PJM Expects Peak Demand To Grow More Slowly Than Previously Forecast

January 20, 2014

PJM said it expects peak demand to grow more slowly than previously forecast, increasing at an average annual rate of 1 percent over the next decade as opposed to the 1.3 percent that was projected a year ago.

In its 2014 Load Management Report, PJM said the primary reasons for the change are “(r)evisions to historical economic data and the addition of another year of load experience to the model.” Specifically, the revisions were attributed to more current data from the U.S. Department of Commerce – which, as it gets new information, updates many of the values PJM uses in its forecasts – and to economic projections the RTO uses from Moody’s Analytics.

PJM Chairman John Reynolds explained that the restatement of the federal economic data made “the recent recession a little less deep and the recovery a little faster than data used in last year’s forecast.”

Even with the new forecast, however, PJM said the growth rate is sill consistent with projections from the U.S. Energy Information Administration (EIA) and other RTOs, which have also dropped their peak demand predictions. EIA has predicted annual demand growth will be 0.9 percent across the country.

Highlights of the report related to summer peak demand and load growth include:

• Peak demand for summer 2014 is expected to increase by 2,214 MW, or 1.4 percent, to 157,399 MW compared to the weather-normalized summer peak of 155,185 MW for 2013.
• Summer peak load growth is projected to average 1 percent per year over the next 10 years, and 0.9 percent over the next 15 years.
• Summer peak will be about 173,852 MWs in 2024, which is a 10-year rise of 16,453 MWs. The peak is expected to reach 180,137 MW in 2029, for 15-year growth of 22,738 MWs.
• Compared to last year’s estimates, the 2014 summer peak forecast shows a reduction of 1,318 MW, or 0.8 percent, for the next delivery year (2014); a reduction of 2,777 MW, or 1.7 percent, for the next Reliability Pricing Market auction year (2017); and a reduction of 3,457 MW, or 2 percent, for the next Regional Transmission Expansion Plan study year (2019).

Among the estimates for winter are:

• Peak load growth is forecast to average 0.9 percent annually over the next 10 years and 0.8 percent over the next 15 years.
• Peak load in 2023-24 is projected to be 144,496 MW, which represents a 10-year increase of 12,777 MW.
• Peak load in 2028-29 is expected to hit 148,423 MW, for a 15-year increase of 16,704 MW.

The report also noted that individual zones could see their annual load growth rise by anywhere from 0.4 percent to 1.8 percent in the coming decade. For example, Allegheny Power Systems added between 80 and 120 MW to serve facilities for hydraulic fracturing, the process by which natural gas is extracted from shale; an “undisclosed” project from Baltimore Gas & Electric Co. that is now being built will add from 120 to 315 MW to the summer peak; and “substantial” ongoing growth in Dominion’s data center construction could add from 288 to 896 MW to the summer peak.

On the other hand, RTO Insider reported: "The closure of the Ormet Corp. aluminum smelter in Hannibal, Ohio — the largest single load in PJM — reduced the summer peak by 370 MW in all years."