PJM, the Regional Transmission Organization (RTO) that manages the delivery of electricity to New Jersey and other states, has been warning about issues related to renewable energy policies in the states in which it operates since at least 2020. Here are a few public statements from PJM about the issue.
Note that PJM does not build electricity generation or storage facilities; they merely connect those facilities to the grid that they manage and help to oversee that the region that it serves has enough electricity to meet its present and future needs. The approval, construction, and completion of these facilities is performed by energy companies and the regulatory agencies such as the New Jersey Board of Public Utilities (NJBPU) that oversee such developments. In New Jersey, the NJBPU has been tasked by the Murphy Administration to implement to 2019 Energy Master Plan (EMP) that was originally a roadmap to 100% renewable energy by 2050 but was then accelerated to 100% renewables by 2035. PJM has no input in state-level plans like the EMP.
PJM conducts annual capacity auctions, where energy providers within the PJM grid compete to provide energy to the grid. PJM chooses the lowest bidders that meet the region’s electricity needs.
2020
PJM notes low completion rates of renewable energy projects.
“Renewable energy was a relatively small share of PJM total energy and capacity in 2020 but many renewable projects are under development. While renewables currently make up the majority of both projects and nameplate MW in the interconnection queue, historical completion rates and derating factors must be accounted for when evaluating the share of capacity resources that are likely to be contributed by renewables and by thermal resources. Of the 23,095 MW of combined cycle projects in the queue, 15,849.4 MW (68.6 percent) are expected to go in service based on historical completion rates as of December 31, 2020, providing both energy and capacity at that level. Of the 129,844.9 MW of renewable projects in the queue, only 16,541 MW (12.7 percent) are expected to go in service based on historical completion rates and be available to supply energy. Of those 16,541 MW, only 6,487.5 MW (5.0 percent of the total) will be capacity, based on the average derate factors for wind and solar.”
“2020 State of the Market Report for PJM”
Monitoring Analytics, LLC, Independent Market Monitor for PJM, 3.11.2021
2021
PJM notes continued low completion rates of renewable energy projects.
“Renewable energy was a relatively small share of PJM total energy and capacity in 2021 but many renewable projects are under development. While renewables currently make up the majority of both projects and nameplate MW in the interconnection queue, historical completion rates and derating factors must be accounted for when evaluating the share of capacity resources that are likely to be contributed by renewables and by thermal resources. Of the 18,707.9 MW of combined cycle projects in the queue, 11,128.3 MW (59.5 percent) are expected to go in service based on historical completion rates as of December 31, 2021, providing both energy and capacity at that level. Of the 191,372.4 MW of renewable projects in the queue, only 24,300.6 MW (12.7 percent) are expected to go in service based on historical completion rates and be available to supply energy. Of those 24,300.6 MW, only 9,871.6 MW (5.1 percent of the total) are expected to be capacity resources, based on the average derate factors for wind and solar.”
“2021 State of the Market Report for PJM”
Monitoring Analytics, LLC, Independent Market Monitor for PJM, 3.10.2022
2022
PJM notes high level of generation retirement from 2022 to 2030.
“One of the key challenges facing the market is the high level of expected resource retirements between now and 2030. An estimated total of 51,757 MW of capacity are at risk of retirement, consisting of 6,628 MW currently planning to retire, 23,509 MW expected to retire for state and federal environmental regulatory reasons, and 21,621 MW expected to be uneconomic. This capacity consists primarily of coal steam plants and CTs. If the units at risk are replaced by new gas-fired CCs, those new units will require a significant amount of firm gas pipeline capacity. The new CC plants would require more than two BCF/day of firm pipeline capacity based on the maximum output level of the CCs.
This level of retirements is not unprecedented. Retirements during the 12 year period from 2011 to 2022 were 47,492 MW, comparable to the retirements expected over the next eight years, although the annual rate of currently expected retirements is higher. There are adequate resources in the queue to replace the retiring capacity.
Of the 12,767.4 MW of combined cycle projects in the queue, 7,799.0 MW (61.6 percent) are expected to go in service based on historical completion rates as of December 31, 2022, providing both energy and capacity at that level. Of the 216,192.4 MW of renewable projects in the queue, only 28,472.7 MW (13.2 percent) are expected to go in service based on historical completion rates and be available to supply energy. Of those 28,472.7 MW, only 13,009.8 MW (6.0 percent of the total) are expected to be capacity resources, based on the average derate factors for storage, wind and solar.
