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Resource accreditation in PJM is a cornerstone of ensuring grid reliability, especially as the energy landscape evolves with more renewable and variable resources. Accreditation determines how much capacity a resource can reliably contribute to meeting PJM’s reliability requirements. But as the grid changes, so does the need for a more dynamic and accurate accreditation process.
In this blog post, we’ll explore how PJM currently handles resource accreditation, the methodologies it uses, and the planned changes that aim to better align accreditation with resource performance and grid needs. Whether you’re a market participant or just curious about how PJM ensures reliability, we’ll walk you through this step by step.
Let’s dive into the details of PJM’s current accreditation process, the challenges it faces, and the upcoming changes that will reshape how resources are valued in the capacity market.
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How PJM handles resource accreditation today
PJM’s current resource accreditation process is designed to ensure that capacity resources can reliably meet demand during peak periods. For traditional generation resources like coal, natural gas, and nuclear, accreditation is relatively straightforward. These resources are evaluated based on their installed capacity and historical performance during critical periods.
However, for resources like wind, solar, and demand response, the process is more complex. PJM uses the Effective Load Carrying Capability (ELCC) methodology to determine how much capacity these resources can contribute. ELCC analyzes historical weather patterns, load shapes, and resource output to quantify their reliability. Through the 2024/2025 Delivery Year, ELCC applies to Variable Resources, Limited Duration Resources, and Combination Resources. Starting with the 2025/2026 Delivery Year, it will expand to include all Generation Capacity Resources and Demand Resources.
For intermittent resources like wind and solar, accreditation reflects their ability to perform during peak demand periods, which often don’t align with their maximum output. Similarly, Limited Duration Resources like batteries are evaluated based on their ability to sustain output over critical intervals.
Why changes are needed
The current accreditation process, while effective, faces challenges as the grid evolves. The increasing penetration of renewable resources introduces variability and uncertainty that traditional methods struggle to capture. For example, a wind farm might have a high installed capacity but contribute less during peak demand due to weather conditions.
Additionally, the growing role of demand response and energy storage requires a more nuanced approach to accreditation. These resources don’t operate like traditional generators, so their value to the grid can’t be measured solely by installed capacity.
PJM recognizes these challenges and is implementing changes to better align accreditation with resource performance and grid needs.
What changes are planned for resource accreditation?
Starting with the 2025/2026 Delivery Year, PJM will expand the ELCC methodology to include all Generation Capacity Resources and Demand Resources. This change reflects a shift toward performance-based accreditation, where resources are evaluated based on their ability to deliver energy during critical periods.
The ELCC methodology will continue to analyze historical data, but it will also incorporate forward-looking scenarios to account for changes in resource mix and grid conditions. This approach ensures that accreditation reflects not just past performance but also future reliability.
For example, a solar farm might receive a higher accreditation if it’s paired with battery storage, as the combination can provide energy during peak demand even when the sun isn’t shining. Similarly, demand response programs that can reliably reduce load during critical periods will see their accreditation reflect this capability.
What this means for market participants
The shift to performance-based accreditation has significant implications for market participants. Resources that can reliably perform during critical periods will be rewarded, while those that can’t may see their accreditation reduced. This creates an incentive for resource owners to invest in technologies and strategies that enhance reliability.
For example, a wind farm might add battery storage to improve its performance during peak demand. Similarly, a natural gas plant might invest in upgrades to ensure it can ramp up quickly when needed.
These changes also underscore the importance of accurate data and forecasting. Market participants will need to provide detailed information about their resources to ensure they receive appropriate accreditation.
Looking ahead
PJM’s planned changes to resource accreditation represent a significant step forward in aligning capacity valuation with grid reliability. By expanding the ELCC methodology and focusing on performance-based accreditation, PJM is ensuring that its capacity market can adapt to a changing energy landscape.
For market participants, these changes offer both challenges and opportunities. Resources that can reliably perform during critical periods will be well-positioned to succeed, while those that can’t may need to adapt.
As the energy landscape continues to evolve, PJM’s approach to resource accreditation will play a crucial role in maintaining grid reliability and supporting the transition to a cleaner, more sustainable energy future.
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