Fuel Security Senior Task Force Preparing Recommendation

Since 2018, PJM and members have been studying risks to the grid and how best to prepare for them

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The Fuel Security Senior Task Force is preparing to make a recommendation to the Markets & Reliability Committee Dec. 19 on whether to pursue changes that would help ensure fuel security.

The task force, which began meeting in April, was charged with determining whether operational, market or planning changes are needed to ensure the current or future security of the grid, and what those changes could be. In particular, the group is studying how the availability of fuel and sets of resources may be assured through new or enhanced mechanisms. The first step of the task force was to do an additional analysis – beyond what was done in 2018 – to determine if there are any credible risks and gaps in existing mechanisms for ensuring current or future fuel security.

Fuel security is the availability of fuel required, both on-site and assessed from delivery systems, to enable a generating unit to follow PJM dispatch signals or operating instructions.

The work of the Fuel Security Senior Task Force has taken a broad approach that expands the strategy to also include:

  • Resource security – Availability of a set of resources with the same fuel type that share common vulnerabilities.
  • Energy security – Potential solutions may include a combination of system attributes, fuel and resources that can be achieved through existing, modified or new mechanisms such as demand response and load-shaving programs that reduce electricity demand.

Tim Horger, Director of Energy Market Operations, presented a summary of the fuel security initiative at the Nov. 22 task force meeting. Potential approaches were discussed on paths forward, including retaining the status quo, defining criteria in 2020 that would trigger the development of a solution, and developing both criteria and a solution mechanism in the coming year.

Poll questions to help inform discussions were expected to be sent out on Nov. 26 to those on the group’s email list, with responses due Dec. 6.

The results will be reviewed at the group’s final meeting on Dec. 16.

Hundreds of Scenarios, Sensitivities Studied

PJM recommended that members create the Fuel Security Senior Task Force following the November 2018 release of its Fuel Security Study, which stress tested the grid using more than 300 scenarios. The findings showed that the system can withstand an extended period of stress while remaining reliable and fuel secure. However, there were combinations of extreme conditions under which the system could be subject to disruptions.

While there is no imminent threat to the system, the findings of the study underscored the importance of PJM exploring proactive measures to value fuel security.

The senior task force studied 324 scenarios and 56 sensitivities that included assumptions reflective of typical conditions and more extreme assumptions intended to stress the system. The focus was on event impact and the effect of fuel delivery infrastructure interdependencies.

What Was Found

When assessing the generation portfolio for 2023 at an expected reserve margin, Horger noted, the study revealed no immediate threat to the reliability of the system, even when assuming the greatest fuel delivery risk.

Additional scenarios further stressed PJM’s generation portfolio, tightened expected reserve margins and assumed greater amounts of fuel delivery risk. This resulted in a need for emergency procedures, including voltage reductions and shedding load.

A simulation of PJM’s operational procedure to manage resource limitations like onsite fuel inventory showed a reduction in the need to escalate emergency procedures.

Regarding generator compensation, the review revealed some potential gaps in existing mechanisms, Horger said. For example, there may not be sufficient incentive for a resource to improve its fuel/energy/resource security.

What’s Next?

Horger kicked off the discussion of potential paths forward with three suggestions. Under the first, retaining the status quo, stakeholders could review the issue annually.

“We are ahead of the game now from the perspective of looking at fuel security,” Horger said.

The downside of this approach, however, is that no solution would be in place if risks increased drastically and unexpectedly. And, without a solution, the market may not trigger a need for action.

These are the same risks associated with a second approach, in which stakeholders would define criteria in the coming year, which, if met, would trigger the need to develop a solution.

The third potential recommendation would be to develop both criteria and a solution in 2020. The disadvantage to this approach, he said, would be the potential for a solution to be triggered prematurely. Among the questions in the poll, stakeholders will be asked to weigh in on these suggestions and to offer their own.