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Emergent Energy Solutions
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  • PJM Rebates Provides Multi-Year Incentives for Energy Projects

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The Capacity Energy Efficiency Program with Emergent Energy Solutions

Emergent Energy Solutions (EES) partners with contractors and building owners who have completed energy efficiency projects and offers them the opportunity to participate in the Capacity Energy Efficiency Program. These energy efficiency projects are recognized by PJM as capacity resources and can be bid into PJM’s capacity market. PJM Interconnection operates the wholesale market for electricity in thirteen states and the District of Columbia. (To learn more about PJM please visit, www.pjm.com)

EES compensates our contractors and building owner partners based on PJM’s capacity market auction results, and so provides a means for owners to receive additional payments for energy efficiency improvements they have already completed. The energy efficiency credit dollars will vary by a projects overall impact on the electrical grid’s peak demand (KW) period. Typically the PJM credits will be about 30% of any available rebates from your local utility.

EES aggregates many smaller and intermediate projects, to achieve a scale that makes participating in the wholesale capacity market possible for all.

For further details on how EES can assist you with PJM Energy credits, please contact us

What is PJM?

PJM Interconnection, LLC is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia. PJM operates the competitive wholesale electricity market and manages the high-voltage electricity grid to ensure reliability for more than 58 million people in its geographic territory extending from New Jersey to Illinois. PJM is the largest wholesale electricity market in the world and handles over $40 billion of electric transaction a year. Membership in PJM includes power generators, transmission owners, electricity distributors, power marketers and large consumers. The organization is headquartered in Valley Forge, Pa.

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The Capacity Energy Efficiency Program

To participate in the program, EES asks for your authorization to bid the demand savings (KW) achieved at your facilities into the PJM capacity market auction. Your contractor will work with EES to complete all the pre-qualification tasks related to bidding the energy efficiency project into the market. Your responsibility, as the project owner, is simply to to complete, sign and return the Capacity Rewards agreement form and provide acknowledgement of continued use of the energy efficiency project for each qualified year.

Compensation is based on the PJM Capacity Auction. While capacity auction results will vary, most newer resources that are eligible can participate in the auctions and receive compensation for up to four delivery years. Capacity rewards are paid to owners over the four delivery years. EES’ compensation is a share of the successful auction proceeds.

This program is separate from utility rebates or state incentives for energy efficiency, and taking advantage does not preclude participation in the other.

What is an Energy Efficiency (EE) Resource

PJM defines an Energy Efficiency (EE) Resource as a project that involves the installation of more efficient devices/equipment, or the implementation of more efficient processes/systems. The EE Resource must achieve a permanent, continuous reduction in electric energy consumption (during the summer peak or winter demand period). Good examples of Energy Efficiency Resources includes the installation of energy efficient LED lighting, compressed air, refrigeration & HVAC system optimization, and new construction that exceeds industry or ASHRAE standards for the site's specific jurisdiction.

What Determines a Project's Value? 

The value of an EE Resource is based upon the project’s expected electric demand reduction (kw savings) and the auction pricing results. The demand reduction is easily calculated; auction pricing always varies. Our PJM Incentive Calculator can provide you with a great starting point to determine the value of your incentives. 

What Are The Obligations of Building Owners / Customers? 

Obligations are minimal. Building owners/customers are required to sign a simple one page agreement that acknowledges that an EE project has been completed and authorizes EES to exclusively bid their energy efficiency project into PJM’s capacity market auction.
Finally, the building owner is asked to verify continued use of the energy efficient equipment. 

Who Pays the Building Owners / Customers

EES will provide payment directly to customers for the committed energy efficiency project resources that have cleared in the PJM auction. Payments are made based on the KW saved, according to the terms of agreements.

When does the Building Owner / Customer get paid? What type of payment will it be? Over what period of time will they be paid? 

Payments will be made by check from EES directly to building owner/customers. Each energy efficiency project is unique and is eligible for payment from one year to four years. The eligibility is defined in the commercial arrangement with EES. The Building Owner/Customer is paid in December of the delivery year and the following June.

Is the program the same as utility rebates or state grants and loans? 

No. This is a completely separate program from utility rebates or state incentive programs, and does not preclude participation in either of those. Much of the project detail needed by EES is similar to that required for most rebate programs. Together these programs can all improve the bottom line of energy efficiency projects.

What type of projects will qualify? 

Energy projects will qualify for energy efficiency credits if it delivers permanent reduction in operational load (KW) for any specific utility service account within the PJM territory. Projects types includes (but are not limited to) lighting, HVAC, Refrigeration, Compressed Air, LEED and other measures that reduces electrical demand on the grid during PJM’s peak hours. For more details regarding the project types and data requirements, please visit the Project Types page.

Some examples of possible projects include:

A customer completes a custom (non-prescriptive) compressed air project that incorporates a well-integrated sequencer, zero-loss drains, storage, and a new VFD compressor for $150,000. The project is able to obtain $50,000 in utility incentives for the investment. The generated PJM Credits will deliver another $10,000 to 15,000 in additional incentives.

A customer completes a lighting project that includes conversions from Metal Halide high bays and T-8 Fluorescent lighting to LED lighting throughout their facility. At the same time, the site expands and adds an additional 250,000 SQFT of warehouse space that exceeds ASHRAE’s lighting and HVAC efficiency standards for the addition. Since the utility customer both reduced and increased electrical load, this will be handled in 2 different components. On the reduction end, utility rebates and PJM Credits are obtained for the lighting upgrade as KWH and KW reduced. Since the new addition exceeds ASHRAE’s efficiency standards, the new addition is able to once again qualify for utility rebates and PJM credits based on the percent improved using ASHRAE as the baseline condition.

Types of measures that will not qualify for PJM Capacity Reduction Incentives:

  • Variable Load Devices (Individual Switched Motion Sensors or Daylight Harvesting) - These sensors and their impact on the facility's KW load will not qualify because the customer is not able to guarantee that the lighting capacity will be permanently reduced by the controlled lighting load. As an example, if individual motion sensors are installed in a commercial office building, there is no specific guarantee that all of the offices will not be occupied at the same time, therefore PJM still has to to commit a specific KW load to the facility. The same would apply to the daylight harvesting sensor. The exception to this policy is with a centralized lighting control system that is able to maintain a peak lighting load through dimming and load balancing functionality
  • Demand Response - The temporary load reduction achieved through Demand Response will not qualify. 
  • Onsite Co-Generation or Solar PV - These types of project categories deliver significant benefit to the facility, but will not qualify for load reduction as there is no guarantee that the sun will always shine or the co-gen will always run during the peak delivery period. 

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Insights from PJM's 2020 / 2021 Capacity Auction

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