PJM Grid Generation Outlook to 2040

From an Article by Chloe Holden, Green Tech Media, May 20, 2019

Solar and wind have struggled to compete against a flood of cheap natural gas in the largest U.S. wholesale power market, operated by PJM, the Pennsylvania-Jersey-Maryland Interconnect System which includes the electrical grid in the middle Atlantic states even WV, Ohio, Indiana, and VA.

Interconnection queue requests across all the major North American markets show that over 90 percent of new requests now consist of solar, wind and storage. This is the result of state-level policies and declining costs.

Even in PJM, where natural gas has dominated the generation queue, new requests are now giving way to wind, solar and battery storage projects. (PJM is the country’s leader for front-of-the-meter storage, though it will likely be overtaken by California in 2020.)

However, as utilities replace retiring coal assets in PJM, coal capacity has been replaced at almost a one-for-one rate with new combined-cycle natural-gas generation. Over the last several years, 29 gigawatts of retiring coal plants in PJM have been replaced with 23 gigawatts of natural gas, according to a recent Wood Mackenzie Power & Renewables webinar.

PJM Generation Outlook (GW) is shown the color graphic insert above.

PJM’s natural-gas plant building boom has been centered in northeast Pennsylvania, with additional recent activity in southwest Pennsylvania, West Virginia and eastern Ohio, near natural-gas resources. Operation costs are low and gas supplies plentiful, driving the cost of electricity down.

Because of this plentiful natural gas, wind and solar are not yet competing with natural gas on price in PJM when it comes to replacing coal. Wood Mackenzie’s analysts contrasted PJM with Texas’ ERCOT territory, where wind and solar dominate the generation queue.

In ERCOT, plenty of coal plants have been retired, including 4 gigawatts in 2018 alone. Prices in ERCOT’s energy-only market are not consistently high enough to make the market attractive for new natural-gas development. Wind and solar are picking up the slack; even small solar installations under 1 megawatt have flourished, nearly doubling capacity in just two years from 2016 to 2018.

With PJM’s natural-gas boom in full swing, will the region be locked into natural-gas generation for the lifetime of today’s new plants?

Wood Mackenzie analysis for 20 years out suggests gas will continue to make up around 40 percent of the generation mix, barring dramatic changes to how the energy mix is determined. Resources still must compete in an open market, and PJM holds a forward capacity auction three years in advance. (This year’s 2022/2023 Base Residual Auction will be held in August 2019.)

While front-of-the-meter renewables struggle to gain ground relative to natural gas in PJM due to low prices, one area to keep an eye on is flexibility and distributed energy resources in PJM. Organizations like the Solar Energy Industries Association argue that to level the playing field in PJM, grid operators will need to evolve power markets in order to take advantage of “inverter-based resources.”

Distributed Energy Resources (DERs)

Recent developments have shown what’s possible, as changes to wholesale markets are poised to bring more storage and DERs into the mix in the independent system operator and regional transmission organization footprints. FERC Order 841 has nudged market operators to take a closer look at storage, although the commission still has to rule on the pending DER proceeding.

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See Also: PJM and Argonne National Laboratory Collaborate to Study Guidelines for Solar Resources, PJM News Release, April 2, 2019

Pleasants Station on Ohio River generates fog

Distributed by the American Petroleum Institute (API), May 8, 2018

WASHINGTON – An unusual coalition representing natural gas, power, renewable energy and energy efficiency industry associations submitted a legal analysis to the Department of Energy (DOE) late Monday opposing federal use of emergency authority to provide a long-term subsidy for aging and uneconomic power plants that would otherwise retire. Such federal action is under consideration following a request from FirstEnergy Solutions (FES), an owner of power plants now in bankruptcy proceedings.

The industry groups’ legal analysis notes that the Federal Energy Regulatory Commission recently rejected a similar proposal from DOE and initiated a broader review of electric power system “resilience” to determine whether any change in market rules is needed. FES has since petitioned DOE to use its emergency powers under Section 202(c) of the Federal Power Act to prevent the company’s power plants from closing, and others have pointed to even more obscure statutory provisions to seek similar action.

The analysis refutes that an “emergency” exists requiring the use of emergency authorities, pointing out that none of the referenced emergency authorities appropriately apply to the requested relief for power plants whose retirements do not threaten the reliability of electric power.

The legal analysis makes the following key points:

1. The orderly retirement of inefficient, aging power plants in 2020 and 2021 does not constitute an emergency. “FirstEnergy’s claim that an emergency exists rests entirely on the observation that some coal and nuclear plants – most importantly those owned by FirstEnergy – are losing money and are therefore likely to retire in the coming years. That is not an emergency. The retirements [First Energy cites] will unfold over a period of years and will be carefully planned.” (page 3)

2. Further to this point, the paper quotes grid operator PJM Interconnection’s recent response to FirstEnergy’s petition: “…the PJM Transmission System will remain reliable and therefore the generating units listed above may plan to deactivate as scheduled.” (page 3)

3. DOE must reject FirstEnergy’s petition under Section 202(c) to provide above-market pricing to power plants. “Section 202(c) authorizes the Department to order generators to run during times of war or other emergencies … The orderly retirement of power plants in PJM will unfold over a period of years and in the context of ample supply of generating capacity. There is no ‘emergency’ that could serve as the basis for using … Section 202(c).” (page 5)

4. “FirstEnergy’s petition seeks to stretch Section 202(c) far beyond what its text can support… It does not give the Department authority to set national energy policy or to advantage one type of fuel for electric generation over others.” (page 5)

