The Organization of PJM States focused its 2021 annual meeting on continuing work by PJM and its stakeholders to advance towards the grid of the future while maintaining reliability and ensuring efficient market outcomes.
PJM subject matter experts contributed to each of the four panels at the OPSI annual meeting on Oct. 25 and 26. The meeting also included a keynote from Commissioner Mark C. Christie of the Federal Energy Regulatory Commission (FERC).
The conference took place on the heels of the newly created PJM Resource Adequacy Senior Task Force, which met for the first time on Oct. 22 to explore the scope of work and next steps for reforming the PJM capacity market, or the PJM Reliability Pricing Model.
Distributed Energy Resources
Kentucky Public Service Commission Chairman Kent A. Chandler kicked off the annual meeting with the first panel addressing policy issues associated with integrating distributed energy resources (DER) into wholesale power markets.
PJM Senior Lead Market Design Specialist Danielle Croop highlighted efforts directed at compliance with FERC Order 2222:
- Interconnection processes with respect to state jurisdiction of DER
- Local distribution rules for reliability and safety
- Locational and sizing requirements
- Metering and telemetry
- DER registration and utility review
- Dispute-resolution framework
- Preventing double counting, which may result from retail and wholesale DER market participation
In all, FERC Order 2222 defines a “paradigm shift for operations and the transmission distribution system,” Croop said, adding that PJM’s ongoing collaboration with stakeholders aims for a compliance filing at FERC in early 2022.
“Optionality and flexibility in our implementation continue to be a point of discussion and importance. This allows states to execute their policies for resources, while we facilitate implementation in the market,” Croop said.
Resilience and Reliability Inform Transmission Planning Reform
Ken Seiler, PJM Vice President – Planning, spoke at the second panel led by Maryland Public Service Commissioner Michael T. Richard and Public Utilities Commission of Ohio Commissioner M. Beth Trombold. The panel discussed changes in the planning process to accommodate the integration of renewable resources.
Through its interconnection workshop process overseen by PJM’s Planning Committee, reform is already underway to reflect planning principles, Seiler said. PJM outlined the guiding principles that should be followed in its recent filing in response to FERC’s advanced notice of proposed rulemaking regarding planning for the grid of the future:
- Facilitate a more decarbonized future with planning processes that effectively implement local, state and federal policy choices as well as customer desire for reduced carbon electricity
- Provide clear regulatory support and necessary tools to ensure the grid can withstand extreme weather events and the threat of physical and cyberattacks
- Ensure that any cost-allocation method protects consumers from unreasonable shifts of costs/risks to load
- Implement planning reforms consistently across the nation between regional transmission organization (RTO) and non-RTO regions, so as not to create disincentives for transmission owners to participate in RTOs
In light of a PJM interconnection queue composed of 93% renewable resources, Seiler said reform efforts aim to generate better cost certainty for interconnection customers while moving projects through the queue more quickly.
For example, Seiler said PJM has more than 2,000 projects with over 230,000 MW of new generation proposed in a system that was designed to handle PJM’s current generation fleet with 200,000 MW.
“You don’t just double the amount of MW and expect the transmission system to be able to handle that,” Seiler said. “We have to be thoughtful and surgical in thinking about how to build out transmission.”
Moderated by Indiana Utility Regulatory Commissioner David Ober, the third panel discussed new products that may be necessary to ensure reliability under a changing generation mix. Emanuel Bernabeu, PJM Director – Applied Innovation & Analytics, noted special characteristics of the ongoing energy resource transition, which include:
- Physics, as generation evolves from spinning processes to inverters and controllers
- Variable behavior of renewable resources
- Economics of renewable resources, including high capital investments and zero marginal cost
- The need to strike a new balance between centralized generation and renewable resources
These properties drive the need for a discussion around potential new products or for better definitions of existing products that are required to ensure reliability. While every state’s resource priorities differ, Bernabeu said it is important to note that PJM and its stakeholders can benefit from lessons learned in other markets already accommodating the energy transition worldwide.
“Having a very strong foundation is critical going forward,” Bernabeu said. “Today at PJM, we don’t have a list set in stone of exactly what those products we need to develop are. We have some idea. We will work with stakeholders, academia and research institutions to shape the products needed going forward in the future.”
Adam Keech, PJM Vice President – Market Design & Economics, joined the final panel discussion addressing how renewables can be accommodated in the capacity market. The panel was led by Joe DeLosa, Bureau Chief, Federal and Regional Policy for the New Jersey Board of Public Utilities.
Keech covered three broad areas of inquiry:
- PJM markets may evolve beyond use of current metrics, such as Loss of Load Expectation (LOLE) metric of one day in 10 years and equivalent forced outage rate (EFORD).
- PJM recently implemented Effective Load Carrying Capability (ELCC) for renewable resources and storage as a more accurate metric to determine resource accreditation and is considering whether to expand the use of ELCC to include other generation resources.
- Regional procurement of clean resources could benefit consumers by using economies of scale to increase competition.
PJM’s newly formed Resource Adequacy Senior Task Force will deliberate on these issues and more. At the same time, Keech asked the panel to consider additional market tools to advance some of the stated objectives of the panelists.
“We should really recall that the capacity market is not the only tool we have to solve the challenges coming from decarbonization, and it’s not always the most direct tool,” Keech said. “So continuing to think about solutions in terms of the combined effect of the capacity and energy markets, it’s critical to making sure we do decarbonization in the least cost and the best and most efficient sense that we can.”