PJM announces next phase of grid resilience initiative

2018

PJM today announced the next steps in its initiative to ensure future fuel security for electricity generation on its power system serving 65 million people with the publication of the report, Valuing Fuel Security.

Fuel security, defined by PJM as risks to the fuel supply and delivery to critical generators, is at the forefront of resilience, as a combination of public policies, lower fuel prices and technology improvements alter the traditional mix of generation resources serving customers.

The PJM grid remains reliable even with the resource retirements analyzed to date and investment in new, increasingly more efficient gas-powered generation sources.

While the grid also remains fuel secure given these changes, the potential for continued evolution of the fuel mix underscores questions, raised by PJM in a March 2017 report, about the need to examine the long-term resilience of the grid.

In the 2017 report, PJM’s Evolving Resource Mix and System Reliability, PJM concluded that the system could remain reliable with the addition of more natural gas and renewable resources, but that “heavy reliance on one resource type” raises potential resilience risks beyond existing reliability standards.

“I have been asked questions related to fuel security and with good reason,” said PJM CEO and President Andy Ott. “Our timing on this is driven by the trend. This is not tied to any one event.”

To address longer-term questions of fuel security, PJM will initiate a process, starting immediately, to analyze fuel security vulnerabilities and establish criteria to assess areas in the PJM system that could face future fuel security issues.

“We currently do not have a metric for the trends we are seeing in retirements,” said Ott. “We want to focus this at a level of the growing general concerns. Our grid is reliable and fuel secure for the near future. But that’s the point – we have to do this analysis now to be ready for the long term.”

The criteria will be the means to value and price fuel security. Those criteria could then be incorporated into PJM’s existing market mechanisms to promote competition among different resource types to meet any fuel security needs in a particular location, with reforms to be in place for next year’s capacity auction, if necessary.

“Competitive markets remain the best mechanism to maintain a reliable and fuel-secure system at the lowest reasonable cost to customers,” said Ott.

The process will involve three phases:

  • Identify system vulnerabilities and determine attributes such as on-site fuel requirements, dual-fuel capability or others that ensure that peak demands can be met during extreme scenarios.
  • Model those vulnerabilities as constraints in PJM’s capacity market, similar to existing transmission constraints, allowing for proper valuation of needed attributes in the market.
  • PJM will continue to work with the U.S. Department of Homeland Security, the U.S. Department of Energy, the Federal Energy Regulatory Commission, states, stakeholders and others to ensure that the results are consistent with identified security needs in the PJM footprint, including service to key military installations and other identified security concerns.

The intent of the vulnerability assessment is to stress-test the system under various fuel supply disruption scenarios, to better understand potential future reliability concerns. PJM anticipates completing the study within the next six months, and the results will be discussed with PJM stakeholders, including state and federal agencies.