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2017-06-02 / Energy Updates

PJM capacity auction sees strong response from market participants to strict performance standards

VALLEY FORGE, PA (AP) – The world’s largest competitive power market, PJM Interconnection, attracted a record amount of competitive resources meeting strict performance standards in its annual capacity auction. The auction procures power supply resources to meet consumers’ electricity needs three years from now.

The auction produced a price of $76.53/ megawatt-day for resources in most of the PJM footprint. Prices are higher in some areas due to transmission limits and retiring generators.

PJM procured 165,109 megawatts of resources for the period June 1, 2020, to May 31, 2021. The procured capacity provides a 23.3-percent reserve margin.

This is the first auction in which all resources had to meet capacity performance requirements, which were phased in. It also was the first to have participation by Price Responsive Demand resources, demand response-like resources that react to market signals.

The auction attracted 2,350 MW of new gas- fired generation. The auction procured about 7,532 MW of demand response resources that committed to year-round availability and the higher performance requirements. There were 119 MW of solar resources and 504.3 MW of wind resources that cleared the auction. In addition, 1,710 MW of energy efficiency resources cleared.

Additionally, under new rules approved by the Federal Energy Regulatory Commission in March, 398 MW of seasonal capacity (resources available in one season only) cleared in an aggregated manner to form a year-round resource. Wind generators, whose capacity is greater in the winter, combined through the auction clearing mechanism with demand response and solar resources, whose capacity is greater in the summer.

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