PJM Staff Capacity Performance Proposal

Posted: August 20, 2014 - 19:00 / PJM / ESA Filings

Last winter’s generator performance—when up to 22 percent of PJM capacity was unavailable due to cold weather-related problems—highlighted a potentially significant reliability issue. PJM’s analysis shows that a comparable rate of generator outages in the winter of 2015/2016, coupled with extremely cold temperatures and expected coal retirements, would likely prevent PJM from meeting its peak load requirements. 

PJM Interconnection’s capacity market has been highly successful, attracting more than 35,000 megawatts of new physical generation to the system since its inception in 2007. Our capacity auctions ensure that adequate generation is committed to serve the region three years in advance of the need. The capacity market also has eased impacts from the major fuel switch that is occurring as coal generators retire and new natural gas generators replace them. However, this rapid transition is contributing to concerns about the performance of the generation fleet—particularly during extremely cold weather, like last January’s. 

PJM, therefore, is seeking to develop a more robust definition of Capacity Resources that provides stronger performance incentives and more operational availability and diversity during peak power system conditions. To do so, PJM is proposing to add an enhanced capacity product – Capacity Performance – to its capacity market structure and to reinforce the existing definition of the Annual Capacity product to ensure that the reliability of the grid will be maintained through the current industry fuel transition and beyond.

Capacity providers—including physical generators, demand response and energy efficiency providers—that offer and are committed to provide the Capacity Performance product will be required to meet additional eligibility qualifications and obligations designed to ensure better performance.

Under this enhanced structure, there will be four products – Capacity Performance, Annual Capacity, Extended Summer and Limited Demand Response.