In this episode of the Energy Connection Podcast, we take a deep dive with hosts Andy Huenefeld and Phil Orend, joined by special guest, Steven Willins, into the volatile PJM Capacity Market where they discuss recent developments and potential implications for the future. Take a moment to listen in and stay connected with the energy industry!
PJM’s capacity market, called the Reliability Pricing Model, ensures long-term grid reliability by securing the appropriate amount of power supply resources needed to meet predicted energy demand in the future.
There are a lot of questions about capacity and the capacity markets within the PJM network and how it may benefit the consumers today.
Has the capacity market done its job?
“Energy prices tend to be a little bit lower when there is a capacity market. Spikes and volatility tend to be a little less. So, yes, I would say capacity markets work.” – Steven Willins
PJM Interconnection operates the energy grid from Pennsylvania, New Jersey, Maryland where it started all the way to Chicago. They conduct a forward capacity auction every year (with the exception of the past two years) three years in advance. Load and generation resources bid in and when PJM first determines how much load they project they need and once the resources match the load, plus a reserve margin, that sets the price for the capacity auction.
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