the year to date in pjm: operations and markets · 2014. 8. 1. · 7/31/2014 1 pjm©2014 kerry...
TRANSCRIPT
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PJM©2014 www.pjm.com
Kerry Stroup
Manager, State Government Policy
PJM Interconnection
OMA Energy Committee
July 30, 2014
The Year to Date in PJM:
Operations and Markets
PJM©2014 2 www.pjm.com
OMA Energy Committee Presentation Outline
• PJM’s mission: maintaining reliability of the bulk power
system
• Bottom line to date: lower wholesale prices
• Challenges facing the electricity industry
• PJM Capacity Market outcomes and design changes to
assure continued reliability
• New challenges: USEPA 111(d) rule and Order 745
remand
• Operational challenges and market outcomes associated
with January cold weather
• Stay tuned for PJM’s High Availability Capacity Product
proposal
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PJM©2014 3 www.pjm.com
PJM’s Role
• Ensures the reliability of the high-voltage electric power system
• Coordinates and directs the operation of the region’s transmission
grid;
• Administers a competitive wholesale electricity market that sends
price signals to supply resources and load consistent with reliable
bulk power system operations;
• Plans regional transmission expansion improvements to maintain
grid reliability and relieve congestion.
www.pjm.com
PJM©2014 4 www.pjm.com
PJM as Part of the Eastern Interconnection
KEY STATISTICS
PJM member companies 900+
millions of people served 61
peak load in megawatts 165,492
MWs of generating capacity 183,604
miles of transmission lines 62,556
2013 GWh of annual energy 791,089
generation sources 1,376
square miles of territory 243,417
area served 13 states + DC
externally facing tie lines 191
• 27% of generation in
Eastern Interconnection
• 28% of load in Eastern Interconnection
• 20% of transmission assets in
Eastern Interconnection
21% of U.S. GDP
produced in PJM
www.pjm.com
As of 4/1/2014
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PJM©2014 5 www.pjm.com
PJM Evolution
www.pjm.com
PJM©2014 6 www.pjm.com
PJM ‒ Focus on Just 3 Things
Markets • Energy
• Capacity
• Ancillary Services
Regional Planning • 15-Year Outlook
Reliability • Grid Operations
• Supply/Demand Balance
• Transmission monitoring
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PJM©2014 7 www.pjm.com
PJM Wholesale Electricity Prices 2008-2003
PJM©2014 8 www.pjm.com
Top Challenges Facing the Industry
• Electricity Demand
• World’s Largest Fuel Switch
• Natural Gas Interoperability
• Integration of Intermittent and Demand Side Resources
• Man-Made and Natural Disasters
• Extreme Weather
Each Challenge is Also an Opportunity
Adapted from: EPRI
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PJM©2014 9 www.pjm.com
Lingering Low Electricity Demand
PJM©2014 10 www.pjm.com
Transitioning from Coal to Gas
2009 to Date: 26,000 MW in Retirement Notices
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PJM©2014 11 www.pjm.com
Renewable Energy in PJM
www.pjm.com
PJM©2014 12 www.pjm.com
PJM Renewable Integration Study Findings
• The primary focus of the stakeholder-requested study was to evaluate the effects on
reliability of a higher penetration of renewable resources, not the economic
competiveness of renewable generation versus other generation.
• The study’s main conclusion is that the PJM system, with adequate transmission
expansion (up to $13.7 billion) and additional regulation reserves (up to an additional
1,500 MW), would not have any significant reliability issues operating with up to 30
percent of its energy (as distinct from capacity) provided by wind and solar
generation.
• The estimated electricity production-cost savings from increased renewable
resources depend upon the study’s assumptions about future fuel prices, load growth
and environmental policies. Current low gas prices have made renewable power less
competitively priced.
• Also, there was no attempt to estimate the effect on capacity prices resulting from
lower energy prices. (To maintain adequate capacity resources in the face of lower
energy prices capacity prices may increase.)
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PJM©2014 13 www.pjm.com
What is RPM?
