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PJM©2013 PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations April 9, 2013

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Page 1: PJM Capacity Market Overview - Platts · PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations . April 9, 2013 . 2 PJM©2013 ... 8. PJM©2013 . …

PJM©2013

PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations April 9, 2013

Page 2: PJM Capacity Market Overview - Platts · PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations . April 9, 2013 . 2 PJM©2013 ... 8. PJM©2013 . …

PJM©2013 2

PJM: Who We Are

KEY STATISTICS Member companies 800+

Millions of people served 60

Peak load in megawatts 163,848

MWs of generating capacity 185,600

Miles of transmission lines 59,750

GWh of annual energy 832,331

Generation sources 1,365

Square miles of territory 214,000

States served 13 + DC 21% of U.S. GDP produced in PJM

As of 7/2012

www.pjm.com

Page 3: PJM Capacity Market Overview - Platts · PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations . April 9, 2013 . 2 PJM©2013 ... 8. PJM©2013 . …

PJM©2013 3

Objectives of RPM

• Resource commitments to meet system peak loads three years in the future

• Three year forward pricing which is aligned with reliability requirements and which adequately values all capacity resources

• Provide transparent information to all participants far enough in advance for actionable response

Purpose of RPM is to enable PJM to obtain sufficient resources to reliably meet the needs of electric consumers within PJM.

Page 4: PJM Capacity Market Overview - Platts · PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations . April 9, 2013 . 2 PJM©2013 ... 8. PJM©2013 . …

PJM©2013 4

Foundation for RPM Structure

Resource Adequacy

Requirement

Locational Constraints

RPM Structure

• Auction Structure

• Market Power Mitigation

• Performance Requirements

• Self-Supply Alternative (FRR Option)

Forward Procurement

Page 5: PJM Capacity Market Overview - Platts · PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations . April 9, 2013 . 2 PJM©2013 ... 8. PJM©2013 . …

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Coal-fired Generation Retirements

Over 20,000 MW of Pending Deactivations (~17,500 MW since 11/2011)

www.pjm.com

Page 6: PJM Capacity Market Overview - Platts · PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations . April 9, 2013 . 2 PJM©2013 ... 8. PJM©2013 . …

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PJM Forward Capacity Market Performance, 2007 - 2015 Demand Resource Additions

Cumulative Generator Capacity Additions

M W

New Generators - 15,135 MW Generator Uprates – 6,079 MW

www.pjm.com

Page 7: PJM Capacity Market Overview - Platts · PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations . April 9, 2013 . 2 PJM©2013 ... 8. PJM©2013 . …

PJM©2013 7

Gas

Coal

Demand Response

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16Delivery Year

All Renewables Wind/ Solar

PJM Installed Capacity Cleared

Managing a Sea-Change

www.pjm.com

Page 8: PJM Capacity Market Overview - Platts · PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations . April 9, 2013 . 2 PJM©2013 ... 8. PJM©2013 . …

PJM©2013 8

PJM Power Price Components

www.pjm.com

Page 9: PJM Capacity Market Overview - Platts · PJM Capacity Market Overview Jeff Bastian Manager, Capacity Market Operations . April 9, 2013 . 2 PJM©2013 ... 8. PJM©2013 . …

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Forward Capacity Market Performance Assessment – Primary Findings

– RPM has achieved resource adequacy • RPM has attracted and retained sufficient capacity to meet or exceed reliability requirements

– Prices have been consistent with market conditions • Lower prices (below Net CONE) under excess supply conditions • Higher prices under tighter supply conditions, but still below Net CONE in recent auctions

– RPM has reduced costs by fostering competition • Generally level playing field has reduced costs by attracting investments in low-cost supplies

from demand response, efficiency and uprates

– RPM has enabled cost-effective response to environmental rules • Facilitated economically efficient tradeoffs among investment in environmental retrofits,

retirement and replacement with lower-cost alternative supplies

www.pjm.com