The first PJM Interconnection capacity auction to include the new capacity performance requirement attracted a strong response from capacity resources prepared to meet the new pay-for-performance standards. The resources that qualified as capacity performance units ensure that a reliable electric supply will be available during extreme weather or other system emergencies.
"Two consecutive cold winters with natural gas interruptions and the rapid pace of coal retirements have put considerable pressure on the system," said PJM CEO Terry Boston. "Clearly, PJM had to act decisively with the introduction of capacity performance to ensure firmer fuel supplies and other improvements for the continued reliability of the grid."
The 2018-2019 delivery year clearing price for capacity performance resources, which include generation, demand response and energy efficiency, is $164.77/MW-day for all of PJM except the ComEd and Eastern MAAC delivery areas. (ComEd is in northern Illinois while Eastern MAAC is made up of Public Service Electric and Gas Co., Jersey Central Power and Light Co., PECO, Atlantic City Electric, Delmarva Power and Rockland Electric Co.)
For the two constrained areas, the ComEd capacity performance clearing price is $215/MW-day; the Eastern MAAC price is $225.42/MW-day.
As part of the phase-in of the new standard, at least 80 percent of the cleared capacity in 2018-2019 auction was required to meet capacity performance requirements. The remainder is "base capacity," which may be unable to commit to capacity performance standards and therefore is subject to penalties only during the summer peak period. Capacity performance is targeted to be the only capacity product in PJM for the 2020-2021 delivery year.
The base capacity clearing price for the RTO is $149.98/MW-day, about $15 less than the capacity performance price. The RTO clearing price in last year's auction was $120/MW-day. The base capacity price in ComEd is $200.21/MW-day; in Eastern MAAC, $210.63/MW-day; and in the PPL delivery area in Pennsylvania, $75.
Overall, the auction procured 166,837 MW of capacity, which represents a 19.8 percent reserve margin. One MW is enough to power about 1,000 homes.
The auction attracted over 3,500 MW of new generation, including more than 2,900 MW of new generating units and over 500 MW of uprates to existing generating units.
A total of 11,084 MW of demand response was procured for 2018-2019, 1,484 MW of which is capacity performance. Energy efficiency totaled 1,247 MW, with 887 MW being capacity performance.