• Reliability Pricing Model (RPM) is the PJM resource adequacy construct
• RPM is part of an integrated approach to ensuring long-term resource adequacy and competitively priced delivered energy
• RPM aligns the price paid for generation and other capacity resources with overall system reliability requirements
• RPM provides forward investment signals
PJM©2014 14 www.pjm.com
Highlights of RPM Auction Design
• PJM invites resource-specific sell offers for planning each year, three years in advance
• Products that may be offered include: existing and planned generation; planned transmission upgrades; and existing and planned demand resources including energy efficiency
• New generation, new demand response alternatives, and new transmission solutions can compete directly with existing resources
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PJM©2014 15 www.pjm.com
Capacity Resources Cleared, 2007/8-2017/18
PJM©2014 16 www.pjm.com
Demand Resources in PJM’s Capacity Market
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PJM©2014 17 www.pjm.com
RPM BRA Clearing Prices – “Rest of RTO”
PJM©2014 18 www.pjm.com
2017/2018 Base Residual Auction
Clearing Prices ($/MW-Day)
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PJM©2014 19 www.pjm.com
Future Capacity
PJM©2014 20 www.pjm.com
PJM’s Changing Fuel Mix
2007 PJM Installed Capacity
Capacity Cleared Market for
2017/2018 Delivery Year
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PJM©2014 21 www.pjm.com
New Generation by Fuel Type Since RPM Implementation in 2007
35,040 MW Total
Gas = 75%
PJM©2014 22 www.pjm.com
PJM Capacity Market Reform
• Clearing of limited DR accepted 1/30/14
• Capacity import limit accepted 4/22/14
• DR operational flexibility accepted 5/9/14
• Replacement capacity filing rejected 5/12/14;
PJM request for rehearing filed 6/9/14
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PJM©2014 23 www.pjm.com
RPM Parameter Triennial Review
• Brattle review determined VRR not achieving performance
objectives at system or LDA level and EAS offset is not accurate,
especially for combined cycle technology
• PJM recommendations are under stakeholder review include:
– Shift VRR curve right and establish convex shape to better
protect against market shocks
– Adjust CONE values to Sargent/Lundy study estimates; align
CONE values more closely with LDAs; maintain CTs as
reference to preserve continuity and market stability; adjust
certain LDA CONE values to include dual fuel capability and
mandate firm transportation only for Cove Point LNG export
considerations
– Calibrate E&AS offset model to reflect actual historical net
revenues
PJM©2014 24 www.pjm.com
USEPA Section 111(d) proposed rule and Order 745 Remand
• have the potential to significantly affect reliability
and market outcomes
• ISO-RTO Council recommendations address
reliability and market outcomes
• PJM has joined Maryland, DC, and other parties
in requesting an en banc rehearing of the 6th
District’s Order
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PJM©2014 25 www.pjm.com
PJM States System Emission Reduction Standards
PJM©2014 26 www.pjm.com
IRC Reliability Safety Valve Proposal
• Similar to the Reliability Safety Valve for MATS
– Keeps generation resources on-line to maintain reliability until a transmission
solution can be implemented to ensure retirements do not jeopardize reliability
• Proposed Reliability Safety Valve for 111(d) has additional features
– Up front analysis of SIPs to check for possible reliability issues intra-state and
inter-state both long-term retirements and short-term operations.
– On going analysis after implementation as generation resources may retire well
after compliance obligations begin depending on flexibility of SIPs…in contrast
MATS has a hard deadline for emissions rate compliance
– Ongoing analysis of retirements same as MATS retirement analysis…standard
deactivation analysis
– Ongoing analysis of commitment and dispatch operations as this could be
impacted depending how states implement 111(d)
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PJM©2014 27 www.pjm.com
Measuring Compliance on a Regional/RTO Basis
• Provide an option for state-submitted plans to measure compliance on
a regional/RTO basis
• Leverages the economies of scope and scale and cost-effectiveness of
RTO-wide markets and institutions
– Cost-effective security constrained economic dispatch across an RTO is already
taking place and would make compliance more cost-effective
– Resource adequacy constructs allow for the cost-effective sharing and transfer of
resources across the region
– Region-wide transmission planning process
– Market rules already exist in RTO markets to account for the cost of
environmental compliance in general
PJM©2014 28 www.pjm.com
DC Court of Appeals Order Vacating FERC Order No. 745
• 5/23 Order is directed at FERC, not PJM whose market operations are governed by
its filed rates, unchanged by the court order.
