Dive Brief:

• PJM Interconnection has proposed changes to its capacity market rules in response to a winter that strained the grid's ability to meet customer demand.
• The changes are aimed at providing stronger performance incentives to a more fuel-diverse group of generators during high-demand periods.
• The operator has proposed a new Capacity Performance product that would require generators to be capable of sustained, predictable operation for 16 hours per day for three consecutive days.

Dive Insight:

PJM proposed the changes after analysis showed that a comparable rate of generator outages in the 2015-2016 winter, "coupled with extremely cold temperatures and expected coal retirements, would likely prevent PJM from meeting its peak load requirements."

The operator noted its capacity market has been successful, attracting more than 35,000 MW of new physical generation to the system since its inception in 2007. And while the market has eased the impacts of the switch from gas to coal generation, the rate of the transition is causing problems.

The "rapid transition is contributing to concerns about the performance of the generation fleet—particularly during extremely cold weather, like last January’s," PJM said.