Presentation on theme: "Resource Adequacy in PJM"— Presentation transcript:
1Resource Adequacy in PJM Adam KeechDirector, Market OperationsPJM
2Adam Keech My Background Worked at PJM for over 10 yrs Education 8+ years in Market OperationsManager, Real-Time Market OperationsDirector, Market Operations2+ years in System OperationsDirector, DispatchEducationMS Electrical Engineering from Rutgers UniversityMS Applied Statistics from West Chester University
3PJM as Part of the Eastern Interconnection KEY STATISTICSPJM member companies millions of people served peak load in megawatts 163,848 MWs of generating capacity 185,600 miles of transmission lines 59,750 GWh of annual energy 832,331 generation sources ,365 square miles of territory 214,000 area served states + DC externally facing tie lines26% of generation in Eastern Interconnection28% of load in Eastern Interconnection19% of transmission assets in Eastern Interconnection21% of U.S. GDP produced in PJM*Map is missing EKPC zone which joined June 1, 2013As of 9/7/2012
5PJM Responsibilities Wholesale Electric Markets Regional Reliability Transmission Planning
6LSE secures capacity to satisfy their load obligation. PJM Capacity MarketPJM Capacity MarketFixed Resource Requirement Alternative (FRR) (opt-out of RPM)Reliability Pricing Model (RPM)PJM secures capacity on behalf of LSEs to satisfy load obligations not satisfied through self-supply.LSE secures capacity to satisfy their load obligation.PJM Capacity Market is designed to ensure adequate availability of resources that can be called upon to ensure the reliability of the electric grid.
7What is the RPM?Reliability Pricing Model (RPM) is PJM’s resource adequacy constructRPM is part of an integrated approach to ensuring long-term resource adequacy and competitively priced delivered energyRPM aligns the price paid for capacity with overall system reliability requirementsRPM includes pricing to recognize and quantify the locational value of capacity (effective 2007/2008 Delivery Year) and the operational value of capacity (effective 2014/15 Delivery Year)RPM provides forward investment signals
8Generation of electrical power over a period of time Capacity vs. EnergyEnergyGeneration of electrical power over a period of timeEnergy revenues paid to resource based on participation in PJM’s Day-Ahead & Real-Time Energy MarketsHourly productCapacityA commitment of a resource to provide energy during PJM emergency under the capped energy price.Capacity revenues paid to committed resource whether or not energy is produced by resource.Daily productCapacity, energy & ancillary services revenues are expected, in the long term, to meet the fixed and variable costs of generation resources to ensure that adequate generation is maintained for reliability of the electric grid.
9Ongoing Bilateral Market RPM Structure3 Years20 monthsMay10 monthsSeptMay be scheduled at any time prior to DY3 monthsJulyFeb.March*June 1May 31Interruptible Load for Reliability (ILR)(Only effective prior to 12/13 DY)*Certification deadline April 1 for 11/12 DYDelivery YearEFORd FixedBase Residual AuctionConditionalIncremental Auction (Effective 12/13 DY)First Incremental AuctionSecond Incremental AuctionThird Incremental AuctionOngoing Bilateral Market
10Illustrative Example of a VRR Curve 1.5 Net ConeEffective 12/13 DY:Target Level = Reliability Requirement –Short Term Resource Procurement Target(b)Net ConePrice = UCAP Price ($/MW-day)0.2 Net Cone(c)(IRM – 3%)IRM(IRM + 1%)(IRM + 5%)Quantity = UCAP MWA VRR Curve is defined for the PJM Region.Individual VRR Curves are defined for each Constrained LDA.
11What is a Supply Resource in RPM? In RPM, Resources are =Generation ResourcesDemand Resources(DR)Energy Efficiency Resources(EE)(Effective with 11/12 DY)Qualifying Transmission Upgrades(QTU)
12Evolution of Supply Capability in PJM Market coalgasnuclearContinuing trend of a major shift in generation from coal to natural gasNatural gas accounts for 95% of new generation participationtotal renewablesdemand responsesolar/ windNote: Adjusted to reflect integrations
21Current - PJM Queued Generation (Nameplate Energy) As of 03/2013
22Energy Efficiency (EE) DR vs. EEEnergy Efficiency (EE)Installed device that exceeds relevant standardsAchieves reduction during ALL hours of the performance periodInstalling an LED light bulbDemand Response (DR)Capability to reduce consumption on commandAnnual, Extended Summer, LimitedShutting the light off
24Energy Efficiency Participation in RPM Over Time
25Trends in Resource Adequacy Coal Retirements~ 14,000 MW by 2015Growth in energy production of natural gasEmergence of Energy Efficiency and DRCapacity Market revenues make these types of projects much more profitableOffset the need for traditional generationEfforts to “operationalize” DRIncreases in natural gas capacityMore natural gas capacity than coal by 2015Generation queue volumes have swapped over the last few years