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Find opportunity in PJM’s new Demand Response Program

Find opportunity in PJM’s new Demand Response Program

Here is everything you need to know for the upcoming PJM Demand Response market changes.

The PJM Demand Response market will change to a new, single model for the 2020/2021 season. This 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. 

The history

Historically, PJM has run a summer DR program to provide flexibility and safeguards to the grid when electricity demand is high due to hot summer temperatures driving up demand. But, during the Polar Vortex of 2014 on the coldest day in January, 22% of PJM generation was unexpectedly unavailable to serve customers. The unanticipated winter event demonstrated to PJM how vulnerable generation resources are to extreme conditions and that robust incentives were needed to encourage stability in year-round performance of emergency capacity resources. As a result, PJM designed Capacity Performance (CP) to improve reliability by incentivizing capacity resources to be available whenever they are needed.

Program rules for Demand Response (DR) 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 to your facility. Your baseline (or max value) will differ from season to season and so can your Firm Service Level (FSL). In other words, the amount that you commit to drop your usage down to can be different during the Summer and Winter periods.

More on the 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.

We’re here to help

We are here to assist you in preparation for seasonal Demand Response participation. Our team of DR experts will work with you to determine a curtailment strategy to best benefit your business. We offer advanced technology to help you maximize your DR strategy like Energy Insight, which will enable you to plan your curtailment using your own energy data and monitor events in real-time to ensure you’re meeting your commitments.

With our new advanced DR automation technology, you can access ancillary markets to get even more value from your energy flexibility.

Let’s talk

Let’s discuss how DR can open new opportunities for your business. Reach out to your Account Representative or click here to discuss these changes with us today.