The PJM Interconnection on May 23 released the results of its base residual auction, or BRA, which was held to procure capacity for the 2021/22 delivery year.
Cleared resources included an increase of 500 megawatts in coal and 1,000 MW in gas-fired generation compared to last year’s BRA, but nuclear generation clearing the auction totaled 19,900 MW, which is about 7,400 MW less than last year’s auction.
Exelon reported that its 837-MW Three Mile Island nuclear plant in Pennsylvania, 1,845-MW Dresden nuclear plant in Illinois and all but a small portion of its 2,347 MW Byron nuclear plant in Illinois failed to clear the auction, and that 10,643 MW of nuclear capacity did not clear the BRA, compared with 3,243 MW that failed to clear last year.
Exelon noted that this marks the fourth consecutive year that the Three Mile Island nuclear plant has failed to clear.
According to Exelon, Dresden and Byron are not at risk of early retirement at this time and that the company’s efforts to work with stakeholders on state policy solutions and to advocate for broader market reforms have yet to produce any solutions that will prevent the planned premature retirement of Three Mile Island in October of 2019.
Meanwhile, FirstEnergy confirmed that its nuclear plants did not clear in the auction.
In a PJM news release, Stu Bresler, senior vice president, Operations and Markets at PJM, said that the reduction in nuclear was not a surprise, since it was consistent with analysts’ predictions before the auction. He said that, in fact, the reduction was less than some of the analysts’ predictions.
The BRA was the second with full implementation of capacity performance rules for all resources and the first since the Federal Energy Regulatory Commission issued a remand order overturning previously granted exemptions from the PJM Minimum Offer Price Rule for self-supply and competitive entry.
Prices in the auction increased in all but one zone. About 90 percent of the capacity is within the RTO, MAAC, EMAAC and ComEd zones. The RTO and MAAC zones, accounting for 62 percent of the capacity, saw price increases from last year of 83 and 63 percent respectively. Total revenue amounted to $9.3 billion, a $2.3 billion increase from each of the past two auctions.
PJM said the auction produced a price of $140/megawatt-day for most of the PJM footprint, compared to $76.53/MW-day last year. Prices are higher in some regions due to transmission limits, it said.
The capacity procured through the auction provides for a reserve margin for PJM of 21.5 percent or 5.7 percentage points higher than the target reserve margin of 15.8 percent.
The BRA procured 893 MW of capacity from new generation and 508.3 MW from uprates, representing 0.9 percent of total capacity and a significant decline from the past six auctions when new generation and uprates ranged from about 2,800 MW (2020/21) to 6,300 MW (2017/18). PJM reported that the new generation included one combined-cycle gas plant.
Increases in DR, energy efficiency and renewables
PJM said the auction attracted a year-to-year increase in the amount of demand response, energy efficiency and renewable resources that commit to meet PJM’s strict performance standards.
A total of 11,126 MW of demand response cleared in the auction, representing an increase of 3,305 MW compared to last year’s auction.
A total of 2,832 MW of energy efficiency also cleared, an increase of about 1,100 MW. A total of 1,417 MW of wind cleared in the auction, representing an increase of 529 MW.
Solar increased more than four-fold, with around 570 MW clearing compared to 125 MW last year. Bresler said that would convert to more than 1,640 MW compared to 637 MW last year. The larger number represents the nameplate capacity of solar and the lower unforced capacity number accounts for the limitations on the availability of solar.
Because of the increases in demand response and energy efficiency and the decline in total capacity procured, generation resources declined by 5.6 GW from the prior auction.
PJM allows for aggregation of seasonal resources as an attempt to address stakeholder concerns about capacity performance rules’ impediments to seasonal resource participation in the capacity auctions. Just 715 MW seasonal resources aggregated, which included demand response, energy efficiency and solar as summer resources, and wind (plus a very small amount of other generation) as winter resources.
Also, 510 MW of price responsive demand participated in the BRA, resulting in a downward shift in the demand curve. A price responsive demand provider may voluntarily make a firm commitment of a quantity of price responsive demand that will reduce its consumption in response to real time energy price during a delivery year.
