- Sep 15, 2021 5:10 pm GMT
PJM deserves recognition for taking an honest and objective approach to dealing with the challenges of Capacity Market reforms.
Slide 7: Problems identified where today’s market falls short of one or both of the primary objectives of the market:
• Reliability: Ensure adequate supply & demand response to meet the resource adequacy target
• Efficiency: Embrace competitive principles and send transparent price signals for efficient entry and exit
Slide 10: Procurement levels seen by some as too high in PJM. Indicators of a potential problem include:
– Load forecast has systematically exceeded realized load (historically), particularly the forecast used at the time of the BRA
– Capacity procured has been above the target IRM, and prices have been low even as merchant entry continues [RJB] This is a big problem in ISO New England as well.
Slide 16: Flexibility, ramping, etc. are expected to be more valuable in the future with a changing resource mix
• Requires supporting analysis to help determine what and when these services may be needed in the markets (e.g., Renewable Integration Study 2.0 underway)
• Requires discussion on the appropriate place to compensate these services – Is there a need for additional flexible capacity, or should flexibility be primarily compensated in the operating time frame to better utilize flexible capability already on the system?
[RJB] I cannot overstate the importance of having flexible, adequately compensated, grid services available to help system operators manage the ever more complex balancing act we call grid reliability as the energy transition produces a more distributed and granular electricity supply.
Well done, PJM.
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