Usually when PJM's Western Hub sees hourly real-time Locational Marginal Prices (LMPs) above $1500/MWh, it is because the system is experiencing high levels of demand driven by hot or cold temperatures or extreme gas prices. So why then with a peak load of 108 GW (well below the summer peak of 162 GW on July 2) did we see such an extreme real-time price spike on October 13?
Yes Energy PowerSignals, Time Series Analysis
A natural place to look would be net load — defined as load minus solar and wind generation. But that was also at a much lower level relative to a typical summer peak: 104 GW vs 154 GW. To be sure, temperatures were hot across the regional transmission organization (RTO) footprint, but another major factor played a pivotal role - seasonal generator outages.
Yes Energy PowerSignals, Analytical Price Map, Max Temperature in Degrees Fahrenheit
October Is Outage Season
From a climate perspective, the week of October 12 has a median expected load peak of 95 GW and a 90th percentile load peak of 104 GW. This makes it an ideal time for generators to go offline after being heavily utilized during the summer and before they are called upon to meet winter heating demand. In fact, this time of year is often referred to as shoulder season or outage season for that reason.
Yes Energy PowerSignals, Forecast Analysis Module
We can see this pattern reflected in PJM's published generation outage schedules. PJM reported 46 GW of planned outages and 60 GW of total outages on October 13. Contrast this with the middle of summer from June through September where there were 0 GW of planned outages and fewer than 30 GW of total outages each day.
Yes Energy PowerSignals, Time Series Analysis
Effective Load vs Net Load
With so much generation on outage, the system is left with a much smaller pool of generators to call on at the same levels of net load. We can capture that combined effect by summing up the generation on outage value with the net load value to calculate something called effective load. From that vantage, we can see that October 13 was actually comparable to days like July 2 (169 GW effective load peak), July 3 (163 GW effective load peak), and September 16 (162 GW effective load peak) which all saw real-time LMPs spike above $1500/MWh.
Yes Energy PowerSignals, Time Series Analysis
PJM’s Highest Effective Load Days Since 2016
In fact, querying Yes Energy's historical power market database on Snowflake reveals that the effective load forecast of 167 GW was the 12th highest in PJM since 2016. Of the top 25 effective load peak days, only five others had a net load forecast below 110 GW and two of those days were before 2020 when wind and solar generation in PJM began to really take off.
Source: Yes Energy's market database on Snowflake
One of the key value adds of Yes Energy's market data and visualization tools is the ability to track changes in market forecasts over time. Using that vintaging capability, we can see that PJM was well aware of the impact of planned generator outages on the market. Originally, PJM's 6 day ahead forecast anticipated 54 GW of planned outages. By Saturday, that dropped to 48 GW and finally 46 GW as the RTO called on all generators to return to service if they were able. This lines up with PJM's initial issuance of a Capacity Advisory followed by a Maximum Generation Alert.
Yes Energy PowerSignals: Time Series Analysis
MISO Was Running Tight, Too
And PJM wasn't the only market in the Eastern Interconnect experiencing tight real-time margins. The Midwest ISO's (MISO) peak effective load of 135 GW on Tuesday October 13 blew past the recent record of 133 GW set in August 2023, triggering a Conservative Operations declaration. Unsurprisingly, real-time energy prices at Indiana Hub were almost $1000/MWh – less extreme than spikes in PJM but certainly high enough to limit the quantity of imports available to relieve PJM's energy shortage.
PowerSignals: Time Series Analysis
What To Watch
Given the combined impact of hot weather and elevated levels of generation on outage, it is much less of a surprise that real-time prices spiked than if we look at either variable independently. And with high temperatures expected through Wednesday, we could see continued volatility in the market. Want to be ahead of the curve when it comes to market events like this one? Book a demo with Yes Energy.
