Federal Ruling Opens Up PJM Market to Virtual Power Plants
A recent federal ruling will allow virtual power plants to participate in the PJM Interconnection energy market, potentially unlocking hundreds of megawatts of residential load and alleviating reliability and cost concerns.
The Federal Energy Regulatory Commission (FERC) has handed virtual power plants a significant win in the PJM Interconnection market. A recent ruling will enable these plants to help meet surging energy demand in the country's largest energy market.
## Background The ruling comes after a years-long fight from providers of demand-response and virtual-power-plant services. At issue was PJM's concern about relying on third-party demand-response aggregators to reduce household electricity demand when needed. PJM had required detailed evidence that participating households actually cut power when prompted to do so, which demand-response firms were unable to provide due to a lack of access to smart-meter data.
## Impact of the Ruling The FERC ruling requires PJM to accept statistical sampling as a valid method for measuring the reliability of programs tapping into demand-response and virtual-power-plant programs. This decision could unlock at least 4.9 gigawatts of capacity, equivalent to several large power plants, and help alleviate reliability and cost concerns in the PJM market. The ruling is seen as a huge win for virtual power plants, with Voltus' senior director of partnerships, Marissa Galizia, stating that it will unlock hundreds of megawatts of residential load over the next several years.
## Reaction to the Ruling The ruling has been met with optimism from demand-response companies, with Ken Schisler, chief legal and regulatory officer at CPower, hoping that it will send a message to PJM and its stakeholders to remove barriers that are keeping demand response from growing in the market. Michael Murray, president of Mission:data, hopes that the ruling will add fuel to his decade-long effort to make utilities and state regulators unblock smart-meter data that technically belongs to customers. However, the ruling has also been met with concerns from PJM staff and Monitoring Analytics, its independent market monitor, who argue that allowing statistical sampling could undermine reliability.
## Next Steps The ruling won't take effect immediately, with FERC directing PJM to launch a proceeding to work with stakeholders to find a method that parties could agree on. Voltus and other demand-response companies will be working with their partners to submit proposals and find a method that is as easy as possible while guaranteeing accuracy. The outcome of this proceeding will be crucial in determining the future of virtual power plants in the PJM market.
