Load Forecasting

Predicting Electricity Demand Supports Grid Reliability & Efficiency

Predicting the demand for electricity helps ensure that consumers have a reliable supply of power today and in the years ahead. Making these predictions – called load forecasting – is a job PJM does routinely.

Load forecasting helps PJM make decisions about how to operate the bulk electric system and plan for upgrades. The goal is to ensure an adequate supply of power for reliable service at the most reasonable cost. PJM members also use forecasts to make decisions about competing in power markets in the near term and about investing in new plants and equipment over the long term. Some factors in load forecasting are predictable, like power usage in large data centers that are highly automated and have predictable usage patterns. Other factors require forecasters to adjust their models to reflect unexpected changes in human behavior, as with the reduction in demand caused by the coronavirus pandemic.

Long-Term Forecasting

Each year, usually in early January, PJM issues an updated long-term forecast for the PJM region. This report provides a 15-year load projection: peak usage, net energy consumption, load management and data on distributed solar generation and plug-in electric vehicles. Forecasts are provided for individual zones, load deliverability areas and for the RTO overall. This forecast supports some key activities:

• Capacity Market: The long-term load forecast is a major input into PJM’s Reliability Pricing Model (RPM), more commonly known as the capacity market. PJM uses the RPM to secure electricity supplies – and commitments to curtail usage in emergencies – three-years ahead of when they’re needed.
• Regional Transmission Expansion Plan: Planners factor the long-term load forecast into PJM’s Regional Transmission Expansion Plan (RTEP), which evaluates the need for enhancements to the high-voltage transmission system up to 15 years in the future.

Short-Term Forecasting

PJM regularly prepares a short-term projection of power consumption. Forecasters generally focus on the upcoming week, aiming to keep their projections to within a range of 3 percent above or below actual usage. PJM prepares two primary short-term products:

• Hourly Forecast: looks seven-days ahead. It is often used by members in planning their bidding strategies in the Day-Ahead and Real-Time power markets.
• Five-Minute Forecast: looks six-hours ahead. This forecast is used by PJM’s Security Constrained Economic Dispatch tool, which helps operators dispatch power plants from moment to moment in the most economic order across the region, as they continuously balance the supply of electricity with the ever-changing demand.

Key Factors

The graph above shows the reduction in the PJM peak demand forecast over the last eight years. This reduction is primarily due to three trends that have emerged over this time period. The first trend is the shifting of load from the manufacturing sector to the less energy-intensive services sector. The other two trends are the increasing adoption of more energy-efficient appliances and processes by end users, and the addition of significant amounts of behind-the-meter solar generation such as photovoltaic panels across the PJM footprint.

• Weather: Temperature, humidity, cloudiness and wind conditions are among the most significant components in setting the short-term load forecast. A heat wave will spur consumers to run their air conditioners more and drive up the demand for power. Similarly, a period of extreme cold will prompt consumers’ heating equipment to run more often. Moderate weather in the spring and fall tends to minimize the use of such equipment and reduces the demand for power.
• Day of the Week: The load forecast can differ significantly between a weekday – when many people are at work or school and electricity usage is high – and a weekend day or holiday, when many businesses are closed and usage is typically lower.
• Economic Trends: In preparing the long-term forecast, planners examine the state of the economy. The amount of electricity needed by commercial and industrial users is a major factor in overall demand. In a vigorous economy, manufacturers with electricity-intensive machinery will likely consume more power than when the economy is slack.
• End-Use Trends: PJM planners examine the volume and efficiency of electric-powered equipment that consumers have in service and that they plan to install. This includes central air conditioning, heat pumps, lighting and major appliances – water heaters, refrigerators, freezers, washers and dryers.
• Rooftop Solar: Solar panels and other types of generation installed on the customer’s side of the electric meter can reduce the amount of electricity the customer draws from the grid. Knowing this capacity helps PJM develop accurate forecasts.
• Plug-In Electric Vehicles: Charging a battery-powered car requires a significant amount of electricity, in some cases the equivalent of half the power needed for an entire home. As consumers buy increasing numbers of plug-in electric vehicles, the bigger impact they have on the grid. As a result, PJM planners factor the proliferation of these vehicles into their forecasts.

Load forecasting is complex, dynamic and an important part of PJM’s mission to supply reliable electricity to the 65 million people in the PJM region.