Wednesday, June 20, 2018

PJM Outlines Aggregation Rules for Upcoming Capacity Auction

By Rory D. Sweeney

VALLEY FORGE — PJM staff on Friday detailed how the new rules for aggregating seasonal resources will be implemented in May’s Base Residual Auction, the first requiring all resources meet tougher Capacity Performance standards.

FERC staff tentatively approved PJM’s aggregation proposal March 21, allowing the RTO to relax current rules prohibiting seasonal resources from aggregating across locational deliverability areas (LDA) (ER17-367). PJM’s plan also creates additional winter capacity interconnection rights (CIRs) and modifies rules for measuring demand response performance in the winter. (See FERC Staff OKs PJM Aggregation, DR Rules; Refunds Possible.)

The May BRA, which will provide capacity for delivery year 2020/21, will only procure resources available year-round, ending PJM’s longstanding use of summer-only DR and energy efficiency.

PJM’s Pete Langbein, Paul Scheidecker and Jeff Bastian told the Demand Response Subcommittee on Friday that there will be two aggregation categories:

  • Commercial aggregation, in which a market seller will match seasonal resources on its own and offer them together as a single year-round capacity resource. All resources must be within a single capacity market seller account.
  • Facilitated aggregation, in which seasonal resources offer into the BRA individually and will be grouped with complementary resources by PJM.

Eligible for aggregation will be intermittent generators, energy storage, environmentally limited resources, DR and energy efficiency. Winter resources (November-April) would be matched with summer resources (June-October and the following May).

PJM will clear all annual CP offers, summer-period offers and winter-period offers simultaneously to minimize the cost of satisfying the reliability requirements of the RTO and each modeled LDA. Total cleared summer-period offers must exactly equal total cleared winter-period offers across the entire RTO to ensure coverage for the entire year.

Commercial resources must be submitted to PJM for analysis and approval no later than two weeks before the BRA, or April 26.

When commercial offers are submitted, they must include an explanation of how the aggregation achieves a higher CP ability (measured in unforced capacity megawatts) than the resources individually. PJM will respond with the approved megawatt offer and what LDA the aggregate will be modeled in.

Cleared resources will receive a blend of the clearing prices of the LDAs in which the resources are located, Langbein said. Market sellers are guaranteed that the blend will be at least the resources’ cleared offer prices.

Seasonal resources can be replaced using a “similarly located” resource from any source, whether it’s an annual CP resource or an appropriate seasonal one. They can also be replaced in an Incremental Auction but would need to be bought in the same LDA the resource is physically located in.

For commercial aggregates, replacements can be from any LDA but must be available CP resources or cleared CP buy bids. “What you are not able to do is go in and replace the constituent components of your aggregate,” Langbein said. “So you can’t go in and replace the wind farm, for example, that’s part of your commercial aggregate.”

PJM demand response capacity auction


Resources’ production during performance assessment hours (PAHs) will be netted between all of the resources required to perform during the PAH. Penalties for shortfalls and credits for overperformance will be assessed to the aggregate resource, not individual resources.

NRG Curtailment Solutions’ Brian Kauffman asked whether a resource in the same zone as the PAH that is not required, but that performs anyway, would be included as overperformance in the assessment. Bastian confirmed that it would automatically be included in PJM’s calculations.

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