• Court mandate withheld until requests for rehearing by DC Court of Appeals filed and
acted upon; status quo until mandate issued.
• PJM participated in the appeal supporting FERC and Order 745 despite not agreeing
with all elements of the final FERC rule, which concerns compensation for economic
demand response in daily energy markets. The Court’s Order, however, also
suggests that demand response is entirely retail-jurisdictional and has no place in
wholesale power markets.
• PJM is disappointed with the Court’s jurisdictional analysis that served as the basis
for the majority decision.
• PJM filed a motion for an en banc rehearing by the DC Court of Appeals of the Order
on July 7; FERC, Maryland and the District of Columbia had previously filed for an en
banc rehearing. . PJM asserted that rehearing en banc is warranted because EPSA
presents a question of exceptional importance—whether FERC has authority under
the Federal Power Act to approve compensation for voluntary demand-side
participation in wholesale electric markets.
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PJM©2014 29 www.pjm.com
January 2014 Low (& Wind Chill) vs Historical Temperatures
Unseasonably Cold Weather in January
Region Week of
Jan 6th
Week of
Jan 20th
Week of
Jan 27th
Avg Jan
Low Temp
All-Time
Record Low
Philadelphia 4° (1/7)
-18° WC
4° (1/22)
-17° WC
10° (1/30)
-3° WC 25.5°
-7° (1982 & 84)
-16° & -33° WC
Richmond 10° (1/7)
-8° WC
7° (1/23)
-2° WC
4° (1/30)
4° WC 28.4°
-12° (1940)
WC N/A
Chicago -16° (1/6)
-41° WC
-6° (1/24)
-24° WC
-11° (1/28)
-30° WC 16.3°
-27° (1985)
-57° WC
All temperatures are in Fahrenheit and WC denotes Wind Chill
PJM©2014 30 www.pjm.com
PJM RTO Highest Historical Winter Demands
2014 Demands are Preliminary Telemetered Data
Pre-2014 Demands include Coincident Demands of Not-Yet-Integrated Zones
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PJM©2014 31 www.pjm.com
January Forced Outages Compared to History
PJM©2014 32 www.pjm.com
Tuesday, January 7, 2104 - Peak – Generation by Fuel type
Fuel Types
01/07/2014 HE 19
ICAP
(MW)
Ambient
Air (MW)
Generation
Outages
(MW)
Maintenance
/ Planned
(MW)
Forced
(MW)
Forced
Outages
(% of
ICAP)
All Fuel Types 188,106 -1,491 40,890 1,104 39,786 21%
Gas 48,243 -734 16,553 428 16,125 33%
Plant Outages 11,819
Gas
Curtailments 4,734
Coal 65,070 -4 12,936 372 12,564 19%
Nuclear 33,316 -455 1,150 -455 1,605 5%
Hydro 8,198 12 755 707 48 1%
Wind 5,597 0 1,430 32 1,398 25%
Oil 9,364 -119 4,379 -59 4,438 47%
Other 18,318 -191 3,687 79 3,608 20%
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PJM©2014 33 www.pjm.com
Gas/Electric Coordination Issues Raised by Polar Vortex
• Information sharing and coordination enabled by FERC Order 787
Emergency Waivers: daily communication of generation
commitment to gas pipelines and implementation of joint status
calls
• Gas pricing Issues January 22 – 28: gas unit variable costs
exceeded the $1000/MWh offer cap for cost-based offers,
resulting in FERC approving PJM’s emergency waiver request to
waive the offer cap through March 31. A PJM Senior Task Force
is considering a change or elimination of offer caps for cost-based
and price-based offers in the energy markets,if they are
determined to be necessary going forward.
