PJM to consider allowing HVDC converters to participate in capacity market

New York — PJM Interconnection stakeholders approved a plan Thursday to consider including in the capacity market high voltage direct current transmission lines with a converter station directly connected to the PJM system that are backed by a portfolio of firm generation supply.

Stakeholders voted to approve scoping documents during a Markets and Reliability Committee meeting that outline a process for considering rule changes that would allow HVDC transmission lines with certain attributes to participate in the capacity market alongside other dispatchable generation resources like natural-gas fired power plants and energy storage systems.

HVDC transmission lines with converter stations that can follow PJM dispatch instructions and are backed by a portfolio of firm generation supply can provide reliability benefits to PJM like other resources, but current PJM tariffs do not allow such HVDC converters to participate in the capacity market, "presenting a market barrier to merchant resources seeking to sell bundled energy and capacity in the PJM market," according to the problem statement.

The issue was raised by Direct Connect Development Company, which is pursuing a 350-mile, 2,100-MW, 525 kV underground HVDC transmission line from Iowa to Illinois, linking low-cost, utility-scale renewable energy generation in the Midcontinent Independent System Operator market with customers in PJM, the company said in a presentation posted to PJM's website.

The project, called SOO Green, is the first major transmission project to cross the seam between MISO and PJM, Direct Connect said. It would run from the Killdeer Substation in MISO Zone 3 to the Plano Substation in PJM's ComEd Zone.

An HVDC converter station connected to PJM would be capable of performing like any other generating resource on the PJM system and could contract for firm "fuel" (generation) supply, enabling it to be fully dispatchable with high availability, the problem statement said.

The ability to respond to dispatch signals from the PJM system operator would allow an HVDC converter to "operate with the same or better responsiveness as other PJM dispatchable generating resources," according to the statement.

Given the essential similarities to other resources, an HVDC converter station located in PJM, delivering generation from another RTO, with the necessary interconnection and shipper arrangements, should be eligible to provide capacity through the capacity market, the statement said.

STAKEHOLDER VIEWS

One stakeholder that owns gas-fired resources in PJM said they were concerned about taking on another issue charge given the tremendous amount of work currently underway and that this particular issue does not seem to be a problem that needs to be fixed.

Another stakeholder said that this seems to be a single company issue charge and that while all stakeholders have issues they want dealt with, this could set a precedent where people start bringing single project issue charges "which could paralyze the stakeholder process."

We are going through lots of paradigm shifts in power industry, another stakeholder said, adding that if "we have time to talk about oil levels in suction tanks for black-start resources then we have time to talk about this."

"If we don't deal with this here, you will see them at FERC," another PJM member said.

The issue is compelling because the sources of supply are no different than supply sources for a generator like a gas pipeline or coal delivery, a stakeholder said, adding it is another element of competition and "we should look into it."

The issue charge was passed in a sector-weighted vote that received 4.4 in favor. The threshold was 50%, meaning 2.5 was needed for it to pass.