2020 PJM Demand Response Changes

2020 PJM Demand Response Changes

By Becky Thompson

December 19, 2019

BIG changes to the PJM Demand Response program are coming in 2020.

If you’re currently participating in or considering enrolling in the PJM demand response program, here’s what you need to know.

What is Demand Response?

Demand response is a program designed to ensure reliability of the electric grid during peak demand periods.

Companies that enroll in the program agree to reduce their electric usage when they receive curtailment alerts. In return, they can receive substantial payments from PJM.

“I don’t think we can curtail any usage.”

That’s what clients initially say when we bring up demand response.

There are a variety of ways businesses can curtail their usage without major disruptions to daily operations. For example:

  • Industrial or manufacturing clients can shift production to off-peak hours.
  • Hospitals and data centers can use non-emergency backup generators that meet program requirements.
  • Schools and residential buildings can raise air conditioning set points by 5 degrees and turn off unused lighting.

What’s changing in 2020?

Up until 2019, organizations could enroll in a Base Capacity program that only required participation during summer months (typically June through September). Since most businesses use more power in the summer than the winter, they could easily match their projections and earn big payouts.

Starting in June 2020, the only available demand response program will be PJM Capacity Performance, a mandatory year-round program for participants.

Quick Facts about PJM Capacity Performance

  1. Demand response program participants will be required to curtail their usage during summer and winter events.
  2. Summer season is June 2020 – October 2020 and May 2021. Winter season is November 2020 – April 2021.
  3. There will be two test events  — one in summer and one in winter — and participants will have to participate in at least one of the tests.
  4. The enrollment deadline for the 2020 – 2021 is in the first or second week of May. However, the program has been decreased by 20% for this year – so enrollment space could run out before then. Site that sign up by the end of February should be able to get their desired kW enrollment value.

Why the change?

Blackouts occur when the demand for power exceeds the amount of supply available. And in recent years, winter blackouts have become more likely than summer because there is lower total supply available. In the Polar Vortex of 2014, PJM energy consumers were at risk of experiencing a blackout during one of the coldest winters in history.

As a result, PJM was forced to rethink how they viewed grid reliability.

How You Can Prepare Yourself for PJM Capacity Performance

Here are a few things to keep in mind when considering enrolling in the new program:

  • The minimum requirement for curtailment is 100 kW.
  • Your curtailment ability will be the difference between your seasonal Peak Load Contribution (PLC) and your Firm Service Level (FSL). Since these can vary greatly between summer and winter, you may see a drastic reduction in your curtailment ability and potential payout.
  • To maximize your payout, ask your demand response vendor if they offer a seasonal performance program that allows you to have different curtailment values for summer and winter.
  • Enrollment in the demand response program is limited because the total MW allotment has been decreased by 20%. It could be beneficial for you to sign a longer Demand Response agreement to ensure your seat at the table in the future.

Despite the changes coming to the program, demand response could be a viable way for your organization to generate some additional revenue. Contact us to discuss if the program is a good fit for you.

 

About the Author

Becky is a Senior Strategic Energy Advisor specializing in the public sector, including schools and municipalities. She has been in the energy industry for over five years, working from the ground up as an account manager and then as an electric pricing team lead. Her background knowledge of the inner workings or an energy company helps her identify actionable strategies for making her clients’ energy strategies both easy and cost-effective. In her free time, Becky enjoys any activity that requires being outside and making her son belly laugh.

Becky can be reached at (630) 225-4561 or bthompson@naniaenergy.com.

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