Post: PJM expects adequate resources for Summer; opportunities for demand response

PJM expects adequate resources for Summer; opportunities for demand response

PJM has forecast “sufficient generation” for typical peak demand this summer but is preparing to call on contracted demand response resources to reduce electricity use under more extreme scenarios featuring record demand.

In its latest Summer Outlook, published on May 9, PJM forecasts summer energy use, or load, to peak at just over 154,000MW. PJM’s record summer peak load was set at 165,563MW in 2006. Last year, PJM’s summer peak was about 152,700MW. PJM has approximately 179,200MW of generation capacity this summer. But PJM noted that available generation capacity may fall short of required reserves in an extreme scenario that would result in an all-time PJM peak load of more than 166,000MW. In these circumstances PJM would call on its 7,900MW of contracted demand response to meet its required reserve needs.

Historically businesses participating in demand response may have gained revenue by participating in the capacity market. But values that can be achieved are volatile. PJM’s latest capacity auction successfully secured resources to meet the reliability requirement for the 2025-26 Delivery Year. But two zones cleared just short of their reserve requirement, resulting in prices being set at the zonal cap. Auction prices were significantly higher across the RTO due to decreased electricity supply caused primarily by a large number of generator retirements, combined with increased electricity demand and implementation of FERC-approved market reforms, including improved reliability risk modeling for extreme weather and accreditation that more accurately values each resource’s contribution to reliability. The auction produced a price of $269.92/MW-day for much of the PJM footprint, compared to $28.92/MW-day for the 2024-25 auction. This year’s auction procured 135,684MW for the period of June 1, 2025, through May 31, 2026. The total Fixed Resource Requirement (FRR) obligation is an additional 10,886MW for a total of 146,570MW. The total procured capacity in the auction and resource commitments under FRR represents an 18.5% reserve margin, compared to a 20.4% reserve margin for the 2024/2025 Delivery Year.

Added to this, 5 Critical Peaks (5CP) rates continue to rise. Peak Load Contribution (PLC) related costs may account for up to 30% of your total electric bill. Businesses that can accurately anticipate and strategically lower their demand during 5CP events can drastically reduce their capacity charges for the following year. The value could be as much as $98,500/MW-Yr of 5CP savings combined with a further saving of $5,000 – $180,000/MW-Yr. (Zone dependent)​ on Network Transmission (NITS) charges.The combination of these factors is putting additional pressure on consumers struggling to improve sustainability and green up operations.

Using a bottom-up approach by understanding your assets, combined with in-depth knowledge of the intricacies of the system, GridBeyond’s AI-powered platform is a powerful combination of high-end energy management technology and data analytics that transforms your energy strategy from passive risk and price management to active participation that utilizes smart technology to enable co-optimization across the PJM energy markets.

Whitepaper | Predicting peaks | PJM’s 5CP program 

In this white paper we explore how these charges are assessed and the key role of forecasting in monetizing flexibility for maximum gain/cost reduction. 

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