Efficiencies
Of Scale
Markets
In 2022, stakeholder work for market evolution gained momentum to fulfill the requirements of the changing grid. The scale of PJM’s competitive wholesale energy markets continues to offer opportunities for customers to benefit from the most cost-effective market outcomes.
Base Residual
Auctions
Continue on compressed timeline
PJM’s Base Residual Auctions, or annual capacity auctions, function to secure power system needs up to three years in advance. In 2022, PJM continued an accelerated capacity auction cadence to reestablish the three-year forward model that was interrupted while FERC considered new market rules.
June 2022
PJM successfully conducted the auction to secure capacity required to ensure reliability for the 2023/2024 Delivery Year. The auction results reflected a reliable and lower-carbon resource mix achieved at a low cost to consumers.
December 2022
The 2024/2025 Delivery Year capacity auction, which opened in December 2022, was completed on Feb. 27, 2023.
The posting of the results was delayed while PJM sought and received permission from FERC to address a unique anomaly in the calculation of the reserve requirement that led to prices being artificially and unjustly inflated in the Delmarva South Local Deliverability Area.
The Base Residual Auction for the 2024/2025 Delivery Year secured adequate resources to meet demand, with prices down in the RTO and up in areas with local constraints that indicate tightening conditions in specific areas.
Although PJM retained a healthy reserve margin in 2022, a three-year trend of decreasing amounts of megawatts offered represents a potential concern for long-term resource adequacy, depending on the rate of replacement of these resources.
Advancing
Capacity
Market Reform
PJM, members and stakeholders worked diligently throughout 2022 to explore and identify interests and objectives related to the adaptation of wholesale energy markets to the grid of the future.
With reliability and cost-efficiency at the forefront, senior task forces explored changing generation attributes, resource accreditation, load forecasting and a host of other wholesale electricity market issues.
The Resource Adequacy Senior Task Force (RASTF) met throughout 2022. Stakeholders explored high-level concepts for market constructs from many industry perspectives. In all, the RASTF advanced work on eight key activities articulated by stakeholders as necessary for collaboration and progress.
Distributed energy Resources
MArket
Integration
In February, PJM filed a comprehensive proposal outlining how it will comply with Order No. 2222, FERC’s directive for power system operators to create market rules enabling the participation of distributed energy resource (DER) aggregations in the wholesale markets.
The framework being put forward is a foundation for DER aggregation participation in wholesale markets that will evolve over time.
Elements include:
A new market participation model called the DER Aggregator Participation Model
Pre-registration coordination activities between DER aggregators and electric distribution utilities to determine locational and data components needed for the DER aggregators’ registration with PJM
A 60-day review period whereby electric distribution utilities can, among other things, analyze a proposed registration for electric distribution system reliability impacts
Locational requirements that support reliable operations and energy price formation, and are as geographically broad as technically feasible
Enabling of retail and wholesale participation while at the same time preventing double counting of the same product
Balanced metering and telemetry requirements
A coordination framework that balances market access with safe and reliable distribution system operations
Reserve pricing changes
Better align
Financial
incentives
PJM is required by NERC to maintain sufficient reserves to respond within 15 minutes to the loss of the largest single contingency on its system. PJM implemented new reserve price formation rules as ordered by FERC effective Oct. 1, 2022.
The Changes:
Are expected to produce
with less PJM operator intervention and produce reliable Synchronized Reserve performance
Established new
product in the Day-Ahead and Real-Time markets
Enable PJM to
between operations and market outcomes
quadrennial
Review Filing
The PJM capacity auction procures power supply resources to meet electricity needs in its service area of all or part of 13 states and Washington, D.C., three years ahead of the delivery year.
In 2022, the PJM Board of Managers approved the PJM-recommended solution to estimate the amount of capacity to be procured to ensure reliability in advance.
Efficiencies
Of Scale
Markets
In 2022, stakeholder work for market evolution gained momentum to fulfill the requirements of the changing grid. The scale of PJM’s competitive wholesale energy markets continues to offer opportunities for customers to benefit from the most cost-effective market outcomes.
