Don't remove renewable resources from PJM capacity auction: advocates

PJM Interconnection stakeholders representing renewable energy interests sent a letter to PJM's management board refuting a suggestion from a generator stakeholder group that renewable energy resources should be removed from the capacity market, an assertion the renewables boosters called alarmist, illegal and anticompetitive.

The PJM Power Providers Group, or P3, provided an "inaccurate description" of the work PJM does and its comments to the board in a recent letter were an "inappropriate attack on the stakeholder process and federal regulatory review that are the bedrock of PJM's legitimacy," the renewable energy advocates said in a letter PJM shared with stakeholders Feb. 14.

The letter was signed by representatives from Citizens for Pennsylvania's Future, Earthjustice, Union of Concerned Scientists, Vote Solar, Citizens Utility Board, Sustainable FERC Project, Sierra Club and the Natural Resources Defense Council.

P3 said it is concerned about the viability of PJM's capacity markets because wind and solar resources have been acquiring capacity obligations at volumes greater than what they can deliver, according to a letter PJM shared on 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 in PJM territory.

PJM this past summer 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.

Ultimately, P3 called for removing these renewable energy resource MWs from the supply stack for the 2023-24 planning year as well as subsequent capacity auctions.

Environmental groups rebuttal

The core of P3's complaint is that PJM considers intermittent resources' full historical output when determining their capacity value, with P3 asserting this longstanding practice somehow violates PJM's tariff and raises imminent reliability risks, the environmental groups said.

"The alarmist tone of P3's letter is inappropriate given that PJM has calculated the capacity value of intermittent resources based on historic output, including output in excess of capacity interconnection rights (CIRs), since at least 2010," the groups said.

PJM has supported rules continuing the practice of recognizing renewable energy's actual performance as part of its new effective load carrying capability, or "ELCC," methodology and those ELCC rules gained 80% stakeholder support at a September 2020 stakeholder meeting, including majority support from all stakeholder sectors, the letter said.

The need for transmission as part of generators' deliverability is currently under discussion within PJM's stakeholder process through the Planning Committee and the Resource Adequacy Senior Task Force. A Planning Committee Special Session on capacity interconnection rights for ELCC resources was held Feb. 15.

A P3 company submitted a list of questions to PJM related to this matter as part of the meeting materials.

The environmental groups said P3 has endorsed the stakeholder process in supportive comments to federal regulators regarding ELCC, but "their sudden reversal simply reflects their disagreement with PJM's proposed solution."

P3 should not bring "an alarmist letter" to the board now while discussions addressing the whole set of needs and possible reforms remains ongoing, the renewable energy advocates said, adding that nothing in PJM's tariff gives PJM staff or the board the authority to unilaterally change resources' capacity accreditation, "much less simply remove resources from the supply stack as P3 requests."

"The Board should reject this self-serving request as the illegal and anticompetitive action it would be," the environmental groups said.

The capacity auction for delivery year 2023-24 has been delayed to June 2022 from January.