What to expect in the upcoming PJM 2017/18 Demand Response season as well as a 2020/21 BRA preview.

April 27, 2017
Seasonal Preview: PJM

A changing weather landscape may bring early summer heat.
Although the recent La Nina season is officially over, we are experiencing a Mother Nature hangover as the 2017 Spring season has seen above normal temperatures.  As we transition from La Nina to El Nino, we should expect the hotter than normal temperatures to continue through the early part of the summer in the PJM region.  This should give way to cooler than normal late summer temperatures, which is opposite of what we saw during the 2016 summer season.  Warmer temperatures early in the season could yield some emergency issues, especially localized transmission concerns, so be prepared early in the 2017/18 Demand Response (DR) season.

As usual, CPower tends to schedule the PJM mandatory test event early in the summer to ensure customers will have time to be retested in the event they under-perform. CPower customers should be on the lookout for our test event messaging.

Capacity Performance Non-Summer M&V changes take effect in 2017/18.
As part of PJM’s filing to FERC in November 2016, the Non-Summer Measurement and Verification (M&V) methodology for Capacity Performance (CP) has been changed starting with the 2017/18 season.  The new Non-Summer M&V will be a Winter PLC construct.  The Winter PLC will be based on the customer’s highest load value between 6am-9pm during PJM’s 5 Winter Peak Days.  CP Demand Response customers will have separate Summer and Winter PLCs and FSLs for compliance purposes although the load reduction will be the same value for the entire season.

PJM ushers in a new era of Demand Response with the 2020/21 BRA.
In May of 2017 PJM will conduct its annual Base Residual Auction (BRA) for the 2020/21 season.  This year marks the first year that Demand Response can only be Capacity Performance.  Although there will be a mechanism for Summer seasonal DR resources to offer and clear as a CP aggregation, the overwhelming majority of DR that clears the BRA will be pure CP.

Prognosticators are reviewing the auction parameters and making predictions on clearing prices.  Although capacity resources are expected to exit the market under the new CP construct, PJM has also lowered their load forecast, causing many to believe the CP price could clear flat compared to last year.  There is, however, reason to believe that there could be significant premiums in EMAAC and COMED due to limited CP resources and transmission constraints.  One can never predict participant behaviors which is a variable that always makes price prediction an interesting but inexact science.

During the 2020/21 season, many traditional “summer only” DR customers will be forced to participate as annual resources in the CP program at potentially a lesser load drop commitment, while others may leave the market entirely.  CPower would like to work with all DR customers to maximize their participation and find ways to keep them in the program as either CP enrollments or part of a CP aggregation.

To learn more about PJM’s changing market or about how to be better prepared for potential grid instability this summer, contact Dann or any member of the CPower’s PJM Team.

Published by

Dann Price

Dann Price has worked in the energy industry since 2008. As CPower’s Director of Market Development for the PJM market, Dann is responsible for keeping hundreds of demand response customers abreast of market conditions, energy prices, and regulatory issues.

Dann Price

Dann Price has worked in the energy industry since 2008. As CPower’s Director of Market Development for the PJM market, Dann is responsible for keeping hundreds of demand response customers abreast of market conditions, energy prices, and regulatory issues.