Andrew Ott became president and chief executive of PJM Interconnect late last year. The Energy Times recently caught up with Ott for a wide-ranging conversation about PJM and the industry. This is the last of a two-part series.
ENERGY TIMES: To what extent will you have to totally redesign and transform your 72,000 miles of PJM transmission lines as the generation mix continues to change?
OTT: As we get more distributed assets, that puts more pressure on the distribution system. From a transmission perspective, we are looking at a flat load growth or moderately increasing load growth, currently 0.6 percent per year. We’re not exactly flat or negative in the PGM region as you see in some other regions.
ENERGY TIMES: As you look across your market, how big is demand response today and how will the Supreme Court decision upholding FERC order 745, allowing the federal government to regulate demand response affect PGM going forward?
OTT: We’ve had enormous success with demand response in PJM. PJM has the largest amount of demand response in the world. We continue to have on the order of between 11,000 and 12,000 megawatts of demand response committed each year. As I look forward in demand response, what we’re seeing is more and more innovation where demand response is coupled with distributed storage or distributed resources like solar.
ENERGY TIMES: How fast are renewables growing in the PJM territory?
OTT: More moderately than you hear elsewhere. Certain areas of our markets are seeing a growth in distributed solar because of state programs. We have about 7,000 megawatts of wind in the market. We have about 2,000 megawatts total of solar.
ENERGY TIMES: How popular are microgrids in PJM?
OTT: The growth rate is certainly an emerging area. There are several different drivers. Certainly in the eastern part of our market, resiliency is the goal, particularly after Hurricane Sandy. Another concept is the deployment of demand response co-located with distributed resources. This really gave us an opportunity to have a greener footprint, without giving up flexibility.
ENERGY TIMES: One concept that’s getting a lot of buzz is transactive energy or real-time pricing on energy as it flows around the grid. What do you think the potential of that might be to PJM and other ISOs?
OTT: PJM is somewhat of a front runner there. Out of our 13 states and the District of Columbia that we cover, eight or nine have competitive retail pricing. For the past 10 years, a significant number of industrial customers had real-time pricing. We’ve had a lot of experience with responsiveness to real-time pricing. As we look at transactive energy, it’s really extending wholesale market real-time pricing down to the distribution level and more residential or small commercial customers. But electric prices collapsed over the past 18 months. That has really moderated any discussion of real-time price because prices are so low customers don’t see the need to curtail. The technology is there but the incentives aren’t.
ENERGY TIMES: What do you make of the New York REV changes?
OTT: New York REV and how that evolves is of interest because it’s one method of opening up the distribution system to get an alternative way to run it.
ENERGY TIMES: In late December PJM reported plans to spend $490 million on transmission capital expenditures. What will that help you achieve?
OTT: That number is actually down considering the past years, when we had a much higher number. Every six months we refresh our 15-year regional transmission plan. Most of the drivers in that number are localized projects. Load growth has been moderating. Flows on the transmission grid have been affected by significant retirement of coal units and significant additions of gas generation.
ENERGY TIMES: How does it feel to be at the help of PJM?
OTT: It actually feels great. It’s a very exciting time in the industry, and certainly Terry Boston was a good teacher. Coming from within the organization, I certainly feel some continuity.