IEEE Power & Energy Magazine - September/October 2017 - 60

Since its first pilot in 2009, PJM has integrated
nearly 300 MW of advanced energy storage resources
into its market.
they provide to the market as well as discusses services that
energy storage resources may provide in the future along with
integration opportunities, resulting in a larger amount of storage deployed within the grid.

The PJM System and Market Overview
PJM is responsible for ensuring reliable power system operation and efficient electricity market operation. It also manages
regional planning processes for generation and transmission
expansion to ensure future system reliability. The PJM-operated bulk power system is part of the Eastern Interconnection
of North America, covering all or parts of 13 states and the
District of Columbia. PJM operates 82,546 mi of transmission
lines, coordinates the dispatch of 1,304 generation resources,
and serves an all-time peak load of 165,492 MW. To achieve
greater economic efficiency, PJM also administers the largest competitive wholesale electricity market in the world,
with more than 1,000 market participants and different market products used to enable reliable operations at the least
possible cost. In 2016, PJM billed a total of US$39.05 billion
through its markets. The market products include energy,
capacity, ancillary services, and financial transmission rights.
The PJM energy market is a two-settlement market: a dayahead (DA) financial market and a real-time (RT) balancing
market. The DA market is cleared based on bid-in demand
submitted by market participants plus a system reserve requirement. The RT market cooptimizes energy and ancillary
services to balance generation with system load, maintain
system reserves, and resolve transmission network congestion, resulting in resource-specific dispatch and locational
marginal prices (LMPs).

PJM's capacity market, called the reliability pricing model,
maintains resource adequacy and ensures that there will be
sufficient capacity [generation, storage, or demand response
(DR)] to meet future peak load plus a required reserve margin. In 2016, PJM began to employ rules emphasizing performance-based requirements in the capacity market to reward
well-performing resources and penalize those that fail to perform when needed most. In general, the capacity performance
product requires resources to be available and to follow PJM
dispatch instructions during emergency operating events.
PJM's ancillary service markets include performance-based
regulation market, synchronized and nonsynchronized reserve
markets, which have been cooptimized with the RT energy
market every 5 min since 2012. PJM's regulation market has
two control signals: 1) the slower signal designed to best fit traditional resources with the ability to sustain energy deviation for
long periods of time with relatively slower ramp rates and 2) the
faster signal designed for faster ramping resources that require
a more "neutral" signal with a long-term energy average of zero.
Following FERC Order 755, the regulation market introduced
the concept of "effective MW" of equivalent service, as well as
three clearing price components: capability, performance, and
lost opportunity cost. The performance score of each regulating
resource is used for both scaling financial compensation and
adjusting future offers. Benefit factor, i.e., the rate of substitution, equates varying resources' characteristics into an effective
multiplier for equivalent service.

Energy Storage in PJM

Traditional generating units, for example, nuclear, run-of-river
hydroelectric, fossil, and renewables, can only inject energy into
the grid. Energy storage devices change
this dynamic, allowing for the ability to
withdraw energy from the bulk power system for later injection. This time shifting
of energy allows storage resources to arbitrage price differences throughout the day,
drawing power at low prices and injecting
at high prices, while providing reliability
services needed by the grid. PJM's market rules do not prohibit any resource type
from participating in the wholesale markets
as long as the resource meets the participation requirements.
Storage devices can participate in PJM's
markets at both the transmission and disfigure 1. An AES battery trailer. (Image used with permission from PJM.)
tribution voltage levels. To participate at
60

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