Catalyst

PJM: Protecting the Grid and Generating Growth for Pennsylvania

By Manu Asthana

Imagine an intricate machine that simultaneously keeps affordable electricity flowing to 65 million people, powering one-fifth of the U.S. economy, while planning how to operate through the most disruptive events and keep the lights on for the foreseeable future.

 

All of this happens every day at the Valley Forge headquarters of PJM Interconnection, operator of the largest electrical grid in the country and the biggest wholesale electricity market in the world.

 

In Pennsylvania, you are much more likely to know the name of your local utility that delivers electricity to your home or business — whether it’s Duquesne Light, Allegheny Power, PECO or PPL. PJM partners with these utilities and others across 13 states and the District of Columbia to help create a vast, stable and affordable electrical system upon which you can rely.

 

Since its formation in 1927, when three utilities realized the benefits and efficiencies made possible by sharing generating resources, PJM has grown to more than 1,000 members. We are dedicated to providing reliable electricity, and since 1997, PJM has also managed wholesale electricity markets that give consumers access to efficiently priced wholesale power over a broad region.

 

It is a huge responsibility that involves some of today’s most pressing challenges. During the onset of the coronavirus and its resulting restrictions, PJM was able to rely on our existing pandemic plans to protect our critical control room operators. But we also had to confront situations that no one anticipated, such as long-term telecommuting, holding meetings remotely for stakeholders in 13 states and Washington, D.C., and adapting to changes in energy usage.

 

Between mid-March and mid-May, PJM saw a reduction in expected energy consumption of about 8 percent on weekdays, which is a result of businesses shutting down. As more counties began to reopen in late May into early June, energy crept back toward “normal” levels, an indication of both increased economic activity and hot weather that drove higher residential air-conditioner use, as many people continued to work from home.

 

For Pennsylvanians, PJM’s competitive markets have helped keep wholesale electricity costs flat over the last 20 years, helped reduce carbon emissions by more than 30 percent since 2005, and laid the foundation for a competitive retail market.

 

The PJM markets have supported the entry of new, ultra-efficient generators that take advantage of the Commonwealth’s abundant shale gas to provide affordable power, attract investment and act as a catalyst for an industry that exports electricity to other states. Lower costs are not just a boost for homeowners, but also a way to make Pennsylvania a more attractive place to do business.

 

Encouraging Investment

 

The amount of installed generation in Pennsylvania makes up nearly a quarter of all the installed generating capacity in the entire 13-state region PJM serves. Pennsylvania benefits directly by being able to sell any excess power it produces to the region through PJM’s wholesale markets. You can see how many megawatts of electricity Pennsylvania is exporting in real-time with PJM’s net energy import map.

 

PJM’s capacity market has attracted investment of more than $8 billion in new electricity generators and resources in Pennsylvania over the last decade. In addition, projects representing more than 13,000 MW of electricity are looking to build and connect to the power grid PJM operates in Pennsylvania. PJM’s wholesale electricity markets help drive these significant new investments in the state.

 

Traditional generation is not the only investment in Pennsylvania. PJM’s markets are open to user-based energy technologies, including programs such as demand response (paying customers to temporarily reduce electricity use when the grid is being stressed) and electric efficiency (utilities and states permanently reducing electricity demand by encouraging the use of more efficient appliances).

 

Reducing Emissions

 

New technologies tend to improve efficiency, and Pennsylvania’s current generation mix is over 30 percent less carbon-intensive than 10 years ago.

 

Emissions reductions are largely the result of competitive markets encouraging the entry of new, more efficient technologies. Cleaner-burning and more energy-efficient generators are replacing older resources. This includes renewable energy sources such as solar, wind and energy storage that are in the process of joining PJM’s generation fleet in Pennsylvania.

 

Ready for the Future

 

There is an ongoing debate throughout the country about the future makeup of electricity generation. Customers want to know more about how their power is produced. PJM markets can continue to help shape the future. They can adapt to changing public policies and consumer needs, while continuing to efficiently deliver reliable power, even throughout extended disruptions.

 

I’m honored to take on the challenge of leading PJM during a time of unprecedented challenges presented by the current pandemic, and also a historic transition in the energy industry. I am looking forward to fostering relationships and working collaboratively with Pennsylvania’s policymakers as they continue to strive for a clean, reliable and affordable electricity future. I believe PJM and the electricity markets we operate can help make that future a reality.

 

Manu Asthana is president and CEO of PJM Interconnection.     

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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of BusinessTM.