PJM and stakeholders have begun exploring ways to enhance reserve market performance and fuel procurement incentives through a new Reserve Certainty Senior Task Force, which convened Oct. 10.
The effort is part of PJM’s overarching initiative, Ensuring a Reliable Energy Transition, to identify challenges to reliability and craft solutions amid the transition to a lower-carbon generation fleet. Procuring the right amount of reserves and incentivizing their reliable performance is increasingly critical as the generation fleet shifts from thermal resources to renewable energy sources whose output varies with time of day and weather.
Members endorsed the problem statement and issue charge (PDF) creating the group at the Sept. 20 meeting of the Markets & Reliability Committee (MRC).
In introducing the issue at the Sept. 20 MRC, Donnie Bielak, Sr. Manager – Dispatch, said the topic is a reliability concern that has come directly from dispatchers in the control room; reserves are simply not performing as expected, nor being appropriately compensated when they do, particularly Synchronized Reserves.
Synchronized Reserves are the reserve capability resources that can fully convert to energy within 10 minutes upon request from PJM dispatchers. This power can be from generators that are synchronized to the power grid or certain loads, designated as demand side response, which can be removed from the grid.
Since the implementation of Reserve Price Formation on Oct. 1, 2022, system recovery has taken more than PJM’s internal requirement of 10 minutes for the majority of Synchronized Reserve Events, Bielak said, though less than the 15-minute standard imposed by the North American Electric Reliability Corporation.
In addition, resources with a Synchronized Reserve commitment are performing at an average of 47% of their assignment during events, which could be related to low-to-zero clearing prices and low penalty rates for non-performance.
According to the problem statement (PDF), “PJM believes ‘reserve certainty’ comes from having the appropriate suite of ancillary service products procured at the necessary level coupled with the confidence in resources with an assignment to provide reserves to perform when called upon.”
The issue is one of several immediate, near-term and upcoming concerns identified in PJM’s initiative, Ensuring a Reliable Energy Transition.
That initiative reflected a need to update PJM’s procurement and compensation structure for reserves and improve visibility into the availability of reserves and their fuel supply.
The issue charge tasks the group with studying two phases of system needs – immediate and longer-term, with the potential for a Federal Energy Regulatory Commission filing between deliberations.
The immediate needs are:
- Reserve resource performance and penalty structure
- Reserve offer structure appropriately aligned for resource fuel procurement
- Reserve deployment
- Reserve quantities procurement reflective of system needs
That last item continues into longer-term needs. Other long-term needs the task force will be exploring are:
- Reserve product participation requirements
- Incenting resource flexibility that the system needs
The first phase of the task force’s work is expected to take six to nine months.