Energy efficiency lowers costs in recent PJM capacity auction

Energy efficiency provides many benefits to the electric utility system. One of these benefits is reducing the market price for electric generation. PJM Interconnection, the operator of the largest electric grid in the United States serving approximately 61 million people, wrapped up its most recent generation capacity auction last week. This auction determines the price paid to power plants three years in the future. The clearing price in last week’s auction was far below expectations and nearly 40% below last year’s clearing price. This is in large part due to new natural gas power plants and energy efficiency.

Approximately 1,515 MW of energy efficiency cleared the auction, the largest amount ever. In terms of total clean energy alternative resources to clear the auction, energy efficiency had the highest amount of capacity, substantially more than solar (335 MW) and wind (969 MW). The complete results can be found here.

The results of this capacity auction are great news for two reasons. First, the result highlights how system planners are utilizing energy efficiency as resource able to provide sustained and predictable energy and reserves. The fact that energy efficiency cleared a substantial amount of megawatts under new requirements called “capacity performance” underscores the confidence of system planners in energy efficiency to reliably meet system load.

Read the full story. (ACEEE)