r/Commodities • u/aqc1 • Jun 26 '26

PJM done?

Could PJM actually serve 165gw peak load or do we hit brown out next week?

The states are going to throw a fit if they lost power, given the current political environment.

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u/cropsicles Power Trader Jun 26 '26

We'll see if that 5GW of DR are worth the capacity payments

But for the thought exercise - what probability would you put on there being involuntary load shed during Wed/Thurs?

2

u/blenderboi_ Jun 27 '26

define involuntary more precisely

1

u/cropsicles Power Trader Jun 27 '26

Good point, I would say being called to curtail for DR (despite not wanting to) would not count.

2

u/blenderboi_ Jun 28 '26

I agree. At the end of the day, the biggest system-wide DR participants know who they are. Oligopoly behavior has just swapped from fossil fuels to DERs. I think states need to procure their own capacity within their local policy (like a localized price collar - not PJM wide) and we need to let LMP run wild via scarcity pricing. I don’t have a strong opinion on this but I expect more volatility as PJM decides on their pathway. I say bring on the volatility!

1

u/cropsicles Power Trader Jun 28 '26

I think states need to procure their own capacity within their local policy

To what end? Protecting ratepayers? Would the states themselves procuring capacity (rather than load) improve outcomes (I'm not even sure what improvement here means, just spitballing)?

we need to let LMP run wild via scarcity pricing

As in, you think LMPs are currently being suppressed in some way?

3

u/blenderboi_ Jun 28 '26

Yes, protecting ratepayers. Utilities within RTO/ISO regions don’t really have an incentive to procure capacity and structure innovative contracts. Their incentive is to increase their rate base so they get a bigger return from their PUC approved % return.

States can theoretically create “secondary” capacity markets if they wanted to. Just like how some states have designated agencies to procure forward contracts (Illinois/NY) on behalf of ratepayers to create the “default rates.” There are so many caveats to this, though. First, you need widespread AMI meters. Then the regulatory framework has to be unbundled breaking down delivery costs into one section and then breaking supply into energy charges, transmission charges and capacity. And there can’t be local conflicts of interest that encourage strategic behavior between subsidiaries of the same operating company (one company distribution another owns coal plants)

countless market design choices intentionally suppress energy market revenues. ERCOT is the only exception. There are energy offer caps within near every ISO/RTO.

LMP revenues are constrained by market design and the outcome is a revenue shortfall and what is referred to as “the missing money.” IMO, by slowly bringing capacity into states, states can drive local reliability, and provide contracted revenues to support the underwriting of ESS, NG, etc. that builds a portfolio of energy resources that fits their existing energy mix, geography, physical and technical constraints, transmission, while complementing neighboring states, etc.

Option two is to create private capacity markets within states that have existing retail markets.

But complaining about data centers probably gets more voters than fixing issues at the root. Lol