PJM briefing Greater Philadelphia Chapter of the Association of Energy Engineers PJM Interconnection Mike Bryson, Executive Director, System Operations Steve Boyle, Director, State Government Affairs January 22, 2015
Keeping The Lights On 2
PJM s Role as a Regional Transmission Organization www.pjm.com 3
PJM as Part of the Eastern Interconnection KEY STATISTICS Member companies 950+ Millions of people served 61 Peak load in megawatts 165,492 MWs of generating capacity 183,604 Miles of transmission lines 62,556 2013 GWh of annual energy 791,089 Generation sources 1,376 21% of U.S. GDP produced in PJM Square miles of territory 243,417 States served 13 + DC As of 9/1/2014 4
PJM Backbone Transmission 5
50 46 $45 42 $40 $35 38 $30 34 $25 30 $20 $15 26 $10 22 $5 Wholesale Energy Market Operations Economic Dispatch of Generation to Meet Demand 1 3 5 7 9 11 13 15 17 19 21 23 Hour of Day 6
July 21, 2011 PJM New All-Time Peak 300 MW on the system at peak. (~5:00 p.m.) 7
Top Challenges Facing the Industry Electricity Demand Extreme Weather World s Largest Fuel Switch Natural Gas Interoperability Integration of Intermittent and Demand Side Resources Man-Made and Natural Disasters Each Challenge is Also an Opportunity Adapted from: EPRI 8
U.S. Electricity Use and Economic Trend 9
Sandy October 29, 2012 9:10 a.m. EDT 10
Extreme Weather Hurricanes Irene: 2011 Sandy: 2012 Landfall in NJ Sun., Aug. 28 approx. 1:00 a.m. Pressure at Landfall: 958mb Landfall in NJ Mon., Oct. 29 approx. 1:00 p.m. Pressure at Landfall: 940mb 11
Superstorm Sandy s Toll 12
Extreme Weather 2014 Polar Vortex 8 of 10 PJM Winter peak loads occurred in Jan. 2014 Source: Polar vortex via NASA 13
Extreme Weather PJM Winter Peak Demands 14
January 7 Peak Load vs. Typical Load 35,000 MW 15
Forced Outages January 7 Evening Peak (7pm) 16
Wind Chill vs. Forced Outage PJM Western Zone 17
Polar Vortex: Key Actions Improve transmission system infrastructure Incent better fuel availability and/or dual-fuel capability Test generators before Winter arrives Improve coordination with gas pipeline and neighboring power grids Improve generator availability and performance 18
Capacity Performance Features Obligation to deliver energy when PJM calls for it Over-performers rewarded; under-performers pay Small net cost for improved reliability/price stability 19
Product Definition Key Design Elements of Proposal Obligation to deliver energy when scheduled and dispatched by PJM during Performance Hours Modeled closely after ISO-NE Pay for Performance design Performance (Compliance) Hours Hours when PJM implements emergency procedures including or beyond implementation of demand response Performance Obligation Committed resources obligated to deliver pro-rata share of system requirements during Performance Hours Dispatch down by PJM and approved outages not required to deliver 20
Performance payment Key Design Elements of Proposal (cont d) Delivery shortfalls subject to payment of Net CONE divided by the estimated number of performance hours Allocation of Performance Payments Performance payments collected from under-performing resources would be allocated to over-performing resources Would solidify the incentive to perform as well as possible during emergencies Base Capacity For 18/19 and 19/20 Delivery Years, PJM would commit 80% of reliability requirement as Capacity Performance Remainder would be Base Capacity, a produce similar to today s Capacity product 21
PJM Is Sitting Atop the Largest Shale Gas Discovery Marcellus Source: Energy Information Administration based on data from various published studies. Updated: March 10, 2010 22
PA: Second-Largest Shale Gas Producer in 2013 (8 Bcf/day) 23
Natural Gas Price Trend (Jan. 1999-Jan. 2013) 24
Managing a Sea-Change 25
PJM s Changing Fuel Mix 2007 PJM installed capacity Capacity cleared market for 2016/2017 delivery year 26
Gas = 75% New Generation by Fuel Type Since RPM Implementation in 2007 35,040 MW Total 27
Transitioning from Coal to Gas 2009 to Date: 26,000 MW in Retirement Notices 28
PJM Fuel Mix 29
