A Forward Capacity Market as a Necessary Condition for Integrating Renewable Resources

摘要

By 2026 state mandated Renewable Portfolio Standards (RPS) within the PJM footprint imply renewable resources supplying 14 percent of total energy in PJM, a nearly ten-fold increase in the share of total energy provided by wind and solar resources in 2012. An estimated 40 GW of nameplate installed renewable capacity (33 GW of wind and 7 GW of solar) will be required to meet the RPS, but due to their intermittency, these resources only count for 6.9 GW of capacity, from a resource adequacy perspective. As a result, there will still be a need to retain and/or build additional new conventional generation resources or rely on innovative new resources such as demand response or energy efficiency to maintain resource adequacy. The large penetration of zero-cost, renewable resources impairs the ability of conventional resources to cover their fixed, going-forward costs, including the costs of new investment, through the energy market alone due to reduced energy prices and displacement from the energy market dispatch. In the absence of explicit mechanisms that recognize and pay for the resource adequacy value of resources, many conventional resources have no incentive to remain in commercial operation and will simply retire under an energy-only market design. In PJM the resource adequacy value of generation is recognized through the Reliability Pricing Model (RPM) capacity market which maintains resource adequacy on a three-year forward basis. The ability of RPM to maintain resource adequacy in the face of disruptive market trends and policy changes has been proven. In the face of nearly 24 GW of conventional resource retirements resource adequacy is being maintained. The RPM experience with disruptive policy and market trends indicates RPM will be necessary to maintain resource adequacy while accommodating large-scale renewable resource penetration.