PJM implemented its new fast-start pricing market rules Sept. 1, as directed by the Federal Energy Regulatory Commission.
Fast-start resources are those that PJM has determined are capable of operating within one hour of notification and have a minimum run time of an hour or less.
The new rules allow these quick-start resources to set the price of energy in the Day-Ahead and Real-Time markets, reflecting their cost of serving load and strengthening their incentive to perform during tight system conditions.
Operational flexibility is increasingly important for the grid to remain reliable as more variable resources like wind and solar power interconnect. The new pricing rules more appropriately value resources needed to serve load and incentivize flexibility by enabling resources to compete for additional revenues.
In addition, the settlement process includes a lost opportunity cost incentive to encourage resources to follow dispatch signals in real time.
The newly updated PJM Manual 11 provides a description of the new fast-start business rules.
The new fast-start settlement business rules may be found in the updated version of PJM Manual 28.
The impetus for fast-start pricing began in December 2017, when FERC initiated an investigation into PJM’s fast-start pricing practices.
In April 2019, the Commission ruled that PJM’s fast-start pricing practices were unjust and unreasonable because they did not allow fast-start resources to set clearing prices in order to more accurately reflect the cost of serving load. Following several compliance filings, FERC in May accepted PJM’s fast-start pricing market rules with an effective date of July 1, which was later rescheduled for Sept. 1 at PJM’s request to avoid deployment during peak summer conditions.