operating under a third extension; POWER counted at least 4.4 GW of coal capacity held open by such orders at that time.¹⁵ A plant under an emergency order is neither retired nor available for replacement on the owner’s schedule, which can stall any project that depends on its rights.

Where retirement does happen, the existing grid ties are the draw. The Homer City plant in western Pennsylvania shut in 2023 after 54 years, and its new owners announced a $10 billion campus with seven gas turbines generating up to 4.5 GW for on-site data centers, citing transmission lines to the mid-Atlantic and New York grids, substations and water already in place.¹⁶ They targeted power as early as 2027.¹⁶ The physical side of these sites (coal ash, demolition, water permits) is covered in repurposing power plant and industrial sites and brownfield cleanup and liability protections.

The value of skipping the queue is real. LBNL found that the median time from interconnection request to commercial operation rose from under two years for projects built in 2000–2007 to more than four years for those built in 2018–2024, and that only 13% of capacity requested from 2000 to 2019 had reached operation by the end of 2024.⁵ Our guide to power timelines and interconnection queues puts those numbers in context.

A retiring plant can be one of the fastest routes to large power, or a site whose best asset belongs to someone else. Before relying on its interconnection, work through these questions with the plant owner, the transmission provider and the ISO or RTO:

• What interconnection agreement covers the plant, and how many MW of injection does it allow? Ask for the agreement, not a summary.
• Has a deactivation notice been filed, and when does the replacement window close? In PJM, rights lapse one year after deactivation without a request.⁹
• Is the plant subject to a DOE 202(c) order or a reliability-must-run arrangement that could delay retirement?¹⁵
• Would a replacement meet the region’s eligibility tests, such as PJM’s same-substation and same-voltage rule?⁴
• How much of the existing connection is unused today, and could surplus service add generation for a co-located campus?⁶
• Separately, what would load service from the utility require, and on what schedule?

Energy developers weighing these options from the generation side can start with our guide for energy developers. If you hold land at or near a retiring plant and want to know what its connection can realistically support, get a site reviewed.