Grid 20/20 Forum Ponders Quantifying the Value of Resilience

Different resource types contribute distinct reliability attributes to the electric system, and that value should be quantified and reflected in the market, the afternoon panelists at PJM’s Grid 20/20 symposium said.

But not all agreed on how.

“Whatever the solutions are, we simply ask that they be market-based,” said Andrew Novotny, senior vice president of commercial operations for Calpine. He spoke on the “Solution Perspectives” panel moderated by Denise Foster, PJM vice president – State and Member Services.

The daylong conference, “Focus on Resilience (Fuel Mix Diversity and Security),” held April 19 in Philadelphia, built on a recent PJM study that examined the effects on reliability of the changing resource mix.

One topic of debate common to both afternoon panels was the value of nuclear generation and whether it should be sustained through subsidies, even when a unit is uneconomic.

“Fuel diversity in our country is decreasing, in part because of the potential retirement of nuclear units,” said Cara Lewis, associate general regulatory counsel for PSEG, who sat on the “Resilience” panel. “PSEG sees tremendous long-term value of keeping these units around.”

Bill Berg, Eastern RTO Director for Exelon Generation, who sat on the solutions panel, also discussed the value of nuclear.

“Nuclear power has tremendous environmental benefits. Is there a way to incorporate that in market design?” he said.

Joe Bowring, president of Monitoring Analytics and the independent market monitor for PJM, was not swayed.

“There is no defined market design problem that requires subsidies as a solution,” he said. “We shouldn’t provide incentives for uneconomic resources.”

Novotny from Calpine also cautioned against subsidies.

“If we do use state subsidies, it’s critical that PJM protect the capacity market,” he said. “There will be a consequence if that’s not done.”

The afternoon’s panelists brought perspectives from across the country, including California. There, California ISO has just 3 percent of nuclear generation in the mix, and it’s expected to retire around 2024, said Robert Kott, CAISO operations policy manager, regional operations policy and analytics.

Meanwhile, New Jersey employs a significant amount of nuclear generation, said Richard Mroz, president of the N.J. Board of Public Utilities and of the Organization of PJM States, Inc.

Jeff Weathers, resource planning manager for Southern Company, represented a vertically integrated utility that, he said, has fostered resilience by using a diverse resource mix, multiple pipelines, variously sited storage facilities and different transportation types.

Jonathan Monken, senior director, system resiliency and strategic coordination for PJM, said reliability is more crucial now because of the interdependence of structures.

Resilience brings associated cost. But, he said, “Resilience is squishy. It’s not easily designable, and it’s not easy to fit into current metrics that justify investment.

“It’s not always very palatable when there is an investment necessary that doesn’t have an easily quantifiable result,” he said. “As an industry, what’s important is that we collaborate on what a resilience benefit is.”

In closing remarks, Stu Bresler, PJM senior vice president – operations and markets, echoed the morning session’s call for imagination in moving forward.

“There are no easy answers here. There’s a lot of ongoing discussion and debate needed if we are going to evolve in the right way,” he said. “The more we can internalize what are today externalities, the market can make sure through prices what is necessary for resilience.”