The PJM Interconnection on April 30 said it will immediately launch a process to analyze fuel security vulnerabilities and establish criteria to assess areas in the PJM system that could face future fuel security issues.
The grid operator notes that in March 2017, it published an analysis of the reliability attributes associated with various potential future resource mixes. PJM’s analysis concluded that its bulk electric system could be operated reliably under an array of future supply portfolios.
However, the scope of the analysis did not include the resilience of the system with various potential portfolios nor the risks associated with significant disruptive events.
“As is the case with reliability standards, PJM believes the most effective way to address fuel security is to define and establish fuel security criteria and then use market forces to allow all resources to compete to meet those criteria,” it said.
PJM said that the market can send a price signal that works to incent investment in fuel-secure infrastructure.
“This market signal can be used as one data point to assist in valuing various alternatives such as the benefits of new pipelines, the benefits of resources with on-site fuel and the value of new technologies that promote an array of fuel-secure resources, it said. “Market participants would respond to the signal with the most cost-efficient approach to ensure fuel security.”
As defined by PJM, fuel security is the ability of the system’s supply portfolio, given its fuel supply dependencies, to continue serving electricity demand through credible disturbance events, such as coordinated physical or cyber-attacks or extreme weather that could lead to disruptions in fuel delivery systems, which would impact the availability of generation over extended periods of time.
“To define potential fuel-security criteria, PJM needs to understand the fuel-supply risks in an environment trending towards greater reliance on natural gas supply and delivery,” it said.
The goal is to identify triggering thresholds that indicate locations on the system where additional fuel security assurance is needed. “PJM could then model those locations as constraints in the capacity market, just as PJM models transmission constraints today when determining the parameters that form the locational requirements in the capacity auction,” the grid operator said.
It said that as with transmission constraints, modeling fuel security would only result in price separation if the results demonstrate a constraint. “Ideally, if analysis indicates the need for constraints, PJM would implement them by the May 2019 Base Residual Auction.”
Targeted analyses
As a first step, PJM will perform targeted analyses to identify fuel security risks that could affect specific locations on the system (or depending on the nature of the fuel supply risk on the aggregate PJM system) and establish criteria to apply to existing market mechanisms.
PJM has presented a document that it said outlines the objectives for this study, defines the approach fundamentals, including assumptions, and establishes the timeline for completion.
Three phases
The grid operator said that it recognizes that assessing fuel security is complex and is best addressed in phases. The first phase will assess the scope of fuel security vulnerabilities and the development of criteria. Subsequent phases would use the results of the first phase as input to determine the valuation of fuel security attributes.
PJM anticipates overlap between phases as it continues to refine the analysis, criteria and methods for valuing fuel security.
The first phase will identify potential system vulnerabilities on a locational basis and develop fuel security criteria to address those vulnerabilities. It is intended to identify potential system vulnerabilities and to determine attributes such as requirements for amounts of on-site fuel and dual-fuel capability, among others, to ensure that peak demands can be met during realistic but extreme contingency scenarios in various supply portfolios.
The intent of the first phase will be to “stress-test the system under various extended fuel supply disruption scenarios in order to better understand reliability outcomes resulting from the current capability of local onsite fuel and back-up fuel,” PJM said.
PJM listed some high-level indicative assumptions that could be utilized for the analysis in Phase I:
- Generator forced, planned and maintenance outage rates (other than outages related to fuel supply) will be consistent with recent winters;
- Oil-fired and dual-fuel generator withdrawals of oil and ease of replenishment will be modeled on a locational basis, taking into account the locational supply chain and contractual arrangements associated with such replenishments. PJM will study several different capacity supply portfolios under multiple different gas-availability scenarios;
- The study will be simulated under 2017-18 Cold Snap extended cold weather conditions and under 2014 Polar Vortex loads and wind chill levels;
- The study will be conducted for the RTO region and sub-regions.
The second phase will focus on modeling and, more specifically, working through the PJM stakeholder process to incorporate vulnerabilities, on a locational basis, as constraints in PJM’s capacity market -- similar to PJM’s modeling of transmission constraints currently.
“This would allow for the proper valuation of needed locational attributes as well as competition among resources that today or in the future can provide those attributes to ensure a resilient grid,” according to PJM.
The results of the phase one analysis will be used in Phase II to help model constraints as part of the planning parameters in PJM’s capacity market to help identify and value needed fuel security attributes at particular locations on the system.
The third phase will involve ongoing coordination, addressing any specific security concerns identified by federal and state agencies such as physical and cybersecurity hardening of critical assets that are cleared in the market.
In Phase III, PJM would work with the U.S. Department of Homeland Security, the U.S. Department of Energy, the Federal Energy Regulatory Commission, states, stakeholders and others to ensure that the results are consistent with identified security needs in the PJM footprint, including service to key military installations and other identified security concerns.
“Further, those facilities that clear as fuel-secure resources in the capacity market would need to assure regulators that they are ‘hardened’ to address identified physical and cybersecurity threats and that the fuel system upon which those resources depend are similarly able to withstand identified physical and cybersecurity threats.”
PJM anticipates completing the study within the next several months and the results will be discussed with PJM stakeholders and state and federal agencies.
FERC earlier this year said that it was terminating a proceeding it initiated in order to address a proposed rule on grid reliability and resilience pricing submitted to the commission by Secretary of Energy Rick Perry last year.
At the same time, FERC in its order initiated a new proceeding (Docket No. AD18-7-000) to specifically evaluate the resilience of the bulk power system in the regions operated by regional transmission organizations and independent system operators. The RTO’s responses to FERC’s questions in that docket were submitted on March 9, and reply comments are due on May 9.
