The General Session of PJM’s Annual Meeting Tuesday delved into the convergence of PJM’s central purpose – reliability at reasonable cost – and the transformation of the electric power industry.
“This change is happening now. It’s not a theoretical, distant thing – I only expect these trends to accelerate over time,” PJM President and CEO Manu Asthana said in opening the session, titled “Exploring the Intersection of Decarbonization and Reliability.”
Keynote speaker Jim Robb, president and CEO of the North American Electric Reliability Corporation, or NERC, said the electric power industry is undergoing a “3-D transformation” – featuring decarbonization, distributed resources and digitization.
“It’s really not our grandfather’s electric system anymore,” Robb said.
Environmental priorities and economics are driving decarbonization, Robb said, noting that most of the generation coming online, such as wind and solar, is variable in its output.
That must change the way the industry thinks about resource adequacy, he said.
“Traditionally, we looked at capacity. Capacity is necessary, but no longer sufficient,” Robb said. Now, flexibility is key.
The idea of fixed assets has turned “topsy-turvy,” he said, because system operators don’t know what generation is going to be available with the same certainty as in the past – and due to distributed resources, they don’t have a clear view of what load they need to serve.
“This is creating an industry where the bright line between bulk power and distribution is not the case anymore – the two systems are highly related and interdependent,” Robb said.
The third “D,” digitization, is a consequence of the “Internet of Things” – internet-connected smart devices, including appliances, inside people’s homes – along with large industrial control systems on the grid and smart metering. The explosion of digital devices is vastly improving visibility into the system, but it also comes with an ever expanding cyber risk, Robb said.
This vulnerability is leading NERC to rethink standards for the industry, particularly how to protect access to low-impact systems that don’t have as much cybersecurity on them, he said.
Robb listed four areas on which NERC is focused:
- Cold weather and weatherization: A new standard in the works, which is expected to go into effect the winter of 2022/2023
- Developing tools and techniques that focus on energy planning, ensuring energy adequacy both in planning and operations
- Protecting the supply chain from physical or cyberattack in a way that’s cost-effective
- Keeping the Information Sharing Analysis Center (ISAC) at the forefront of what the industry needs
He listed four additional topics that will require broader cooperation within the industry:
- Building more transmission – for both electricity and gas
- Rethinking gas-electric coordination
- Stretching weatherization further upstream, to natural gas infrastructure and the fuel system itself
- Answering the “the million-dollar question”: What will the balancing resources be?
Panel Focuses on Transmission, Reliability
Robb’s keynote was followed by a panel discussion moderated by Mike Bryson, Senior Vice President – Operations, who was joined by:
- Patricia Hoffman, Acting Assistant Secretary, Principal Deputy Assistant Secretary – Office of Electricity, U.S. Department of Energy
- Antoine Lucas, Vice President – Engineering, Southwest Power Pool (SPP)
- Elliott Nethercutt,Principal Researcher – National Regulatory Research Institute
- Phil Pettingill, Director – Regional Integration, California Independent System Operator (CAISO)
Panelists echoed many of Robb’s points, including the need for transmission.
“This could be the Age of Transmission,” Hoffman said. In the near term, she said, she’s concerned with increasing capacity on the system by re-conductoring, dynamic line ratings and other technology.
In the long term, the United States needs to come together on a transmission-planning strategy, Hoffman said.
Looking forward, she said, value is going to be on firm and flexible capacity. In particular, the system will be driven by a combination of flexible energy storage and the evolution of fuels.
Lucas, of SPP, agreed that transmission is critical.
“You can have all the generation you want, but you have to be able to reliably deliver to load,” he said. “From a planning perspective, that has been a consistent focus for us.”
SPP, where utilities are typically vertically integrated, has seen growth in merchant-developed renewable resources, he said.
The key is understanding the ability of the resources to contribute to reliability, he said, noting swings of as much as 16 GW of wind power in one day.
Nethercutt emphasized the importance of policymakers, regulators and those who plan the system working together toward resource adequacy while meeting Renewable Portfolio Standards (RPS).
“State RPS goals need to be flexible enough to respond to policies created by neighboring states,” he said. “It’s entirely possible that one state could contribute to the retirement of generators that a neighboring state relies on.”
Decarbonization and system reliability are not opposing forces, he said – but they can be if policy is not developed right.
He stressed two points: Decarbonization policies need to be crafted with the ability to course-correct, and enhanced metrics that look beyond peak hour need to be as common as reserve margin analysis is today.
Pettingill offered the perspective of a state that has eliminated coal, is reducing gas-fired generation and is phasing out nuclear power.
In California, he said, energy efficiency programs are offsetting any load growth. Behind-the-meter solar resources – connected at the distribution level and not visible or controllable by PJM – is expected to grow from 11,000 MW to 16,000 MW in five years.
The challenge moves from serving gross load to hitting net-load peak, he said.
Regarding decarbonization, he said, the trick is to monitor and price it. CAISO has incorporated the cost of carbon using a cap-and-trade option that has provided an “extremely strong price signal.”
Studying Reliability, Renewable Integration
Emanuel Bernabeu, PJM Director – Applied Innovation and Analytics, closed out the session with a presentation about the ongoing analyses of reliability and renewable integration.
Continuing study of these issues serves to “inform and initiate discussion on changes that may be required, given industry trends,” Bernabeu said.
Bernabeu outlined the four building blocks of reliability: adequate supply, accurate forecasting, robust transmission and reliable operations. These are described in detail in the PJM white paper, “Reliability in PJM: Today and Tomorrow.”
PJM’s work on the integration of renewables builds on previous studies performed over the last decade. PJM is also gathering industry experience in other regions of the U.S. and the world, looking for possible tipping points for renewable integration in PJM.
In general, PJM anticipates continuing market evolution, increasing Installed Reserve Margins (IRM) and decreasing energy market prices as wind and solar produce electricity at or near zero cost. Generation will have to be flexible, with responsive ramping capability, and regions will be increasingly dependent on one another for backup. PJM’s focus will be on maintaining essential reliability services as inverter-based resources become a key player within the generation mix.
PJM made some extreme assumptions in the first phase of its study, he said, and findings at either end of the spectrum should be considered with that in mind. The second phase of the study will home in on more likely scenarios and likely narrow those extremes.
For study purposes, PJM is projecting how state and federal energy policies will affect resources by 2035. With current work based on energy policies in place in early 2020, PJM studies concerning the stable integration of renewable resources for reliability are ongoing. “Policies change quite frequently,” he said. “When we share results, we want to facilitate discussion and inform. That is our main objective. We are not here to propose solutions. We are here to inform.”