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PJM’s proposed long-term regional transmission planning marks a brand new method ahead. How a lot it’s going to ship continues to be unsure.
It might be a brand new calendar 12 months, however the US grid is going through most of the identical challenges it did in 2023, together with prolonged interconnection queue delays, a lag in transmission buildout, and accelerating fossil retirements. On the identical time, it faces rising clear vitality commitments by states and non-public actors, and rising load development from economy-wide electrification and different new investments.
Nowhere is that this more true than in PJM, a regional transmission group that coordinates wholesale electrical energy markets in 13 states and the District of Columbia. Simply final 12 months, PJM applied interconnection queue reforms and accredited over $5 billion in new transmission initiatives to help, amongst different wants, fossil retirements and cargo development pushed by knowledge middle enlargement. All of the whereas, states throughout PJM, from Maryland to Michigan, are strengthening their local weather insurance policies, heightening the necessity for enhancements to the PJM grid to help the supply of extra clear vitality. PJM’s Useful resource Retirements, Replacements, and Dangers report, launched in February of 2023, highlights the reliability dangers surfaced by these vital supply- and demand-side shifts.
One factor is definite: proactive transmission planning will likely be important to deal with all of PJM’s overlapping grid challenges in a dependable and reasonably priced method. At the moment, PJM’s transmission planning course of is overly myopic, leading to an overemphasis on lower-voltage grid upgrades that don’t ship the dimensions of proactive transmission that we want for the vitality transition. On the identical time, turbines are going through more and more excessive prices to interconnect due to an absence of high-voltage regional transmission, posing a barrier to well timed new entry.
As analysis from final 12 months illustrated (Exhibit 1), PJM’s funding in high-voltage transmission has been declining in recent times, particularly in contrast with different grid areas. We have to reverse this pattern to satisfy the a number of adjustments famous above that PJM’s grid is going through right now.
Final summer time, PJM initiated a sequence of workshops to revamp its transmission planning course of, referred to as Lengthy-Time period Regional Transmission Planning (LTRTP). This has the potential to shift extra funding to the higher-voltage, longer-distance traces the area wants for the vitality transition. As proposed, LTRTP would improve PJM’s present transmission planning by modeling three situations on a way more complete foundation:
- The Base Situation consists of all introduced and policy-driven generator retirements, forecasted new load, and sufficient new era to take care of the 1-in-10 reliability normal. PJM proposes to allocate Base Situation prices utilizing its regional reliability value allocation framework.
- The Medium Situation consists of the Base Situation assumptions and provides new era to totally meet state coverage wants (e.g., renewable portfolio requirements or clear vitality requirements). PJM proposes allocating any further prices for the Medium Situation, above these within the Base Situation, to states with coverage necessities utilizing PJM’s State Settlement Strategy.
- The Excessive Situation consists of the identical coverage wants because the Medium Situation however assumes greater hundreds, incorporating extra bold electrification projections. PJM additionally proposes to allocate any greater prices within the Excessive Situation utilizing the State Settlement Strategy.
In comparison with the established order, PJM is taking an enormous step ahead with LTRTP. By combining a number of drivers of transmission wants, together with plant retirements, load development, and new era, right into a scenario-based analysis, LTRTP can determine holistic transmission options that resolve these points, decrease prices for customers, and preserve system reliability. Importantly, PJM can also be planning to calculate a number of advantages for transmission initiatives, modeled off of these enumerated within the FERC regional transmission Discover of Proposed Rulemaking. These embrace manufacturing value financial savings, prevented era and transmission prices, and decreased lack of load. By factoring in these advantages, everybody concerned could make extra knowledgeable funding selections.
