The PJM Interconnection and stakeholders recently began work to explore sub-annual capacity market constructs in the newly established Sub-Annual Capacity Market Senior Task Force.
"PJM has long secured capacity on an annual basis designed to preserve reliability through extreme summer conditions. Meanwhile, system risk during winter continues to grow. There is growing consensus that separate auctions to procure sub-annual capacity may better reflect the growing risk and resource performance attributes, which vary by season," it said.
During significantly cold weather, for example, fuel procurement for natural gas generation supply competes with home heating needs. In addition, generation availability, performance and outages vary in winter versus summer, based on weather and unit characteristics, PJM said.
The new senior task force will also consider a number of other factors by season, including procurement targets for reliability, resource class accreditation, capacity obligations, cost allocation and more.
PJM’s work to optimize auction design according to seasonal differences is in step with practices across the ISO/RTO sphere.
For example, grid operators like the New York Independent System Operator and the Midcontinent Independent System Operator currently operate seasonal capacity markets, while ISO New England is exploring changes to integrate seasonal availability of resources for optimized reliability and capacity procurement.
“Risks to grid reliability in winter are different than summer, and it makes sense to explore how to procure needed capacity in ways that better reflect these realities,” said Stu Bresler, PJM Executive Vice President – Market Services and Strategy. “This senior task force is an important first step toward market rules that are responsive to seasonal risk.”
Created earlier this year at the direction of the PJM Markets & Reliability Committee, the SACMSTF will kick off with discussion about a consultant study regarding sub-annual capacity market constructs for PJM and work underway in the ISO New England.
