PJM Capacity Auction Secures Electricity Supplies; Solar Increased 25%; More Carbon-Free Resources At Competitive Prices

On June 21, PJM Interconnection announced the successful procurement of resources in its annual capacity auction to meet electricity needs and ensure reliable service for the 2023/2024 Delivery Year.

The auction results reflect a reliable and lower-carbon resource mix achieved at a low cost to consumers.

Prices for the 2023/2024 Delivery Year were lower than in the previous auction for the 2022/2023 Delivery Year. 

The auction produced a price of $34.13/MW-day for much of the PJM footprint, compared to $50/MW-day for the 2022/2023 auction in June 2021. Prices are higher in some regions due to constraints on the transmission system.

As a result, sufficient resources plus robust reserve levels were procured at a cost of $2.2 billion, compared with approximately $4 billion for the current 2022/2023 Delivery Year.

Carbon-Free Resources

PJM’s auction saw a growth of more than 5,000 cleared megawatts of carbon-free resources, led by an increase of 5,315 MW from existing nuclear units that did not clear in the previous auction. 

Solar resources increased 25%, from 1,512 MW to 1,868 MW, while the number of wind resources clearing was down 434 MW to 1,294 MW. The decrease in wind resources clearing the auction reflected a decrease of wind resources offering into the auction.

Natural gas resources clearing the auction increased by 1,685 MW, with more efficient combined-cycle units clearing 3,627 more megawatts than the last auction and combustion-turbine units down 1,012 MW. Combined-cycle units cleared a total of 48,030 MW in the auction and combustion-turbine units 19,080 MW.

Cleared capacity of steam units (primarily coal) was down 7,186 MW to 27,682 MW, tracking with a decrease of 7,813 MW offered into the auction as a result of coal retirements.

A 660 MW increase in Energy Efficiency resources, to 5,471 MW, was offset by a 716 MW decrease in Demand Response to 8,096 MW.

Hydro decreased slightly, from 4,157 MW to 3,677 MW. The total procured capacity in the auction represents a 20.3% reserve margin, compared to a 14.8% required reserve for the 2023/2024 Delivery Year. This accounts for load and resource commitments under FRR.

In three areas, prices were higher than the overall PJM price--

-- In the MAAC region, the price was $49.49/MW-day. MAAC consists of Atlantic City Electric, BGE, Delmarva Power, Jersey Central Power & Light, Met-Ed, PECO, Penelec, Pepco, PPL, PSE&G, PPL and Rockland Electric.

Two transmission zones within MAAC broke out with higher prices than the rest of the MAAC area.

-- The auction price was $69.95 in both the Baltimore Gas & Electric (BGE) transmission zone and the Delmarva Power South (DPL-South) transmission zone, which is Delmarva Power south of the Chesapeake & Delaware Canal.

PJM has compressed its auction calendar to return to a three-year-forward basis. The next annual Base Residual Auction, for the 2024/2025 Delivery Year, will be held in December.

Click Here for a detailed report of the results on PJM’s capacity market auction.

Click Here for the complete announcement.

[Posted: June 21, 2022]  PA Environment Digest