Nevertheless, PJM and its stakeholders can take a number of further steps to enhance LTRTP. Particularly, we suggest the next:
- States ought to proactively discover and agree upon a price allocation methodology for the Medium and Excessive Eventualities. Whereas the State Settlement Strategy lays out a framework for dialogue, states via the Group of PJM States Inc. ought to proactively come collectively to debate how precisely prices might be divided. Pursuing a multi-State Settlement Strategy, for instance, may assist meet a number of states’ coverage objectives extra effectively and cost-effectively. PJM’s proposed LTRTP advantages modeling might help inform these value allocation conversations. As a place to begin, PJM states can look to how different areas have structured long-term planning value allocation, together with MISO LRTP Tranches 1 and a couple of and ISO-NE’s new Lengthy-Time period Transmission Research (LTTS).
- PJM ought to embrace market effectivity in its drivers of transmission wants. At the moment, PJM is planning to guage solely reliability drivers as a part of LTRTP whereas protecting market effectivity (financial) drivers to shorter-horizon (5 years out) planning. This runs the danger of underbuilding the transmission that we want long run by ignoring alternatives to concurrently cut back congestion, and thus prices for customers. Shifting ahead, PJM ought to take into account how one can additionally incorporate consideration of market effectivity drivers into LTRTP, together with via sensitivity analyses. MISO’s LRTP is an effective instance of long-term, multi-driver planning.
- PJM ought to embrace a number of demand sensitivities in its Base Situation. PJM’s present LTRTP framing consists of only one load forecast for the Base Situation, with a excessive electrification future thought-about solely as a part of the Excessive Situation (which is contingent on states agreeing to pay for the upgrades). PJM ought to as an alternative incorporate a number of load forecasts into its Base Situation via sensitivity analyses. Current upward revisions to PJM’s annual load forecast reaffirm the necessity for analyzing a number of load development futures impartial of state public coverage wants. On the outset of this 12 months, for instance, PJM launched its 2024 load forecast, which initiatives 7–2 p.c development per 12 months over the subsequent 10 years — roughly double that of the 2023 forecast’s annual development charge of 0.8–1 p.c.
- PJM ought to plan for increasing connections to its neighbors at the side of LTRTP. LTRTP is targeted on regional transmission, however PJM must also be planning for extra interregional transmission. Current research have recognized the potential for enormous value financial savings — greater than $15 billion between MISO and PJM alone — that would outcome from PJM constructing extra interregional transmission to neighboring grid areas. Interregional transmission additionally helps enhanced reliability and resilience throughout excessive climate occasions. Together with LTRTP, PJM ought to be strengthening its interregional planning efforts with neighboring grid areas.
With these enhancements, we imagine PJM can use LTRTP to plan a “least-regrets” transmission portfolio that serves as a basis for a dependable grid that meets the rising wants of its prospects. Shifting ahead, we hope to see PJM finalize the LTRTP course of within the coming months, in order that implementation of those wanted updates can start. On the identical time, with the pending FERC regional transmission rulemaking anticipated later this 12 months, PJM ought to be ready to totally adjust to the rulemaking in a method that enhances the prevailing LTRTP framework. Exhibit 2 beneath illustrates the progress PJM’s LTRTP could make, as at present proposed, and the extra greatest practices that stay on the desk.
As quite a few research have proven, high-voltage regional transmission has the potential to decrease prices for customers, preserve grid reliability, and foster financial development by connecting new hundreds and era. Moreover, many grid areas are already doing the kind of long-term, scenario-based planning that PJM is proposing via LTRTP and seeing outcomes (e.g., MISO’s LRTP, CAISO’s Transmission Financial Evaluation Methodology, ISO-NE’s LTTS, and NYISO’s Public Coverage Transmission Planning Course of).
To that finish, all of PJM stands to profit from a extra sturdy, long-term strategy to transmission planning, as all states in PJM are going through adjustments to their era and cargo. A scarcity of proactive transmission buildout places PJM states susceptible to elevated reliability points and lacking out on doubtlessly profitable financial growth related to new load development. Transmission is a long-term funding that pays dividends, and stakeholders within the area ought to work to make sure 2024 is the 12 months PJM begins investing sufficiently and properly within the grid of the longer term.
By Claire Wayner, Katie Siegne, © 2023 Rocky Mountain Institute. Revealed with permission. Initially posted on RMI.
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