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The GT Power Hour: Episode 18 (Capacity-Market Deep Dive)

Rory Sweeney 2,325

President Power Prose, Inc.

A policy analyst, media contributor and PR consultant to the power industry with more than a decade of experience in journalism. I'm bringing media savvy to energy sector and awareness about...

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Feb 19, 2021Feb 19, 2021 9:39 pm GMT
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As it turns out, we were probably discussing the reliability risks associated with a grid like ERCOT that doesn't have a capacity market right around the time those factors were actually playing out in ERCOT to heartbreaking and devastating effect. Next month's episode will focus on what happened there and the difference in grids like PJM that are operated with capacity markets.

The GT Power Hour: Episode 18 (Capacity-Market Deep Dive)

Recorded just before the devastating blackouts in Texas, this episode of the GT Power Hour podcast coincidentally happens to focus on capacity markets for electricity supply the potential reliability risks that exist on grids operated without such markets - like Texas.

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Matt Chester on Feb 19, 2021

Thanks for sharing, Rory-- definitely a timely topic, and I'm eager to hear what you all think about the ERCOT situation when you can do an episode looking back on it once the state's grid is back on its feet

Rory Sweeney on Mar 3, 2021

Thanks, Matt. We're organizing it now, and it's looking like it will be very timely and topical.

Richard Brooks on Feb 20, 2021

I highly recommend listening to this interview. Glen really understands the challenges in PJM regarding resource adequacy.

Rory Sweeney on Mar 3, 2021

Thanks for the commendation, Dick!

Bob Meinetz on Feb 21, 2021

Rory, if anything capacity markets would have made the situation worse.

Capacity markets were devised as a way to lend assurance, up to three years in advance, that an RTO would have enough electricity to meet demand at a specific date and time in the future. With more dependence wind and solar, planners have no idea whether they'll have enough electricity one day ahead of time, much less three years.

PJM has escaped the fate of Texas only because there are hundreds of independent sources which are available to come to the rescue from other locations (if at stratospheric prices). Texas is the poster child for what we can expect on PJM or any other RTO, however, as penetration of renewables increases.

Or *if* penetration of renewables increases, as an optimist might say.

Rory Sweeney on Mar 3, 2021

Hi Bob, thanks for the comment; however, I'm somewhat confused by it. I agree capacity markets are intended to ensure suitable generation capability years in advance, so are you suggesting those analyses don't include intermittent resources? I can assure you, at least for PJM and I'm fairly certain for most other RTO/ISOs, they receive a substantial amount of consideration. I encourage you to look into the various ongoing PJM-stakeholder processes and FERC dockets related to effective load-carrying capability (ELCC) calculations.

Regarding the difference in price signals between PJM and ERCOT, it's my understanding that PJM's prices are capped at $2k/MWh while ERCOT's climb to $9k/MWh.

I don't think ERCOT represents the potential future in PJM specifically because they have different market structures: PJM has a capacity market that evaluates and ensures reliability years in advance (provided it's working as intended, which it currently is not) while ERCOT does not.

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