Find Opportunity in PJM's New Demand Response Program

PJM, the regional transmission organization that coordinates movement of electricity through the Northeastern United States, is changing its Demand Response market to a new, single model for the 2020/2021 season. The new structure, Capacity Performance, will replace the previous options within PJM and will expect year-round commitments as opposed to the four-month, “Summer Only” structure that was previously in place.

Read on to learn more about how this came to be and how you can find opportunity through your Demand Response participation.  

How can Demand Response help my business? Learn how your organization can get paid to reduce energy consumption during peak hours. Read more>>

History

Historically, PJM has run a summer Demand Response (DR) program to provide flexibility and safeguards to the grid when electricity demand is high due to hot summer temperatures.

During the Polar Vortex of 2014 on the coldest day in January, 22 percent of PJM generation was unexpectedly unavailable to serve customers. The unanticipated winter event demonstrated how vulnerable generation resources are to extreme cold conditions and that robust incentives are needed to encourage stability in year-round performance of emergency capacity resources.

To improve reliability, PJM designed Capacity Performance (CP) by incentivizing capacity resources to be available whenever they are needed. 

Program Rules for Demand Response Customers

Beginning June 1, 2020, Capacity Performance will become the sole offer for the PJM Emergency Capacity program.

Unlike previous years, the CP program has a year-long obligation period. However, this does not mean that you must make the same curtailment commitment for the entire year. PJM allows curtailment capabilities for two seasons: summer and winter. Depending on your site’s flexibility, seasonal curtailment plans may be similar or may present operational constraints. Your baseline (or max value) will differ from season to season, and so can your Firm Service Level (FSL).

In other words, your usage reduction can be different during the summer and winter periods. 

Baselines and Program Details

During the summer period months (June – October and the following May), your site’s baseline will remain as your utility assigned Peak Load Contribution (PLC), which is determined by your site’s usage from the previous Summer during the 5 hours that PJM experienced its peak demand. With this in mind, determining your summer enrollment amount should be very similar to prior years, except you should consider whether any changes to your curtailment plan are needed for the months of October and May.

During the Winter period months (November – April), your site’s baseline will be determined by your site’s usage from the winter two years prior. PJM defined this as your site’s Winter Peak Load (WPL) and it is determined by your site’s peak usage during the days that PJM experienced its Winter peak demand. This is good news for those of you that actively manage your PLC and have seen your DR value decrease as a result. The WPL baseline methodology could mean you see some DR revenue again. 

Let’s talk

Demand Response can open new opportunities for your business. Reach out to your Account Representative or request a callback to discuss these changes with our team today.