PJM’s first capacity auction to include the new Capacity Performance requirement attracted a strong response from capacity resources prepared to meet the new pay-for-performance standards.
The resources that qualified as Capacity Performance units ensure that a reliable electric supply will be available during extreme weather or other system emergencies. Complete results for the auction, including a report and spreadsheet, are available on pjm.com.
“Two consecutive cold winters with natural gas interruptions and the rapid pace of coal retirements have put considerable pressure on the system,” said PJM CEO Terry Boston. “Clearly, PJM had to act decisively with the introduction of Capacity Performance to ensure firmer fuel supplies and other improvements for the continued reliability of the grid.”
The 2018-2019 delivery year clearing price for Capacity Performance resources, which include generation, demand response and energy efficiency, is $165/megawatt-day for all of PJM except the ComEd and Eastern MAAC delivery areas.
ComEd’s Capacity Performance clearing price is $215/MW-day; the Eastern MAAC price is $225/MW-day. Eastern MAAC consists of Public Service Electric and Gas Company, Jersey Central Power and Light Company, PECO, Atlantic City Electric, Delmarva Power and Rockland Electric Company.
|LDA||Capacity Performance Clearing Price||Base Clearing Price||Base DR/EE Clearing Price|
“The response to this auction and to the call for Capacity Performance is another strong indication that our markets are delivering both the resources we need for the future and innovative solutions to the problems we face today,” said Andy Ott, executive vice president.
“The stronger requirements for Capacity Performance represent an insurance policy for consumers against capacity shortages and dramatic price spikes,” Ott said. “The auction prices are in line with the costs of securing this dependable capacity.”
As part of the Capacity Performance phase-in, at least 80 percent of the cleared capacity was required to meet CP requirements, with the remainder being base capacity.
The base capacity clearing price for the RTO is $149.98/MW-day, $15 less than the CP price. The clearing price in last year’s auction was $120/MW-day. The base capacity price in ComEd is $200.21/MW-day; in Eastern MAAC, $210.63/MW-day; and in the PPL delivery area in Pennsylvania, $75.
Overall, the auction procured 166,837 megawatts of capacity, which represents a 19.8 percent reserve margin. One megawatt is enough to power about 1,000 homes. The auction attracted over 3,500 megawatts of new generation, including 3,000 MW of new generating units and over 500 MW of uprates to existing generating units.
Cleared Resources: Base Capacity vs. Capacity Performance
|Cleared MW (UCAP)|
|Base Capacity||Capacity Performance|
A total of 11,084 MW of demand response was procured for 2018-2019, 1,484 MW of which is Capacity Performance. Energy efficiency totaled 1,247 MW, with 887 MW being Capacity Performance.
Renewable resources – wind, solar and hydroelectric – clearing in the auction totaled 14,347 MW (nameplate, which is the theoretical output of a generator).
Two transitional auctions to integrate Capacity Performance into years for which the forward auctions have already been held will be Aug. 26-27 (2016-2017 delivery year) and Sept. 3-4 (2017-2018 delivery year).