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PJM©2018
The Evolution of WholesaleElectricity Markets
Andrew L. OttPresident & CEO
Kleinman Center for Energy Policy Public LectureFeb. 8, 2018
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PJM©20181
PJM Evolution
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21% of U.S. GDP produced in PJM
Key StatisticsMember companies 1,000+
Millions of people served 65
Peak load in megawatts 165,492
MW of generating capacity 176,569
Miles of transmission lines 82,546
2016 GWh of annual energy 792,314
Generation sources 1,304
Square miles of territory 243,417
States served 13 + DC
• 27% of generation in Eastern Interconnection
• 28% of load
• 20% of transmission assets
PJM©20183
Interconnected Power Grid
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PJM©20184
PJM’s Role as a Regional Transmission Organization
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PJM©20185
PJM ‒ Primary Focus
Market Operation• Energy• Capacity• Ancillary Services
Regional Planning• 15-Year Outlook
Reliability• Grid Operations• Supply/Demand Balance• Transmission Monitoring
2
1
3
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PJM©20186
Evolution of Power Supply
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PJM©20187
Success of Regional Markets and Planning …
… However, we must look at future trends.
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PJM©20188
Average Wholesale Cost Vs. Emissions
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PJM©20189
$0.040
$0.060
$0.080
$0.100
$0.120
$0.140
$0.160
$0.180
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
PJM Load-Weighted Total CostsNJ Residential RatesPA Residential RatesMD Residential RatesWV Residential Rates
Residential and Wholesale Rate Trends
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PJM©201810
Drivers of ~30% Increase in Average PA Residential Rate from 2006 to 2015
$0.1035
($0.0028)
$0.0336
$0.1343
$-
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
$0.14
$0.16
2006 Residential Rate Decrease in Wholesale Tariff Costs Increase in State Tariff Costs 2015 Residential Rate
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PJM©201811
Industry Paradigm Shift
Changes in customer expectations
Alternative technologies
Intermittent renewables
Distributed energy resources
Storage technologies
Unprecedented number of changes in the power industry
Fuel swap
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PJM©201812
Alternative Technology Providing Services to the Grid
444 MW of demand-side resources capable of providing synch reserve in 2017 YTD.
8.1% of synch reserve actually provided by Demand-Side Resources in 2017 YTD.
262.4 MW of batteries32 MW of demand-side resources
Frequency Regulation Synchronized Reserves
~ On average 27%. As high as 39% of our regulation requirement is provided by alternative technologies.
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PJM©201813
Dimensions of Resilience
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External Networks• Fuel Security• Pipeline Infrastructure• Telecommunications
System Restoration• Cranking Path Redundancy• Critical Load Definition• Partnerships
Power Grid• Critical Grid Facilities• Contingency Definitions
PJM©201814
Drivers for Change:Microgrids Interacting Through Markets
• Enhanced Control Systems
• Distributed Storage Technology
• Flexible Consumption
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