Ott: PJM Must Embrace Industry Change with Open Mind

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PJM must listen to members, the marketplace and consumers in order to successfully navigate the swiftly changing energy industry, President and CEO Andy Ott said in his keynote speech at the Annual Meeting May 7.

Ott’s speech echoed the theme of PJM’s annual report, “Leading through the Transition,” which emphasizes PJM’s leadership in shaping dialogue that aligns state policies with the mission of maintaining grid reliability and resilience at the lowest cost.

Over the last few years, the industry also has presented challenges, Ott said, noting changes in technology, fuel shifts, the rise of renewables, regulatory uncertainty – even people’s attitudes toward the way they use energy.

The markets were conceived more than 20 years ago with the mission of reinforcing a reliable grid at the lowest possible cost, Ott said. 

“But to some extent, it’s not enough anymore to just have reliability at the least cost and have open, competitive markets,” he said.

In some cases, state polices along with consumer and corporate choices are changing because of concerns over the environment.

“We need to listen to that as an entity. But it’s not just PJM alone – it’s all of us,” Ott said. “We’re all in it together.”

Markets can accommodate policy changes and technology shifts, Ott said, but PJM must receive clear direction from stakeholders, states and the Federal Energy Regulatory Commission.

Ott noted that markets have helped PJM to become about 40 percent cleaner and greener than 10 years ago. Markets encourage investment in more efficient and reliable sources, which in turn lower emissions. PJM also counts about 2 million demand response customers.

In addition, PJM is working to fully incorporate energy storage in the markets, Ott said, predicting a large jump in that technology as it pairs with others such as renewables and electric vehicles.

Regardless of change, reliability remains job number one for PJM.

The PJM system is more reliable than ever before, and reliability is more important than it’s ever been, Ott said.

Threats to reliability are multiplying, leading PJM to focus on resilience efforts like fuel security.

PJM has gone from about 5 percent of gas-fired generation to about 30 percent over the past 10 years. Renewable penetration is increasing as well; Ott said PJM has 205,000 renewable generators, mostly solar, registered in PJM.

“When you think about the change that we’ve seen, it’s pretty significant,” Ott said. “The system will change again even between now and 2022.”

Going forward, PJM is committed to meeting unprecedented changes with an open mind, Ott said, to continually examine the work it does and identify smart changes that will keep the lights on and the electricity flowing.

Watch highlights of Ott’s keynote below.