PJM Capacity Performance Is Here. Don't Believe The Myths
As we’re all aware by now, this past May PJM ushered in a new era for Demand Response (DR) with the Delivery Year (DY) 2020/21 Base Residual Auction (BRA). This marked the first auction offering 100% Capacity Performance (CP). The legacy summer DR programs of the past, such as the popular Limited and Summer Extended programs, will soon be gone.
In the foreseeable future, Capacity Performance will be PJM’s only game in town for forward capacity Demand Response. Leading up to the May BRA, we at CPower were taking a close, hard look at PJM’s capacity market and what it means to organizations participating, or planning to participate, in Demand Response. In the course of our research we’ve discovered some misconceptions–you could call them “myths”–surrounding the BRA, CP, and DR. We fear that some of the more notable myths, taken alone or together, could prevent forward-looking organizations from seizing opportunities to create potentially lucrative sources of revenue.
So let’s do some DR mythbusting. In this paper, we’ll examine the history of “traditional” DR in PJM, the January storms that sank the tradition, and what CP is–and isn’t. We’ll tackle three significant myths: The decline of cleared DR in the RPM; new requirements and penalties make it too difficult to participate; and the move to 100% CP means PJM is moving away from DR.
Like many myths, these have some basis in fact. But we believe they are not causes for alarm. Although the program rules may seem more challenging, the ability to participate remains high. Capacity Performance is here — let’s explore just what it is, and how to realize its potential.