REED Renderings Issue #2: The PJM Interconnection Generation Capacity Auction

Welcome to the second issue of REED Renderings where we bring our readers attention to interesting trends in REED data and the stories behind those trends in the context of relevant events. In this issue, we discuss the recent PJM Interconnection generation capacity auction.


There has been a lot of noise over the results of the most recent PJM Interconnection generation capacity auction. As the nation’s largest grid operator serving around 61 million people in the Midwest and Mid-Atlantic region, anything PJM does should rightfully make some noise in the energy community. So when people started to talk about the results of the latest auction, it was just business as usual, right? Wrong. The results of this auction were different.

The results of the auction should catch everyone’s attention for a couple of reasons:

  • 1,515 MW of energy efficiency cleared the auction, which is not only the largest amount to ever clear, but is also more than wind (969 MW) and solar (335 MW) combined;
  • Of that 1,515 MW of energy efficiency that cleared, 1,058 MW cleared at capacity performance – a more stringent designation that ensures reliability and is available year round

Energy Efficiency as a Resource

The nearly 70% (1,058 MWs) of the energy efficiency that cleared at capacity performance standards is an affirmation that energy efficiency can be a resource for system planning in the same way that other generation sources can be. Furthermore, these results should also convince everyone that investing in energy efficiency is the most economical way to generate revenue from wholesale capacity markets and simultaneously meet the 100% capacity performance requirement of next year’s auction. 

Growth of Energy Efficiency in the Mid-Atlantic

Nearly one third of the more than 1,500 MW of energy efficiency that cleared the PJM auction were from states that NEEP tracks – the Mid-Atlantic States. Of that third bid by Mid-Atlantic States, almost half came from the Maryland, District of Columbia, and Delaware region. Yet, this doesn’t come as much of a surprise because NEEP has been tracking the growth of energy efficiency within those states in REED. As seen below, these three states have been steadily increasing their investments in energy efficiency year after year, which has resulted in large amounts of MWs saved.

[caption align=center]Source: REED[/caption]

Maryland, Delaware, and the District of Columbia saw a 130% increase in investment from 2011 through 2014. In that same time period, a total of 2,688 gigawatts of energy was saved. Therefore, it is no surprise that the utilities in the Maryland, Delaware, and DC region were able to account for nearly 13% of the total cleared amount of EE in the PJM auction – no small feat considering the size of these jurisdictions. But those are only three states of the five that NEEP tracks. What would happen if New Jersey and Pennsylvania were included in this trend analysis?

The Potential Impact of New Jersey and Pennsylvania

The inclusion of Pennsylvania and New Jersey are clearly detrimental to those nice upward trending graphs, however, the graphs below should not be viewed with complete disappointment. Instead, it should be viewed as having great potential. When Pennsylvania and New Jersey were actively expanding energy efficiency in their states, investment and savings were much larger – sometimes as much as 73% larger in savings and 82% larger in investment.

[caption align=center]Source: REED, ACEEE, and EIA 861[/caption]

This is why the 1,515 MW of energy efficiency cleared should not only be viewed as an impressive feat, but also as an encouraging sign of potential things to come with respect to the Mid-Atlantic region. Of those 1,500 MWs cleared, 17% come from New Jersey and Pennsylvania based utilities. Does this signal the reemergence of New Jersey in the energy efficiency landscape and Pennsylvania’s emergence as a leader in energy efficiency? It is too soon to tell. However, the energy efficiency future of the Mid-Atlantic States has the potential to look vastly different with the inclusion of these two states. And that future is something that will benefit everyone. 

Stay informed

Stay up to date with the latest NEEP and industry news, policies, and trends to your inbox every so often.