EPSA’s Competitive Power Summit brought together energy experts and industry leaders to discuss the role of competitive electricity markets and power suppliers in advancing a reliable energy future for Americans. PJM Interconnection President and CEO Manu Asthana was a keynote speaker this year, with insight on markets and reliability from the nation’s largest RTO, and how to safely and effectively decarbonize the power sector. For more Competitive Power Summit coverage, see summaries of remarks by North American Electric Reliability Corporation President and CEO Jim Robb and a panel on cyber and physical security challenges to reliability.
Competition and markets are the best way to maintain reliability and ensure a successful energy transition, according to Manu Asthana, President and CEO of PJM Interconnection at the Electric Power Supply Association March 21 Competitive Power Summit. The summit featured a day of expert panels and discussions on the critical issues facing competitive power and the U.S. electric system. As the energy space faces increasingly concerning cyber threats, physical attacks on the grid, and extreme weather events, all while transitioning into a lower carbon system, this year’s focus was on the number one priority EPSA has—and policymakers and regulators should have—reliability.
Today’s energy transition is already underway, but this is not the first energy transition PJM has successfully conducted, Asthana said. “In 2005, PJM’s generation mix was 57% coal and 5% gas, as well as nuclear and other [resources]… in 2020, we were 19% coal and 40 % gas,” Asthana said. “There continues to be this fear of the ‘invisible hand’ of the market, but the fact of the matter is that it works, and we have decades of proof of this.”
Recently, PJM published its “Resource Retirements Replacements and Risks” (4R) analysis, which explored the question of grid reliability through 2030. The current PJM load is about 150 gigawatts, and it is predicted that around 40 gigawatts of generation resources are at risk of retirement. Asthana pointed out that this retirement risk is due to policy decisions from multiple levels of government, including individual state and federal policies. This is particularly notable because policy signals are not easily reversed and influence how the market will respond to new circumstances. Over the same period as the project retirements in PJM, Asthana said that policy pressures for electrification have also led PJM to project significant load growth by 2030.
Add Faster, Subtract Slower
The question remains: how do we de-risk the future? For Asthana it’s easy: add faster, subtract slower. “We need to move faster on interconnection processing. We need to subtract slower and only when replacement generation resources are available to meet demand.”
During the question-and-answer session of the keynote, Asthana provided his perspective on how extreme weather events, specifically Winter Storm Elliott, revealed weaknesses in the grid. Asthana emphasized that while capacity was available during the storm, it needs to continue to be a priority, stating, “you can’t perform if you don’t exist. So, we need to have an adequate amount of capacity in the first instance.”
Solutions Through Competition and Cooperation
Throughout the discussion, Asthana continued to emphasize the benefits competitive power markets provide. “The evidence is strong that there are billions of dollars of efficiency to be had through the power of competitive markets,” he said, “And so I encourage everyone to remember that as we think about the future and think about designing the changes to our markets. They’re complex but necessary and worth it.”
Cooperation between local, state, and federal governments is crucial to increase capacity and maintain reliability. Asthana believes that the Federal Energy Regulatory Commission (FERC) should accept new winterization standards from the North American Electric Reliability Corporation (NERC), but that NERC and other industry members should go back to the drawing board and work on a higher standard that also allows for generators to be able to receive compensation for meeting the standard. EPSA has voiced its concerns about this lack of a compensation mechanism in the past. While elected officials have their own role to play, PJM and other stakeholders’ roles are to inform policymakers’ decisions to address these issues.
Asthana concluded with a short discussion on renewables, stating that forecasting is crucial. “It’s really critical to be able to forecast what those renewable resources are going to do over the next operating period.” He also discussed the need for having dispatchable generation and controllable load to complement and support intermittent renewable resources.