5. The Defense Production Act does not contain authority to provide above-market pricing to power plants. “The Defense Production Act allows certain types of market interventions that are rare in American law. Even so, as broad as it is, the DPA is not broad enough to do what the supporters of these uneconomic power plants would like. The DPA does not allow the government to set prices. Nor does it allow the government to force market participants to buy products or services they do not wish to buy.” (page 7)

6. Section 215A of the Federal Power Act authorizes only temporary measures in response to grid security emergencies. The 2015 FAST Act added Section 215A to the Federal Power Act authorizing DOE to issues emergency measures in response to a ‘grid security emergency,” defined as cyberattacks, EMP attacks, geomagnetic storms and direct physical attacks with significant adverse effects on the reliability of critical electric infrastructure. “The retirement of coal and nuclear plants would not, of course, fit within any of these categories.” (page10)

7. “Orders for ‘emergency measures’ may last only 15 days before an additional emergency finding is required. The 15-day limitation shows clear that … Congress meant them in the ordinary sense that emergency measures are temporary and short-lived. FirstEnergy’s request that certain favored power plants receive rate recovery for four years…would far exceed an authority limited to providing temporary, emergency relief.” (pages 11-12)

The white paper is available here.

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Association Media Contacts: Advanced Energy Economy: Monique Hanis, mhanis@aee.net), American Petroleum Institute: Michael Tadeo, tadeom@api.org), American Wind Energy Association: Evan Vaughan, evaughan@awea.org), Electric Power Supply Association: Nancy Bagot, nbagot@epsa.org), Interstate Natural Gas Association of America: Cathy Landry, clandry@ingaa.org), Natural Gas Supply Association: Daphne Magnuson (daphne.magnuson@ngsa.org).

Black = Proposed & Gray = Existing

From an Article by Stephen Huba, Pittsburgh Tribune-Review, July 27, 2017

Natural gas is on pace to either equal or exceed coal as a source of electricity for the second year in a row, says the U.S. Energy Information Administration.

Coal and natural gas generated 30 percent and 34 percent of U.S. electricity in 2016, respectively — the first year that natural gas-fired electricity generation exceeded coal-fired generation. EIA projections show that natural gas and coal will each generate 31 percent of the electricity in the United States in 2017.

The federal government report comes at a time of growth in the number of gas-fired power plants in Western Pennsylvania and Eastern Ohio. The 925-megawatt Tenaska Westmoreland Generating Station in South Huntingdon Township will supply power for up to 925,000 homes once it comes online in late 2018.

For the first four months of 2017, coal has provided 30 percent of electricity generation, while natural gas has provided 28 percent, the EIA said. The amount of natural gas used for electricity generation, known as power burn, from April 1 through July 25 averaged 27.1 billion cubic feet — or 7 percent lower than last year’s consumption over the same period, the EIA said.

Although power burn in 2017 is lower than in 2016, it is still relatively high compared with the previous five-year average for that period, the EIA said. Higher natural gas prices relative to last summer and reliance on renewable sources explain part of the decrease.

Power burn reached its highest daily level so far in 2017 during the past week, exceeding 41 billion cubic feet on July 20, according to data from PointLogic Energy. Natural gas-fired electricity generation typically peaks at the end of July or the beginning of August because of high demand for air conditioning during that period.

In addition to Tenaska in Westmoreland, several other gas-fired power plants are at various stages of development in the region. In January, Boston-based developer Clean Energy Future announced that it was building a second plant in Lordstown, Ohio, next door to the 940-megawatt plant that is scheduled to go into service in June 2018.

In Wellsville, Ohio, Advanced Power Services is building a 1,100-megawatt plant that will provide enough energy for an estimated 1 million homes once it comes online in 2020.

Also under development are plants in Renovo Borough, Clinton County (Bechtel Development Corp.); Cumberland Township, Greene County (Hill Top Energy Center); and Robinson Township, Washington County (Robinson Power Co.).

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Pennsylvania NatGas-Fired Power Plant to Break Ground in 2018

From an Article by Jamison Cocklin, Natural Gas Intelligence, July 27, 2017

The developer of a 950 MW natural gas-fired power plant in central Pennsylvania is expected to break ground on the $800 million project sometime next year.

Clinton County officials said Renovo Energy Center, which was announced in 2015, is on track to start construction in 2018. Renovo two years ago filed an application with the state Department of Environmental Protection. Bechtel Corp.’s infrastructure and financing arm, Bechtel Development Co., is behind the project. The combined-cycle facility is to be a dual-fuel facility that would use ultra-low sulfur diesel to generate electricity during gas supply interruptions.

The plant is to be sited on a 68-acre former rail yard site in Renovo, PA. Construction is expected to employ up to 500 people, with another 30 employed full-time after it enters service. Construction is expected to take more than two years. Renovo Energy plans to sell electricity into the wholesale market.

In addition to the turbines and steam generators, the proposed facility would include two auxiliary boilers, two emergency generators, an emergency firewater pump and a natural gas heater. The boilers and heater would only burn pipeline quality natural gas, the company said in its plan approval application. The emergency firewater pump and emergency generator would utilize the diesel fuel oil.

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Gas-fired power plant in Lawrence County back on track

From an Article by Sara Welch, Shale Gas Reporter, August 23, 2017

Following a long delay, a natural gas-fired poweplant in western Pennsylvania’s Lawrence County could be back on track.

A 900-megawatt Hickory Run Energy plant in North Beaver Township was first proposed by LS Power Development in 2013, costing $750 million. The project stalled and was purchased by a subsidiary of Japan’s ITOCHU Corp. in 2016.

After purchasing the facility Tyr Energy upped its plans to 1,000 MW, and hoped to have the paperwork and financing completed midway through 2017 to start construction. South Korea’s KB Asset Management has agreed to invest $150 million in the project which will now cost $863 million.

See also: More Places to Burn Natural Gas – A FracTracker Article