By Michael D. Smith

Given PJM’s distinction of being both the nation’s largest wholesale electricity market and the epicenter of the data center boom, many hoped the grid operator would move closer to approving reforms governing large loads after a full day of committee proposals on Nov. 19. However, none of the dozen proposals considered were approved. (See: PJM Stakeholders Reject All CIFP Proposals on Large Loads.)

The voting results suggest that an approach similar to PJM’s proposal may be on the horizon. As a demand response aggregator and virtual power plant platform, CPower would be supportive, assuming certain provisions from PJM’s proposal were to be implemented.

Regardless, we’d prefer PJM take the time to get large loads right rather than push through changes that could do more harm than good. PJM needs every megawatt of supply it can secure, and the last thing it should do is inadvertently force existing supply out of the market. With roughly 8 GW of DR in PJM, a poorly executed policy shift risks undermining a critical source of capacity.

As it stands now, with new large loads coming online, commercial and industrial customers are likely to be dispatched more frequently, meaning manual load shedding is likely to become more common. In time, this could discourage the largest customers from providing the greatest load relief through DR participation, which has proven to be instrumental in maintaining system reliability during peak events and preventing deeper emergency actions in PJM.

If new large loads do not bring their own capacity, be it generation or demand flexibility at their site or elsewhere, the number of potential or actual reserve shortage hours over the next few years will rise to the point that PJM may routinely have hundreds of hours of DR calls.

With this in mind, we encourage the PJM Board of Managers to respect the following principles as it further deliberates reforms:

• • “Non-Firm Goes First.” New large loads that are not backed by DR or generator capacity have not purchased firm service and should be dispatched off the grid before pre-emergency DR providers.
  • DR is DR. New large loads participating in load management programs should be dispatched at the same time as pre-emergency and emergency DR and price responsive demand, not after.
  • DR Loads are DR Loads. Any new DR programs should be available to all customers, not just new large loads.
  • Capacity is Capacity. If data centers can buy capacity from a generator to meet a requirement, they should be able to purchase DR capacity for the same purpose.

Whatever path PJM chooses, other markets may follow. That makes this decision especially consequential, as it could set a precedent for future policies and shape how DR is used nationwide.

Getting it right and expanding the use of DR is essential, as it’s the most immediately available, affordable and reliable way to support rapid load growth and enable the innovative energy economy.

Michael D. Smith is CEO of CPower, a virtual power plant platform with 6.7 GW of customer capacity at more than 23,000 sites.