Chapter 19 - Case Study: Demand-Response and Alternative Technologies in Electricity Markets

Abstract

The PJM wholesale electricity market has evolved to promote open competition between existing generation resources, new generation resources, demand-response, and alternative technologies to supply services to support reliable power grid operations. PJM has adapted market rules and procedures to accommodate smaller alternative resources while maintaining and enhancing stringent reliability standards for grid operation. Although the supply resource mix has tended to be less operationally flexible, the development of smart grid technologies, breakthroughs in storage technologies, microgrid applications, distributed supply resources, and smart metering infrastructure have the potential to make power transmission, distribution, and consumption more flexible than in the past. Competitive market signals in forward capacity markets and grid service markets have resulted in substantial investment in demand-response and alternative technologies to provide reliability services to the grid operator. This chapter discusses these trends and the market mechanisms by which both system and market operators can manage and leverage these changes to maintain the reliability of the bulk electric power system.