Well here we are again, facing another cold snap.
At this time a year ago, the PJM region and the eastern U.S. were in the throes of the bitter cold of the Polar Vortex. On Jan. 7, 2014, the cold drove demand for electricity to PJM’s highest-ever winter usage. Eight of the 10 highest winter peaks in PJM happened in last January’s extreme cold.
The Polar Vortex in 2014 uncovered issues that needed to be addressed – especially poor generator performance that meant capacity was not available when needed to meet high consumer demand in the extreme cold.
In fact, 22 percent of the generation in PJM was unavailable to serve consumers on coldest day of the year. More than 40,000 megawatts of the 180,000 megawatts in the PJM fleet were not able to deliver power when the region needed it most.
Against the backdrop of extreme weather, industry change and the coal-to-natural gas fuel transition, PJM developed its Capacity Performance plan. It establishes a pay-for-performance standard for power supplies: Generators will be required to deliver energy whenever PJM declares that emergency conditions exist. If they don’t, they’ll be assessed payments that will go to generators which over-perform. PJM filed the plan on Dec. 12, 2014, for approval by the Federal Energy Regulatory Commission.
This is not the traditional capacity definition, in which resources commit to deliver energy when called on – if they are available.
Capacity Performance is a “no-excuses” approach. It sets a new standard that requires generators to perform when PJM calls on them in system emergencies, in hot or cold weather. It directly links capacity payments and performance. It’s an insurance policy to ensure the reliability of the system that provides essential electricity to 61 million people.