What is Zonal Aggregation?

April 10, 2020

In 2019, PJM adopted new rules that allowed customers to contribute different seasonal load values if their curtailment service provider (CSP) can find an offsetting match for the lesser of the two seasonal values within that particular zone. 

This practice is called zonal aggregation. 

In short, zonal aggregation is what enables a given customer to contribute different seasonal load values in PJM’s Capacity Performance demand response program, which otherwise requires a single year-round load drop value from its participants. 

Before we get into the details of how zonal aggregation works, let’s review the rules (and customer concerns) of PJM’s year-round demand response program. 

Capacity Performance
Heading into 2020, a common concern many organizations that had previously participated in PJM’s summer-only demand response went something like this: will we have enough winter load to satisfy the new year-round participation requirements? 

It’s a valid concern given Capacity Performance’s parameters which essentially state that a participant has both a winter load drop value and a summer load drop value. Those values can be different, but the lesser of the two values is what PJM counts as a given organization’s year-round load value. 

Let’s put some numbers to the example above. If an organization has, say, 5 MW of curtailable load in the summer but only 2 MW in the winter, then the organization’s year-round load would be 2 MW–the lesser of the two values.  

To its credit, PJM realized it had roughly 50% more potential capacity in the summer than winter and that quality seasonal capacity was essentially being kept on the sidelines. The RTO realized it had to make a change. 

Enter zonal aggregation. 

How Zonal Aggregation Affects CP

Let’s turn back to our example of a customer with 5 MW of curtailable load in the summer but only 2 MW available in the winter. 

Instead of having to enroll for the year at the lesser load value (2 MW), the customer can contribute 5 MW of load reduction in the summer and 2 MW in the winter if (and only if) the curtailment service provider (CSP) they’re working with can find another customer in the same zone with 3 MW of excess winter load reduction to offset the original customer’s shortage. 

This creates what is called a CP aggregation within the CSP’s demand response portfolio.

Bigger really is better (when it comes to zonal aggregation portfolios)

Organizations seeking to participate in Capacity Performance and contribute different seasonal load drop values through zonal aggregation need to work with a licensed CSP with–and this is important– a sizable CP aggregation in its demand response portfolio. 

Why, in this case, does the size of the aggregation portfolio matter? 

Consider a small CSP that has just a few organizations’ loads in its portfolio. What are the chances this small CSP is able to find a seasonal load match for a particular organization in a particular zone? Not likely.

On the other hand, a CSP with a large aggregation portfolio that includes loads of many organizations located in many zones is much more likely to be able to find the same offsetting match.


This post was excerpted from the 2020 State of Demand-Side Energy Management in North America, a market-by-market analysis of the issues and trends the experts at CPower feel organizations like yours need to know to make better decisions about your energy use and spend.

CPower has taken the pain out of painstaking detail, leaving a comprehensive but easy-to-understand bed of insights and ideas to help you make sense of demand-side energy’s quickly-evolving landscape.

Download Your Copy

Published by

Avatar

Dann Price

Mr. Price has specialized in PJM Demand Response for more than 10 years. As Power’s Executive Director of Market Development for the PJM market, he is responsible for keeping hundreds of customers with thousands of sites up-to-speed on market conditions, energy prices, program particulars, and regulatory issues in the ever-changing PJM demand response market.

Avatar
Dann Price

Mr. Price has specialized in PJM Demand Response for more than 10 years. As Power’s Executive Director of Market Development for the PJM market, he is responsible for keeping hundreds of customers with thousands of sites up-to-speed on market conditions, energy prices, program particulars, and regulatory issues in the ever-changing PJM demand response market.