Base Residual
Auctions
Continue on compressed timeline
PJM’s Base Residual Auctions, or annual capacity auctions, function to secure power system needs up to three years in advance. In 2022, PJM continued an accelerated capacity auction cadence to reestablish the three-year forward model that was interrupted while FERC considered new market rules.
June 2022
PJM successfully conducted the auction to secure capacity required to ensure reliability for the 2023/2024 Delivery Year. The auction results reflected a reliable and lower-carbon resource mix achieved at a low cost to consumers.
December 2022
The 2024/2025 Delivery Year capacity auction, which opened in December 2022, was completed on Feb. 27, 2023.
The posting of the results was delayed while PJM sought and received permission from FERC to address a unique anomaly in the calculation of the reserve requirement that led to prices being artificially and unjustly inflated in the Delmarva South Local Deliverability Area.
The Base Residual Auction for the 2024/2025 Delivery Year secured adequate resources to meet demand, with prices down in the RTO and up in areas with local constraints that indicate tightening conditions in specific areas.
Although PJM retained a healthy reserve margin in 2022, a three-year trend of decreasing amounts of megawatts offered represents a potential concern for long-term resource adequacy, depending on the rate of replacement of these resources.
Advancing
Capacity
Market Reform
PJM, members and stakeholders worked diligently throughout 2022 to explore and identify interests and objectives related to the adaptation of wholesale energy markets to the grid of the future.
With reliability and cost-efficiency at the forefront, senior task forces explored changing generation attributes, resource accreditation, load forecasting and a host of other wholesale electricity market issues.
The Resource Adequacy Senior Task Force (RASTF) met throughout 2022. Stakeholders explored high-level concepts for market constructs from many industry perspectives. In all, the RASTF advanced work on eight key activities articulated by stakeholders as necessary for collaboration and progress.
Distributed energy resources
Market
integration
In February, PJM filed a comprehensive proposal outlining how it will comply with Order No. 2222, FERC’s directive for power system operators to create market rules enabling the participation of distributed energy resource (DER) aggregations in the wholesale markets.
The framework being put forward is a foundation for DER aggregation participation in wholesale markets that will evolve over time.
Elements include:
- A new market participation model called the DER Aggregator Participation Model
- Pre-registration coordination activities between DER aggregators and electric distribution utilities to determine locational and data components needed for the DER aggregators’ registration with PJM
- A 60-day review period whereby electric distribution utilities can, among other things, analyze a proposed registration for electric distribution system reliability impacts
- Locational requirements that support reliable operations and energy price formation, and are as geographically broad as technically feasible
- Enabling of retail and wholesale participation while at the same time preventing double counting of the same product
- Balanced metering and telemetry requirements
- A coordination framework that balances market access with safe and reliable distribution system operations
Reserve pricing changes
Better align
Financial Incentives
PJM is required by NERC to maintain sufficient reserves to respond within 15 minutes to the loss of the largest single contingency on its system. PJM implemented new reserve price formation rules as ordered by FERC effective Oct. 1, 2022.
The changes
Are expected to produce
with less PJM operator intervention and produce reliable Synchronized Reserve performance
Established new
product in the Day-ahead and Real-Time markets
Enable PJM to
between operations and market outcomes
Quadrennial
Review Filing
The PJM capacity auction procures power supply resources to meet electricity needs in its service area of all or part of 13 states and Washington, D.C., three years ahead of the delivery year.
In 2022, the PJM Board of Managers approved the PJM-recommended solution to estimate the amount of capacity to be procured to ensure reliability in advance.
This study process preceding PJM Board consideration, known as the Quadrennial Review, for the first time invited.
This input helped inform a consultant’s analysis and recommendations for reforming the calculations for key drivers of the Variable Resource Requirement Curve, which determines
PJM believes the resulting Quadrennial Review proposal filed with FERC supports adequate procurement levels in the capacity market while
