Report, Scaling Clean: Assessing Market Options for Clean Energy and Capacity in PJM

PJM, the regional transmission organization (RTO) covering 13 states and the District of Columbia, is considering significant changes to its market rules. This 2022 report from RMI, reviews two clean energy market designs under consideration, a Forward Clean Energy Market (FCEM), and an Integrated Clean Capacity Market (ICCM), and makes recommendations.

The FCEM would help harmonize the requirements of many different Renewable Portfolio Standards (RPS) across different states, with their accompanying targets and definitions of RECs, thereby finding more efficient resources allocations than different RPS auctions. The ICCM would integrate clean energy resources into the capacity market — which, generally speaking, pays generators to “be on call” to deliver a specific wattage of energy when the grid operator needs them. RMI finds that many clean energy projects currently receive no compensation from capacity markets. By integrating these projects’ capacity value into a bid for their renewable attributes, RMI projects that the ICCM would lower system costs while substantially reducing emissions.

Though written specifically for PJM, these findings may be edifying for other ISOs and RTOs considering the role that renewable energy can play in future markets.