As part of a broader ongoing initiative exploring the resiliency of the electrical grid it operates, PJM Interconnection on Thursday shared the findings of an extensive analysis showing that the fuel supply in its system is reliable and can withstand extended periods of highly stressed conditions.
While the study found “no imminent threat” in the grid’s existing fuel supply, PJM acknowledged that it’s an important component to ensuring reliability, especially if the various risks it examined become reality.
“These results indicate that assessing generator fuel security should be a priority for PJM and its members,” said CEO Andrew Ott. “We will continue to look for opportunities to address resilience through the competitive wholesale electricity markets, in this case, by valuing resources that have secure fuel supplies.”
PJM studied more than 300 different scenarios that could occur during an extended period of cold weather, varying elements such as customer demand, fuel availability, oil refueling frequency, generator forced outage rates, retirements and natural gas pipeline disruptions. Testing conditions ranged from typical winter operations to extreme, but “reasonably plausible scenarios.”
Most importantly, PJM said, the analysis found that in a sustained period of cold weather with typical customer demand, its system can operate reliably over an extended period of stress. Although PJM consistently sees its highest demand during the summer, the grid operator said it sees the greatest strain on fuel supply and delivery during the winter, primarily because the needs of commercial and residential heating compete with gas-fired and dual-fuel generators for transportation and oil deliveries. Natural gas and dual-fuel generators account for 30% of the energy produced in PJM.
After examining the 300 scenarios, PJM did find that key elements such as availability of non-firm natural gas service, oil deliverability, pipeline design, reserve level, method of dispatch and availability of demand response become increasingly important as the system comes under more stress.
In particular, PJM said a combination of factors contributed to potential load loss events in the analysis, including the level of retirements and replacements; availability of non-firm gas service; the ability to replenish oil supplies; the location, magnitude and duration of pipeline disruption, and pipeline configuration.
“We found that in extreme scenarios, the more the grid was stressed, the more important fuel supply characteristics, location of the fuel supply disruption and demand response became,” said Vice President of Operations Michael Bryson. “We believe that some changes to the system in the future -- both market-based and operational -- are warranted. As with any stress test, there are extreme cases, and building to mitigate or eliminate risk must be balanced with costs.”
PJM said it would start working with stakeholders this month to examine the findings and explore “market-based solutions” to address concerns about the long-term security of the fuel supply. PJM said it expects to have a problem statement presented to stakeholders in early 2019, with any potential market rule changes targeted for filing with FERC in early 2020.
PJM is the nation’s largest grid operator, serving 65 million people in all or parts of 13 states and the District of Columbia, including shale-rich Ohio, Pennsylvania and West Virginia, where gas-fired facilities have proliferated in recent years and become increasingly competitive with other sources of electricity generation.
PJM said earlier this year that it would analyze long-term fuel security as part of the ongoing resiliency efforts. The announcement came after a 2017 report that it released showing that the system is not becoming too reliant on natural gas and renewable resources, even as more baseload coal-fired facilities retire and nuclear plants are further threatened by low-cost gas supplies.
The latest analysis also comes as PJM is in a proceeding with the Federal Energy Regulatory Commission over how best to deal with the state subsidies that have been passed in parts of its territory for nuclear and renewable energy. The grid operator was forced last month to file a revamped proposal on how to accommodate the subsidies in the wholesale market after the Commission narrowly rejected other ideas it put forward earlier this year.