If your business operates within the PJM energy market, you’re part of an exclusive energy sector serving 65 million people across 13 states and D.C.
What is PJM exactly? It’s like an air traffic controller for electricity, ensuring power gets from where it's generated to where it's needed. Managing the flow of electricity in such a large part of the country makes PJM a major player in the U.S. energy market.
For businesses in this area, understanding PJM’s role is important because it directly impacts how you manage your energy needs and costs.
PJM States
What once covered “Pennsylvania, Jersey, Maryland”, PJM now covers these states:
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Understanding PJM’s Energy Landscape
The PJM energy landscape is anything but straightforward. With its complex capacity market and grid constraints, energy procurement here means dealing with some unique challenges. The capacity market is designed to ensure long-term reliability but charges based on peak demand. It's like paying a premium during rush hour—annoying, right? And with data centers eating up more power, the stakes are higher.
Erin Schmerschneider, Pilot Energy’s Director of Energy Advisory and an expert in the PJM market, explains, "If you are a user who can't afford a power outage, you need to plan for potential grid constraints and ensure reliability and resiliency in your energy strategy. Utilities are working to upgrade infrastructure to prevent blackouts and brownouts, but this takes time.”
This means businesses must proactively plan for these challenges to avoid power outages and ensure uninterrupted operations.
PJM’s Capacity Market & Management Strategies
Gaining an understanding of capacity charges is key to keeping energy costs down. Since these charges are the "second largest item of consideration" after commodity purchasing, strategic planning is essential.
Here are several strategies to help you manage peak demand charges effectively:
• Increase Energy Efficiency: Upgrade to better equipment, improve insulation, optimize HVAC systems, and switch to LED lighting to cut down on overall electricity use.
• Engage in Demand Response Programs: Join these programs to reduce electricity during peak times and earn incentive payments that could save you thousands each year.
• Switch to Off-Peak Hours: Schedule heavy energy-using activities during off-peak times when rates are lower to save on costs and reduce demand charges.
• Go Solar On-Site: Install solar panels to lessen reliance on grid electricity and hit those sustainability goals.
• Store Energy with BESS: Use Battery Energy Storage Systems to store power during low-demand periods and use it during peak times, especially effective when paired with on-site solar.
Real-Life Example
Pilot Energy is currently partnering with a manufacturer in Eastern Ohio to develop a solar project on unused farmland. This initiative demonstrates the effectiveness of tailored, localized solutions in mitigating peak demand charges by considering specific timings, financial returns, and local incentives.
Benefits of Local Energy Procurement Strategies in PJM
When it comes to energy procurement strategies, a one-size-fits-all approach just doesn’t work in PJM. By understanding the specifics of each state within PJM, businesses can optimize their energy procurement and management practices.
Some key benefits include:
• Save More: Tailoring strategies to state-specific transmission costs and regulations can lead to significant cost savings.
• Stay Compliant: Customized strategies ensure compliance with each state's renewable portfolio standards (RPS) and other regulations, leveraging unique incentives and rebates.
• Boost Sustainability: Localized approaches align better with state-specific renewable energy targets, contributing to broader sustainability goals.
• Run Smoothly: By focusing on regional climates and infrastructure, businesses can improve operational efficiency and resilience against local energy challenges."Knowing how regional characteristics differ can help businesses focus on reducing transmission costs in high-cost areas like New Jersey while adopting different strategies in states like Illinois," Schmerschneider explains.
What’s Next for PJM?
The PJM energy market is evolving to boost grid reliability with major capacity market reforms. These changes are set to tackle the growing energy demands from the surge in data centers and the broader shift towards electrifying transport and industry. The reforms aim to improve how we measure and model capacity, ensuring the grid can handle rising electricity needs, especially during peak times.
Businesses need to be ready for these changes by adopting flexible and forward-thinking energy procurement strategies.
That’s exactly where Pilot can help. Our team has decades of experience navigating the complexities of regional energy markets. We stay ahead of industry trends and regulatory changes by attending regional trade shows, conferences, and keeping up with the latest trade publications.
Pilot Energy As Your Partner In Energy Procurement
Founded in 2001, Pilot Energy is an unbiased and independent energy procurement advisor that empowers leaders to confidently know when, where, and how much energy to purchase by leveraging our unique blend of industry knowledge and innovative digital platforms. Putting our know-how to work daily, we drive clarity and control in decision-making and take pride in providing unparalleled personalized service. Guiding businesses with strategic innovation while committing to sustainable solutions.
Reach out today to learn about our regional energy procurement and management expertise.
