PJM Annual Meeting Panel Previews Reliability Challenges

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PJM charted out its reliability concerns and proposed actions to resolve them in a panel presented at the Members Committee meeting Monday.

During the 2023 Annual Meeting of Members in Cambridge, Maryland, PJM leaders and the Independent Market Monitor outlined significant challenges facing the footprint, reviewed an initial set of critical actions underway to preserve reliability, and discussed upcoming efforts into 2024.

Participating in the panel, The Reliability Landscape: A Look Forward, were:

  • Moderator Asim Haque, Vice President – State & Member Services
  • Mike Bryson, Senior Vice President – Operations
  • Adam Keech, Vice President – Market Design & Economics
  • Ken Seiler, Vice President – Planning
  • Joseph Bowring, President, Monitoring Analytics, PJM’s Independent Market Monitor

Haque wove together the findings and conclusions of a series of reports PJM has undertaken over the past few years. Those ongoing studies are meant to assess the impact of the evolving generation mix, as 265,000 MW worth of projects looking to interconnect with the PJM system are intermittent in nature.

The first report, Reliability in PJM: Today and Tomorrow (PDF), laid out the building blocks to define the concept of the transition and how reliability needs will change, Haque said.

This was followed by an ongoing series of Energy Transition in PJM papers, the first titled, Frameworks for Analysis (PDF), the second, Emerging Characteristics of a Decarbonizing Grid (PDF).

“The finding that most directly impacts reliability as we transition to greater renewable penetration is the conclusion that we will continue to need our thermal resources and the essential reliability services they provide in order to preserve reliability until a replacement technology for these resources is deployable at scale,” Haque said. Essential reliability services, a term defined by the North American Electric Reliability Corporation, are physical grid attributes that are necessary to preserve grid reliability that today only our thermal resources can provide.

Today, the PJM generation fleet has adequate resources and resources with essential reliability services.

However, as outlined in the recent paper, Energy Transition in PJM: Resource Retirements, Replacements & Risks (PDF), generation retirements might outpace new entry; at the same time, load will increase, creating concerns over resource adequacy.

Haque broke down reliability concerns into three categories: immediate, near term and upcoming, highlighting more than a dozen initial actions underway to support reliability. The immediate concern relates to generator performance during Winter Storm Elliott. The near-term concern relates to ensuring that we have resource adequacy later into this decade. The upcoming concern relates to maintaining and attracting essential reliability services.

Reliability Backstop

Bryson underscored the concerns Haque presented about reliability. He said while there has been talk that the most recent reliability paper overestimates the impact of the energy transition on reliability, “I’m here to say it’s underestimated.”

PJM’s regular pre-summer assessment indicates higher-than-average generator outage rates, Bryson said, noting, “This is the first time I remember that we will be short on operating reserves in the summer.”

It’s important to devise market solutions to reliability problems, he said, but it’s also important to talk about reliability backstops.

One of these is having state and federal policymakers build “off-ramps” into policies that can be employed as PJM makes reliability decisions. He also said PJM is working to clean up Tariff language for Reliability Must Run (RMR) contracts – for generators that are asked to delay their deactivation to preserve system reliability.

Bryson said it’s critical that contract provisions outline adequate compensation, so that units aren’t discouraged from remaining on the grid if asked to do so by PJM for reliability because the decision is voluntary.

Stakeholders can expect to see a related problem statement as soon as this summer, he said.

Reserve Certainty

Keech weighed in on the concept of reserve certainty.

The goal of reserve certainty is to make sure PJM is encouraging the right types of reserve products, that the cost of providing those reserves can be captured in their market offers, and that they respond when needed, he said.

“We have an opportunity to use the market to shape the fleet of the future,” he said.

Neighboring systems have made changes toward incorporating a flexibility product, he said. “Now is the time to use the markets proactively to send the right signal, so we attract the right resources we need.”

The Markets Work

Bowring said he supports markets as the most effective and efficient path to just and reasonable rates and reliability.

“PJM markets have worked,” he said. “We expect them to continue to work.”

However, he noted that energy market incentives should stay in the energy market, and not be extended to the capacity market.

The markets do face real issues, though, he said. The quality of reserves is less than it appears, and the system much tighter, he said.

He also voiced support for the interconnection queue reform now being implemented.

Continued Queue Improvements

PJM has completely reformed its interconnection queue process, Seiler said, and those reforms are about to begin.

However, he said, “A lot of the projects aren’t building. It’s not enough – we need to see more construction.”

Seiler noted that 38,000 MW of projects requiring virtually no upgrades have an executed Interconnection Service Agreement. Another 6,000 MW worth of projects are out for execution.

Yet last year, only 2,000 MW connected to the grid ­– only about 700 MW of which were renewables – and so far in 2023, that number stands at 250 MW.

Developers are citing challenges including local opposition, the cost of capital, supply chain issues, siting and permitting, he said.

In the next few years, PJM will study in excess of 200,000 MW, Seiler said – well over the 40,000 MW slated for retirement. If the new generation in the queue is built at close to the expected pace, it would be enough to replace those retiring generators.

But in addition to the delay in building, not all megawatts are created equal, he said. Still, “We feel very good about where we are on the interconnection process.”

At the stakeholders’ suggestion, he said, PJM is considering a new process to fast track replacement projects sited where generation is retiring. A problem statement and issue charge is scheduled to go before the Planning Committee in May.

Meanwhile, he also has his eye on long-term planning. Referencing increasing data center load, electrification and offshore wind, Seiler said that a lot of forces are changing the system.

PJM has formalized a group to focus on long-term planning, an initiative that will be introduced to the Planning Committee in July.