Dive Brief:
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The PJM Interconnection expects its summer and winter peak load will grow by 0.4% and 0.7% a year, respectively, over the next decade, according to the grid operator's latest annual load forecast released on Friday.
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Nearly all the anticipated growth is driven by expectations for new data centers in Dominion Energy's service territory and plug-in electric vehicles (EVs) across PJM's footprint, according to an early-December presentation on the load forecast. Data centers added about 0.25% to expected annual summer peak load growth and EVs accounted for 0.1% of the growth.
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PJM lowered its peak load estimate for its upcoming capacity auction, which covers the 2025 capacity year, by 763 MW, or 0.5%, reflecting the reduced summer peak load expectations compared to its last forecast. The auction was set to be held this month but postponed by a recent Federal Energy Regulatory Commission decision.
Dive Insight:
PJM's annual load forecasts are a key input for its capacity auctions, which the grid operator uses to make sure it has enough power supplies three years in the future. The forecasts also feed into PJM's transmission planning process.
PJM consistently lowers its load forecasts from previous years, indicating there is a bias in the forecasting, which, because the grid operator buys capacity three years ahead of time, leads to procuring more capacity than needed, according to Paul Patterson, an equity analyst with Glenrock Associates. "It comes at a cost," he said.
That cost shows up in the excess power supplies PJM buys, Patterson said Monday. In 2020, PJM had a targeted 15.5% reserve margin, a layer of power supplies above the anticipated peak load that can be used to handle unexpected power plant outages or other disruptions.
However, PJM ended up with a 24.2% margin above its peak load that year, according to an annual report by Monitoring Analytics, the grid operator's independent market monitor. In the previous four years, PJM's actual reserves exceeded its planned reserves by 5.9 to 8 percentage points, according to the report.
In its most recent capacity auction, PJM in May procured 144,477 MW for about $3.9 billion, down from $8.3 billion in its previous auction.
In the latest load forecast, PJM said it expected its summer peak to grow by 5,443 MW over the next 10 years, or 0.4% annually, to 154,381 MW. Last year, PJM expected summer-time peak load to grow 0.6% annually.
PJM said winter peak load would grow by about 9,414 MW to 141,516 MW over a decade, or by 0.7% annually, up from the 0.6% forecast in the last report.
PJM also increased its 10-year outlook for annual energy use to 0.8% yearly growth from 0.7% in the last report. The grid operator expects annual electricity use in its footprint to climb to 845,133 GWh in a decade.
PJM anticipates electricity use for EVs will soar from 2,414 GWh this year to nearly 21,000 GWh in 2032. EVs' contribution to summer-time peak load is forecast to jump from about 300 MW this year to about 1,840 MW in 2032, according to the report.
PJM operates the grid and wholesale power markets in 13 Mid-Atlantic and Midwest states and the District of Columbia. Within that footprint, four states and the District of Columbia have EV goals. New Jersey, for example, aims to have 2 million EVs by the end of 2035. PJM based its forecast on those goals, plus, for states without targets, the Energy Information Administration's assumption that EVs would account for 4% of auto sales in 2030 and 8% a decade later, according to the presentation.
Meanwhile, PJM assumed rooftop solar would reduce summer peak load by 3,150 MW this year and by about 6,700 MW in 2032, according to the report.
Also, the grid operator anticipates battery storage facilities will cut summer peak load by 5 MW this year and by 258 MW in a decade.
Dominion, with a service territory that includes parts of Virginia and North Carolina, is expected to serve data centers with about 6,000 MW of load in 2026 and about 8,000 MW in the mid-2030s, according to the presentation. As a result, PJM increased its assumptions for Dominion's load by 2,647 MW in 2027 and by 4,069 MW in 2032, according to the load forecast.
With data centers totaling 12 million square feet, Northern Virginia is the largest data center market in the world, according to Virginia-based utility company Dominion. The company expects the data center market in its territory will grow "significantly."
PJM expects Dominion's summer peak load will grow by 2.2% a year for the next 10 years.
In contrast, PJM forecasts the summer peak load for Exelon's Commonwealth Edison will fall by 0.3% a year for a decade, driven down by voltage optimization savings.
PJM anticipates Baltimore Gas & Electric's summer peak will fall by 0.1% a year for 10 years and Potomac Electric Power Co.'s load will fall 0.2% annually in the same period. Both utilities are owned by Chicago-based Exelon.