Natural Gas Part of Solution To Policy-Driven Retirements That Are Threatening Firm Capacity In PJM’s Market
Mandated retirements of thermal generation and a backlogged review process for new entries on the grid is hurting PJM Interconnection’s ability to meet growing demand through 2030 and threatening reliability in the nation’s largest interconnected market, according to a recently published PJM report.
The solution: more natural gas and renewables.
Natural Gas To Support Renewables
A total of 40 gigawatts (GW) – enough to power 30 million homes – of PJM’s current installed capacity is at risk of retirement by 2030, with 25 GWs going offline because of multiple states’ climate policies. The retirements come as PJM projects energy demand to grow 1.4 percent overall through 2030, with individualized zones of high-consuming data centers, combined with overall electrification, reaching as high as 7 percent annual growth.
To guarantee an adequate level of generation resources, PJM’s report plans a path forward through a combination of renewables and natural gas generation.
The 9 GWs of natural gas is noted as an economic and competitive fuel to maintain resource adequacy and would balance the 17 GW of “intermittent and limited-duration [renewable] resources” that are in PJM’s balance sheet.
A total 290 GW of energy generation is stuck in an interconnection queue with a historically low completion rate of 5 percent. If the trends towards high load growth, increasing rates of generator retirements, and slower entry of natural gas and renewable resources persist, PJM warns it might deplete capacity reserves for the 65 million people across its 13-state territory for the first time in its history.
There are 3.8 GW of market entry from under-construction natural gas resources that are estimated to be completed in the next year, but it remains unclear what percentage of the total 17.6 GW of natural gas generation in the queue will move forward at this rate. This uncertainty is contributing to overall reliability problems, as explained by the report:
“If significantly more natural gas capacity reached commercial operation it could help avoid reliability issues.”
Barriers to increased natural gas capacity are the same policies that have contributed to increased thermal generation retirements. Policymakers continually propose ambitious climate goals while ignoring firm generation requirements. PJM does not have the authority to force power plants to stay open, and policymaker’s incentives towards large-scale renewable projects have flooded the renewables sector with money, meaning the gap in energy between capacity and demand increases as submissions to the interconnection queue balloon, inundating grid managers, and resulting in projects being delayed.
Researchers warn that lawmakers’ ambitious climate laws are running into a reality that could actually increase emissions as solar and wind get stymied by a transmission problem and existing, older thermal generation runs more frequently to keep up with increased electrification of the economy.
Bottomline: Policymakers have ignored firm generation requirements that meet their future needs and their climate goals by disregarding natural gas generation to focus solely on renewable energy. The result has contributed to a bottleneck in bringing any new energy generation online and is threatening regional reliability in PJM’s interconnected marketplace.