The PJM Interconnection presented preliminary recommendations for study and improvement of capacity market performance following Winter Storm Elliott during a stakeholder meeting on May 17.
In advance of the planned mid-July release of a comprehensive storm analysis, PJM presented preliminary recommendations on nine capacity market-related issues observed during the extreme weather events affecting the PJM region Dec. 23–25, 2022.
Those recommendations include, among others:
- Evaluate risk modeling methodology used in planning studies to better account for the drivers of winter reliability risk.
- Assessment of generator performance during Performance Assessment Interval (PAI) events should better consider financial risk, strengthen capacity accreditation and generator testing, and include benchmarking against grid operator best practices.
- Seek opportunities to align capacity market incentives with real-time conditions to improve dispatch results.
- Evaluate how the balancing ratio accounts for PJM exports to neighboring regions during PAI events.
- Review how the performance of energy efficiency and demand response resources during PAI events is calculated for penalties and/or bonuses.
- Evaluate performance issues of non-retail behind-the-meter generation during PAI events to enhance performance.
- Enhance PAI educational opportunities for stakeholders.
The comprehensive report slated for mid-July will include other, non-market areas such as resource scheduling and load forecasting, with a detailed look at operations in preparation for and during the Dec. 23–25 weekend. Other findings that are finalized before then will be shared in stakeholder meetings.
At the direction of the PJM Board of Managers in February, PJM and stakeholders began the accelerated Critical Issue Fast Path process to explore enhancements to the capacity market that will address resource adequacy concerns as outlined in the PJM paper, Energy Transition in PJM: Resource Retirements, Replacements & Risks.
The presentation of preliminary market-related observations and recommendations from Winter Storm Elliott is designed to aid stakeholders in their consideration of reforms.
Four work areas were identified during the Critical Issue Fast Path process:
- Improve the way PJM accounts for winter risk and correlated outages in reliability planning.
- Evaluate changes to the Capacity Performance construct to ensure market seller offers may properly reflect the risk of taking on a capacity obligation.
- Enhance resource accreditation to ensure resource reliability attributes are accurately determined and compensated.
- Ensure comparable treatment of resources by aligning capacity market changes with appropriate adjustments to the Fixed Resource Requirement.