PJM Interconnection’s report on grid performance during this winter’s cold snap shows tthat the system performed well during one of the coldest stretches since the 2014 Polar Vortex.
The downside came in peak demand pricing.
Between Dec. 28, 2017, and Jan. 7, 2018, PJM experienced one of its top 10 winter peak demand days. On Jan. 5, 2018, demand reached 137,522 megawatts, the sixth highest overall winter peak demand. Even during peak demand, PJM had excess reserves and capacity.
However, there was an 11-fold increase in uplift charges during the cold snap period. The report also says the spike in uplift charges during the cold snap shows the need to reform pricing for energy and reserves.
Uplift refers to peak charges that come when extra power is needed.
Over the last several years, uplift charges have been relatively low in PJM, averaging approximately $389,000 per day. By contrast, during the peak days of the cold snap, uplift charges averaged approximately $4.3 million per day.
“We must enhance market pricing so that prices accurately reflect the cost of serving load including the actions taken by dispatchers,” said PJM CEO Andrew L. Ott. “The need for out-of-market uplift payments is a symptom that pricing for reserves and energy is incorrect.
The report says PJM and stakeholders need to evaluate and implement reforms in a timely manner, including the manner in which reserves are procured and priced, enhancements to shortage pricing, and the calculation of locational marginal pricing.
According to the report, overall, there was a significant reduction of forced/unplanned generator outages compared to the winter of 2014 to 2015.
The reduction in forced outages is partially attributed to the wind chill impact being lower during the cold snap than it was in 2014 and 2015.
While the grid performed well, the report noted that there are always areas for additional improvement and indicated that fuel security and stressed operations should be areas of focus for PJM and its members. Additional fuel security measures could include enhanced gas-electric coordination and fuel-oil supply and transportation tracking. The report also called for additional modeling and analysis of operations in extreme cold weather over an extended period.
The PJM grid includes Delaware, a state that has seen the loss of several larger power uses that included both auto plants and the steel mill in Claymont. PJM is dealing with the shutdown of coal-fired plants, more gas-fired plants, and growth in solar and wind.