PJM Wholesale Prices $ 30
CO2 SO2 and NOx PJM Market Average Power Generation Emissions Pounds Per MWh of Electricity Produced 1,350 PJM Average Emissions (lbs/mwh) 9 1,300 1,250 1,200 1,150 1,100 1,050 1,000 950 Carbon Dioxide Sulfur Dioxides Nitrogen Oxides 2005 2006 2007 2008 2009 2010 2011 2012 2013 8 7 6 5 4 3 2 1 0 31
Evolution of Demand Response
Court Order in EPSA Case 33
PJM Stop Gap Filing Court rejects certiorari DR & EE LSE model effective for future auctions 18/19 BRA & IAs Supply side DR & EE suspended from future auctions Supply side DR & EE already committed remains effective for DY 2014/15, 2015/16, 2016/17 Legal & Policy decisions Final DR State Court accepts certiorari or is undecided by mid-april Operate under existing tariff Supply side DR & EE participates in BRA Stop Gap rules are meant to be transitional to ensure market stability for near-term auctions www.pjm.com 34
Demand Response & Energy Efficiency: PJM s Stop Gap Proposal vs. Today Capacity market Capacity obligations Who manages? End-use customers Today Supply resource (Similar to generation) Nominate and reduce load per rules Curtailment service provider/load serving entity (any PJM member) PJM Proposal Demand bid (BRA or bilateral, no IAs) Same Load-serving entity (for specific customer) All may participate subject to Same regulatory rules Both PJM and the Relevant Electric Retail Regulatory Authority each may play a role in facilitating a transition to the LSE DR & EE model 35
Need for PJM State Collaboration PJM commits to support and facilitate where possible the efforts the states may undertake to transition the DR & EE commitments. What needs attention is compensation. The DC Circuit Court held that FERC cannot require compensation to retail DR (and EE). The value proposition of DR and EE though remains the same. So what has to change? There is no reason that retail customers can t still be compensated for committing to and performing demand response and energy efficiency. But, the source of the compensation requirement must change from FERC to states. www.pjm.com 36
Source of DR today DY 14/15 Confirmed Load Management DR Registrations by Owner/Company Type DY 14/15 Confirmed Load Management DR Registrations by Business Segment www.pjm.com 37
EPA's Clean Power Plan (CPP) Clean Air Act Sec. 111(d) - PJM s Role PJM has been tasked with assessing potential impacts of the EPA Clean Power Plan Proposal on PJM states; however, as an RTO, PJM: Maintains neutrality on CO 2 policy Acts as an independent source of information on CO 2 policy implications Does not forecast market outcomes but rather models outcomes based on a specific set of assumptions www.pjm.com 38
PJM States System Emission Reduction Standards 39
Similar to the Reliability Safety Valve for MATS Reliability Safety Valve Keeps generation resources on-line to maintain reliability until a transmission solution can be implemented to ensure retirements do not jeopardize reliability Proposed Reliability Safety Valve for 111(d) has additional features Up front analysis of SIPs to check for possible reliability issues intra-state and inter-state On going analysis after implementation as generation resources may retire well after compliance obligations begin depending on flexibility of SIPs in contrast MATS has a hard deadline for emissions rate compliance Ongoing analysis of retirements same as MATS retirement analysis standard deactivation analysis 40
Measuring Compliance on a Regional/RTO Basis Provide an option for SIPs to measure compliance on a regional/rto basis Leverages the economies of scope and scale and cost-effectiveness of RTO-wide markets and institutions Cost-effective security constrained economic dispatch across an RTO is already taking place and would make compliance more cost-effective Resource adequacy constructs allow for the cost-effective sharing and transfer of resources across the region Region-wide transmission planning process Market rules already exist in RTO markets to account for the cost of environmental compliance in general 41