What will the future hold for PJM, the members companies and the various sectors? What regional and national trends might affect them?
Denise Foster, PJM vice president – State and Member Services, led a panel of representatives from the five member sectors as they gave their take Tuesday at the General Session at the PJM Annual Meeting in Chicago.
From the representatives’ perspectives, the PJM market works well – although not perfectly. Their insights touched on a number of topics, including integrating distributed energy resources into the grid (and the tariff changes it might entail), state subsidies, unit retirements, cost containment and flexibility going forward.
Linde Energy Services’ Larry Stalica (End Use Customer Sector) used his own experience as a cautionary tale of the wrong side of flexibility. He worked for a television manufacturer, which built a huge brand-new picture tube factory in Mexico in 1998. The company didn’t want to believe that flat-screen TVs might become a reality – at least as soon as they did.
He said that the work that PJM stakeholder groups are doing on integrating demand resources into the grid is key, as the business moves from higher carbon to low carbon, less efficient to more efficient.
“We are at a challenge right now,” he said, “an energy transition. Every company in this room wants to figure out how to participate in it. We as a stakeholder group – all the smart people in this room – we can make this happen.”
Marc Gerken, CEO of American Municipal Power (Electric Distributor Sector), said the industry has common goals – cybersecurity, DER – that are game changers and force everyone to pay attention.
He wondered about the build-out costs of future transmission. As costs increased, the next step could be building generation closer to the load, whether it could be micro turbines or hydro.
Chris Crane, CEO of Exelon (Transmission Owner Sector) said the industry has to decide “how much is a trend and how much is a fad.”
He said in cities such as Chicago, Philadelphia, Baltimore and Washington, demand response has the ability to create equitability for consumers. He also pointed out that nuclear resources were reliable during the polar vortex and a source of clean energy.
Thad Hill (Generation Owner Sector), CEO of Calpine, which operates the world’s largest world’s largest geothermal plant, applauded the new diversity. He said his company has seen 30,000 MW of new generation. As the industry has more diversity, wholesale prices fell by a third.
He said that layers of mandates and subsidies are serving as a cautionary tale for the market, but the tide is turning somewhat. Some state commissions seem less interested in “bailouts” and consumer advocates and groups such as the AARP are pushing back. He said PJM has the ability to shape tariffs to make sure the competitive market is protected. It’s all in how the industry gets there.
When it came to trends, Direct Energy President John Shultz (Other Supplier Sector) said the two trends that stakeholders (and everyone else) will see across PJM are de-carbonization and the continued fall of aggregate demand.
He noted the decline in carbon emissions from generation in PJM and said there was a “purposeful intent” to drive down carbon emissions. The shale “revolution,” he said, added to it, with gas having a carbon content one-half that of coal. Several states, such as New Jersey and Delaware, have requirements for 25 percent renewables. Others have slightly lower requirements and it is a trend that will happen across PJM.
As far as demand for energy, in six of the last eight years, aggregate consumption is down. He predicted that [storage] battery costs, already shrinking, will go down another 75 percent, providing up to 10 gigawatts of storage. This will have a significant impact on business models, he said.