Wednesday, May 25, 2016

PJM Capacity Auction: Nearly Half Of MW Were From New Natural Gas Power Plants

Results of PJM Interconnection's second auction with stringent pay-for-performance standards attracted a significant amount of new resources at competitive prices to the PJM footprint.
In addition, the auction for power-supply resources attracted continued strong participation from renewable resources and demand response.
Nearly half of the 10,348 MW of demand resources cleared in the auction were from new natural gas-fired generation— 5,074 MW.  There were 335 MW of solar generation capacity that cleared along with 969 MW of wind generation capacity.
PJM procured 167,306 megawatts in the recent auction to ensure electricity capacity for the June 1, 2019-May 31, 2020, delivery year. The clearing price was $100/megawatt-day for the majority of the region.
"Prices were lower than some analysts had expected and lower than the last year's auction results simply because of market fundamentals of changes in supply and demand," said Stu Bresler, senior vice president - Markets. "The load forecast is lower, and there was a large amount of new gas-fired combined-cycle generation clearing for the first time in the auction."
PJM procures resources three years in advance to ensure reliable electricity supply will be available during extreme weather or other system emergencies to meet consumers' demand for electricity.
Under the new "no excuses" Capacity Performance standards, resources commit to perform when needed or face steep non-performance payments. To meet that requirement, generators, for example, ensure firm fuel supplies or are making improvements to their equipment.
"The results demonstrate investors' continued high degree of confidence in the competitiveness of natural gas-fired generation and natural gas prices going forward and that they are willing to bear the risk of that investment," Bresler said. "The market enables consumers to benefit from assured reliability at the most competitive, economic cost."
A total of 10,348 MW of demand resources cleared in the 2019/2020 auction with 613.7 MW clearing as capacity performance.
The auction attracted 5,074 MW of new gas-fired generation.
In addition, 1,515 MW of Energy Efficiency cleared in the auction with 1,058 MW clearing as capacity performance. There were 335 MW of solar generation capacity that cleared along with 969 MW of wind generation capacity.
In three constrained areas, the Eastern MAAC, Baltimore Gas & Electric and ComEd locational delivery areas, the price for capacity is higher.
For Eastern MAAC the Capacity Performance price is $119.77/MW-day; in BGE the capacity performance price is $100.30/MW-day; and, in ComEd the price is $202.77/MW-day. (ComEd is in northern Illinois. Eastern MAAC consists of Public Service Electric and Gas Company, Jersey Central Power and Light Company, PECO, Atlantic City Electric, Delmarva Power and Rockland Electric Company.).
The capacity procured is a 22.4 percent reserve margin. This year, at least 80 percent of capacity procured had to meet the Capacity Performance criteria. The remaining capacity was purchased as base capacity which has the same performance requirements as Capacity Performance, but only during the summer months.
A report of the results is available on
Related Story:
Exelon: Zero-Carbon Three Mile Island Did Not Clear PJM Capacity Auction

1 comment :

  1. PJM is playing fast and loose with the reliability of their service area, IMHO. They trumpet the fact that a whopping 335 MW of taxpayer-subsidized solar power cleared. The now-defunct Elrama Power Station was capable of 475 MW and failed to clear. Wind added a whopping 969 taxpayer-subsidized MW, about the same as one nuclear unit.
    On a cold, clear winter day when the wind is calm and the solar panels are snow-covered where, pray tell, will the power come from? I wonder if renewables are being held to the same reliability standards as the hated fossil and nuke plants, and if not, why? "Level playing field" my dupa!
    "Demand response" says that American productivity and jobs will be fodder for the desired result of the grid operators and the EPA. Kids will be home from school, plants and offices will close, workers will lose days of pay, while corporations reap a windfall and unfilled orders due to unreliable power result in more American jobs moving offshore to countries with reliable power supplies whose companies can fill orders on time.
    The various system operators would be wise to step away from this and instead conduct auctions based upon fuel type because having a diverse mix of fuel sources is simply good business and should be common sense.
    But common sense, at least where the EPA is concerned, is not as common as one might think. If one agrees with the American power grid becoming dangerously unreliable to satisfy a fictional result, then feel free to take your home off the grid but stay that way...don't be a hypocrite and put the house breaker back in when your kids are cold.


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