The PJM Interconnection has made a temporary change in the rules for its frequency regulation market that could mean lower revenue and market participation for energy storage.
The proposed rule — which still requires approval by federal regulators — addresses price spikes, or “price excursions,” observed by PJM staff.
Reinstates floor value
PJM stakeholders endorsed a rule change that would reinstate a floor value of 0.1 for the “benefits factor” the regional transmission organization uses to compensate for different types of frequency regulation resources.
Two types of resources can participate in PJM’s frequency regulation market: Reg D for fast responding resources, such as batteries, and Reg A for conventional resources, such as gas turbines or hydropower. PJM has only one market for frequency regulation, however, so the benefits factor is designed to create equivalence between offers from the two types of resources.
PJM set the benefits factor floor value at 1 in December 2015, but modified it in January 2017 and then effectively removed it in August 2018.
When the benefits factor fell to values approaching zero it would skew the results of the equations that PJM uses to score offers in the frequency regulation market. The benefits factor is always present as a denominator in those equations, which also include values for a performance score and a lost opportunity cost.
In cases where the benefits factor fell to less than 0.1 and the lost opportunity cost was above zero, PJM observed regulation market clearing prices as high as $7,000/MWh. Between May 1, 2018 and Aug. 31, 2018, PJM observed 80 intervals where the regulation market clearing price was above $500/MWh and 16 of these hours had marginal benefits factors less than 0.1. By way of comparision, the weighted average clearing price for regulation was $32.99/MW in the first six months of 2018.
Recent Comments