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Perspective: New Model Capacity Markets Drive Operational Excellence

Perspective: New Model Capacity Markets Drive Operational Excellence

This IDC Energy Insights Perspective discusses the largest and most sophisticated energy market in North America, PJM. PJM has developed a new "pay for performance" Reliability Pricing Model (RPM) capacity market. Independent of that event, FERC's Order 745 (referred to as 745) was upheld in the courts earlier this year and puts the demand response (DR) market at the forefront of utility capacity model changes. But most importantly, these two events combined create a challenge for traditional fossil fuel generation players in the PJM wholesale power market. 745 will provide demand response participants the opportunity to participate in capacity markets and receive capacity payments on an equal level playing field with generators. This ruling should have some independent power producers (IPPs) and traditional utility generators concerned.As shown in Figure 1, utility and power companies will be investing in the solution areas where the impact will be on operational reliability and market management. These types of solutions are a foundation for operational excellence.

In This Perspective
The Changes for Demand Response and Inefficient Operators
Impact on Power Producers
There Are Other Winners
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