Last week, PJM, the operator of the largest electric grid system in North America, encountered a confluence of issues that threatened the supply/demand balance and, in a worst-case scenario, could have disrupted power for millions of energy consumers.
As the Mid-Atlantic and Midwestern US endured a brutal heat wave—Washington, DC, for example, surpassed an all-time monthly high temperature record that hadn’t been broken since 1941—the increase in air conditioning usage brought demand for electricity to extremely high levels. PJM has reported preliminary peak load of more than 126,000 MW on October 2, which would be the system operator’s second-highest demand total for the month of October on record (the previous high for the month was set at 134,000 MW in 2007).
Unfortunate timing for this heat wave compounded the issue. October temperatures are generally mild, and electricity demand tends to follow weather trends. After heavy usage during the high-demand summer season, many power generators use this opportunity to conduct necessary maintenance, which leaves their equipment out of service. Additionally, several generators were unavailable due to unplanned outages, which further restricted the amount of available supply. This left PJM without significant capacity at a time when demand was approaching seasonal record highs.
To prevent an outage, PJM issued a pre-emergency demand response (DR) dispatch for long lead time customers (120-minute notice) in four transmission zones on October 2, which provided valuable relief to the grid for about two hours. By offering compensation for commercial and industrial (C&I) facilities to curtail their electric demand, PJM keeps demand within manageable levels. Each participating organization will be compensated based on the amount of energy they contributed, in addition to the capacity payments they receive for initially agreeing to be on standby for this kind of emergency event (you can learn more about how C&I customers participate in PJM DR with our in-depth market guide).
In addition to the compensation, DR also helps to keep energy costs in control throughout the region, reducing the need for the costly, fast-acting power generation resources to ramp up supply in emergency conditions. Since energy providers often pass increased costs onto their customers, alleviating this pressure results in more affordable electricity service throughout the region.
Last week’s event also underscores the value of flexibility as PJM aims to adapt to changes to the electric grid system. As power supply has become increasingly reliant on natural gas, PJM has seen costs and reliability risk rise during periods of extreme cold, as increased use of natural gas for home heating restricts supply available for power generation (read this article for more insight into PJM’s challenges during the winter season).
PJM is turning to DR capacity to address these challenges. Beginning next year, PJM is implementing new program rules that will increase the amount of DR capacity available year-round. These changes will better prepare the grid system for seasonal challenges like those that occurred last week.