Canary Media discusses a recent spike in electricity prices by PJM, the largest power market in the country. The article quotes United's Jon Gordon, who speaks to how PJM's interconnection queue delays are exacerbating market issues and negatively impacting energy costs.
Electricity prices are set to spike for roughly 65 million Americans — and rules that keep new clean energy from being built are largely to blame.
Last week, PJM, which manages the power grid serving Washington, D.C., and 13 states stretching from the mid-Atlantic coast to the Great Lakes, hosted its annual capacity auction — the mechanism whereby the grid operator secures the electricity it thinks it will need to ensure the grid is reliable in the years to come.
The prices earned by participants in this year’s capacity auction were 10 times higher than in last year’s auction. This jump will lead to higher electricity costs for PJM customers. It will also send a clear signal to the energy industry: Build to meet the need for reliable energy and you’ll be rewarded.
“The significantly higher prices in this auction confirm our concerns that the supply/demand balance is tightening,” PJM president and CEO Manu Asthana said in a statement accompanying the release of the auction results. “The market is sending a price signal that should incent investment in resources.”
But a price signal is hardly enough to get new energy connected to PJM’s grid. Just ask the hundreds of wind, solar, and battery project developers who are trying to build in the region. Hundreds of gigawatts of proposed power capacity are unable to move forward because of PJM’s outmoded rules for plugging into the grid — an amount more than large enough to avoid sky-high auction prices like last week’s.
That gridlock is already threatening to derail the clean-energy goals of states within the grid operator’s footprint. Unless PJM can find ways to relieve the bottleneck, it will continue to impede the grid operator’s efforts to solve its grid reliability problems as well, clean energy groups say.
“Everyone says, ‘This is how markets are supposed to work. We’re sending a strong price signal for new build,’” said Jon Gordon, a director at clean energy trade group Advanced Energy United. “Well, how do you do that when PJM can’t figure out how to get projects interconnected to the grid?”
Read the full article here.