US power grid operator PJM Interconnection’s latest capacity auction for 2023/2024 saw 1,868MW of solar PV procured, up 25% from the previous auction.
The regional transmission organisation said the latest auction had a lower price for all resources than last year with US$34.13/MW per day versus a price of US$50/MW per day in secured in June 2021.
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The fall in prices this year was the result of a less restrictive minimum offer price rule for seven resources representing 76MW, a lower market seller offer cap, less time to connect the projects (one year instead of three) and the application of an effective load carrying capability (ELCC) method to determine the capacity of solar, wind and storage resources, according to PJM.
Moreover, the latest auction saw a growth of more than 5GW of cleared carbon-free resources led by 5.3GW of existing nuclear that had not cleared through in the previous auction. Meanwhile, wind energy decreased 434MW from the previous auction for a total of 1,294MW and was caused by a decline of wind projects during the auction itself.
This year’s auction procured 144,871MW of total resources for the period of 1 June 2023 until 31 May 2024, almost flat compared to the previous auction, at a total cost of US$2.2 billion, down US$1.8 billion from 2022/2023.
Manu Asthana, president and CEO at PJM Interconnection, said: “In combination with our other markets, the capacity market remains a central component in attracting a diverse, reliable and competitive resource mix to meet forecasted system demand.”
While the auctions are held three years in advance of the delivery year, the 2023/2024 auction was originally scheduled to be held in May 2020 but was postponed until the Federal Energy Regulatory Commission (FERC) considered the approval of new capacity market rules.
After holding the last two capacity auctions only a year before its delivery year and a ruling in October 2021 from FERC, PJM will finally return to a three-year-forward basis with the 2024/2025 delivery year, which will take place in December 2022.
The PJM capacity auction procures power supply resources in advance of the delivery year to meet electricity needs in its service area, which includes all or part of 13 states and the District of Columbia.
Earlier this year, the power grid operator had made progress in clearing its renewables backlog of projects which included more than 136GW of solar capacity.
