Wind, solar resources should be removed from PJM capacity market: P3 trade group
A PJM Interconnection power generators trade group said it is concerned about the viability of PJM’s capacity markets because wind and solar resources have been acquiring capacity obligations greater than what they can deliver, but other stakeholders say all resources need capacity reevaluation.
Recent actions by PJM and the Federal Energy Regulatory Commission “have served to materially destabilize the market,” the PJM Power Providers Group, or P3, said in a letter to PJM’s board of managers that the grid operator shared with stakeholders Feb. 2. P3 lists a dozen members on its website, including Calpine, Vistra, Tenaska, NRG, LS Power and others. It is a market-focused group that owns 67 GW of generation.
PJM told stakeholders this past summer that it has over-accredited certain intermittent resources hundreds of megawatts of capacity that do not meet PJM’s capacity resource requirements because these resources are not deliverable at peak times, P3 said.
“The erroneously awarded resources can only provide approximately 50% of the purported capacity rating that PJM is purchasing in the capacity auctions to be paid for by customers,” the group said.
Accredited wind and solar power MWs “supported by non-deliverable energy” have been included in and cleared in previous capacity market auctions and currently are included in the supply stack for the upcoming 2023-2024 auction, the letter said.
Approximately 50% of the total wind power capacity offered into the auction has been accredited this way and PJM has not provided any metric regarding solar power, according to P3, which went on to say that half of the wind MWs and an unknown portion of the solar MWs offered “provide no reliability” because they are not supported by deliverable energy as required to qualify as a generation capacity resource.
The groups suggests that PJM should remove these wind and solar resources from the upcoming capacity auction.
“The only logical remedy under the circumstance is to remove these MWs from the supply stack for the 2023-24 planning year as well as subsequent auctions, until these resources are physically deliverable in the same way required of every other resource in the PJM system,” P3 said.
Thermal resource valuation
PJM has spent roughly two years developing Effective Load Carrying Capability, or ELCC, methodology to value the capacity contributions more accurately from solar, wind, storage, hydropower, and other resources.
PJM developed the ELCC methodology in response to the rapid growth of renewable energy and energy storage resources that are intermittent and thus typically have lower capacity factors than thermal resources such as coal, natural gas, oil, and nuclear power.