Demand response’s demise in PJM has been greatly exaggerated, report argues
Despite new capacity performance rules, CPower argues ‘real demand response’ remains strong and new opportunities may emerge in energy markets.
nergy news for the past few weeks has understandably been dominated by the U.S. Department of Energy’s proposed changes to wholesale power markets.
But for those looking for a break from NOPR comments, CPower Energy Management this month released a white paper titled “PJM capacity performance is here. Don’t believe the myths.” The commercial and industrial DR provider says that despite new rules that are a challenge to the industry, actual demand response participation has remained robust and there are emerging opportunities for demand-side resources to participate outside the capacity market.
First, a quick refresher. Following the Polar Vortex winter of 2014, PJM instituted new requirements in its capacity market designed to ensure generators were online in extreme weather events. Among the changes was a requirement that resources be available year-round. That’s not typically a problem for traditional generators, but in the PJM footprint demand response tends to be a summer resource, particularly on the residential side.
PJM introduced the more stringent requirements in a new product called Capacity Performance, and phased them in through a pair of transitional auctions. The transition ended this year and capacity in the latest auction had to be available year-round, prompting demand response stakeholders to closely watch the outcome.
The results were mixed, leading to concerns over where the market stands now and how more demand response resources can participate. About 9,850 MW of demand response was offered in the 2020/2021 Base Residual Auction, declining nearly 17% from last year. Out of that, 7,820 MW of resources cleared the auction — about a 25% drop compared with 10,348 MW last year.
A good showing?
Was that a good showing for the demand response industry in the first year of Capacity Performance? That’s where it gets tricky….