Over the last 10 years, the combination of changes in grid operational needs, the evolution of wholesale markets, development of behind-the-meter generation technology and increasing focus on resilience call for a review of how demand resources integrate into operations and markets.
To that end, PJM has developed a paper that focuses on PJM’s vision, roadmap and strategy for demand response in the short-, medium- and long-term. Demand response has proven to be a valuable operational tool for maintaining reliability both for real-time grid stability and long-term resource adequacy.
PJM wants to ensure that demand response is a predictable, reliable and transparent resource and believes this can be accomplished by increasing the alignment of wholesale and retail market incentives through coordination with state retail regulatory authorities.
PJM is seeking opportunities to move demand response to the demand side of the energy market, but acknowledges that the right approach must make sense for all stakeholders, including retail customers, load-serving entities and the markets. PJM also recognizes that there will be obstacles and will collaborate with regulators and load-serving entities to find the best solution.
Demand response has matured significantly in the last 10 years. It has transitioned from a legacy utility program to a resource (managed by curtailment service providers) that is integrated into the wholesale markets and used to operate the grid.
The more that demand actively participates in electricity markets, the more competitive and robust the market results are.
In the paper, PJM states why it believes that demand response should remain as a supply-side resource in the capacity and ancillary service markets.
Going forward, PJM wants to preserve the successful curtailment service provider model of DR participation in PJM wholesale markets has been successful.
PJM recognizes that the transition from customers receiving both supply-side payments and demand-side retail cost savings to receiving just demand-side retail cost savings will have obstacles to overcome.
Nevertheless, PJM will look for opportunities to evolve in this direction through collaboration with load-serving entities and the state retail regulatory authorities.