• Differences in gas and electric market schedules
• Sufficiency of gas infrastructure: EIPC Stucy
PJM©2014 34 www.pjm.com
Cold Weather Demand Response
Date Peak Duration Zones MW
7-Jan Morning 5 ½ Hours RTO 1,720
7-Jan Evening 2 Hours RTO 2,920
8-Jan Morning Cancelled RTO 1,960
22-Jan Evening 6 Hours BGE, PEPCO 160
23-Jan Morning 3 Hours Mid-Atlantic,
DOM, APS 570
23-Jan Evening 4 Hours Mid-Atlantic,
DOM, APS 1,280
24-Jan Morning 3 Hours Mid-Atlantic,
DOM, APS 585
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PJM©2014 35 www.pjm.com
0
500
1000
1500
2000
2500
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
MW
Red
uctio
n
Hour
Demand Response in PJM: January 7, 2014
Emergency DR
Economic DR
Notes:Emergency DR Amounts are Emergency Energy Settlement Reductions.
PJM©2014 36 www.pjm.com
Day-Ahead LMP vs Real-Time LMP- Jan 7
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PJM©2014 37 www.pjm.com
Natural Gas Prices – January 2014
$-
$20
$40
$60
$80
$100
$120
1/1 1/6 1/11 1/16 1/21 1/26 1/31
Gas
Pri
ce p
er M
MB
tu
Henry Market (East) Market (West) Production
PJM©2014 38 www.pjm.com
Load-Weighted LMP, Monthly
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PJM©2014 39 www.pjm.com
January 2014 Daily Uplift
PJM©2014 40 www.pjm.com
RPM Committed Resources
RPM Committed Resources
15.7%
37.3%
Availability
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PJM©2014 41 www.pjm.com
Winter Generation Availability Study
RPM Committed Resources
15.7%
37.3%
X% Winter available units
DR not available in Winter
Study determines “x” such
that the PJM LOLE is
maintained at 1 day in 10
years.
PJM©2014 42 www.pjm.com
New Winter Capacity Minimum
RPM Committed Resources
Set a new minimum
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PJM©2014 43 www.pjm.com
Generation Performance Problem Statement -- MRC
• Problem / Opportunity Statement
• During the extreme cold weather conditions experienced on the PJM system in January of 2014, generator forced
outage rates were extremely high. As fully described in the PJM analysis of those January events1, “At the all-time
winter peak at 7 p.m. on January 7, PJM experienced a 22 percent forced outage rate, which was far above the
historical average of 7 percent, with a total of 40,200 MW unavailable due to forced outages.” As further
highlighted in the report, the forced outage rate during the winter storms later in January was also more than
double what would typically be observed on a winter day. The report also indicates that a portion of these outages
were due to unavailability of fuel to natural gas-fired generating units.
• Recommendation #1 at the conclusion of the PJM report states as follows:
• Unit Performance
• PJM, in conjunction with members, should consider the following topics and develop adjustments to improve unit
performance:
• 1. Review the penalties for non-performance during peak days and/or days when emergency procedures are
issued for capacity emergencies
• 2. Review incentives for performance during peak days
• 3. Investigate a process for unit testing and preparation of resources in advance of winter operations, including
testing dual-fuel capability
• 4. Review generator outage rates outlined in PJM Manual 13: Emergency Operations.
• Items 3 and 4 from the recommendation are already under consideration in the PJM Operating Committee. The
purpose of this problem statement is to initiate stakeholder discussion regarding items 1 and 2 in the
recommendation.
• Issue Source
• PJM initiated this problem statement based on the recommendation stemming from the analysis of the January
cold weather events.
PJM©2014 44 www.pjm.com
High Availability Capacity Product
Operational
Availability
and
Flexibility
Fuel Security Performance
Incentives
and Penalties