But the current challenge associated with replacing retiring resources is more significant than the issues faced in PJM over the past 12 years. Given current technology and the short time period, the retiring capacity can only be replaced by gas-fired generation, or largely replaced by gas-fired generation. Renewables can replace at least some of the energy output but cannot replace the capacity. Regardless of derating values, solar resources will not be available when the sun is not shining and wind resources will not be available when the wind is not blowing. But, given current constraints on the gas pipeline system, the potential sources of the more than two BCF/day are not clear. It is essential that the Commission, PJM, PJM stakeholders and the gas industry (transportation, storage and commodity) address the issues of gas availability.”
“2022 State of the Market Report for PJM”
Monitoring Analytics, LLC, Independent Market Monitor for PJM, 3.9.2023
PJM President and CEO Manu Asthana speaks at annual meeting, comments on the upcoming generating retirements not being replaced quickly enough.
“What Will 2030 Look Like?
Context of this work is important, he [PJM President and CEO Manu Asthana] said, which is why he asked his team to look out to 2030 – a year far enough in the future that you don’t think about it every day, and there is time to effect change, but it is close enough to develop a useful forecast.
Where might we be headed – viewed in context of the framework of PJM’s corporate strategy – to facilitate decarbonization policies reliably and cost-effectively, help build the grid of the future and foster innovation?
PJM can say with confidence that it has adequate reserves today, but the emerging longer-term picture is concerning, Asthana said.
‘On the generation side, we currently see up to 40 GW of retirements, maybe a little bit more. A majority are driven by policy, not exclusively economics,’ he said.
On the other side of the balance sheet, he said, PJM has 10 GW, maybe 15, of load that could come in from data center growth, and perhaps even further load growth from electrification.
What’s helping, he said, is that there is a large interconnection queue – more than 250 GW of new capacity applying to interconnect with PJM. However, this generation isn’t currently getting built at the pace we had anticipated.
Approved Generation Undeveloped
Asthana said there are about 30 GW with a signed interconnection service agreement – meaning they have passed through PJM’s study process – but only roughly 1,500 MW have come online this year.
‘We have this massive queue, of which a meaningful portion has been approved for development, that isn’t getting built at the pace we had anticipated,’ he said, citing supply chain challenges and other issues that are impacting the industry.
Today we are in good shape, he said, but ‘we cannot take the reliability that we enjoy in our region for granted through this energy transition; we have to take concrete steps to ensure that it will continue.’ ‘We have time, but we don’t have time to waste,’ he said. ‘We need to take action to ensure we retain an adequate supply of dispatchable generation through the transition.’”
“PJM CEO Asthana Opens 2022 Annual Meeting”
October 25, 2022
2023
PJM notes growth of electricity demand and how generation retirements continue to outpace new generation.
“Our research highlights four trends below that we believe, in combination, present increasing reliability risks during the transition, due to a potential timing mismatch between resource retirements, load growth and the pace of new generation entry under a possible “low new entry” scenario:
- The growth rate of electricity demand is likely to continue to increase from electrification coupled with the proliferation of high-demand data centers in the region.
- Thermal generators are retiring at a rapid pace due to government and private sector policies as well as economics.
- Retirements are at risk of outpacing the construction of new resources, due to a combination of industry forces, including siting and supply chain, whose long-term impacts are not fully known.
- PJM’s interconnection queue is composed primarily of intermittent and limited-duration resources. Given the operating characteristics of these resources, we need multiple megawatts of these resources to replace 1 MW of thermal generation.”
“Energy Transition in PJM: Resource Retirements, Replacements & Risks”, Feb. 24, 2023
“The results of Winter Storm Elliott in December 2022 revealed significant market design issues in the capacity market. The markets also face a challenge from high levels of generator retirements, with no clear source of replacement capacity…Although the exact numbers may vary, an estimated total of more than 50,000 MW of capacity are at risk of retirement, including announced retirements, retirements as a result of state and federal environmental regulations, and retirements for economic reasons.
“State of the Market Report for PJM, January through June 2023”, Aug. 10, 2023
2024
“One of the key challenges facing the PJM markets is the potentially high level of expected thermal resource retirements between now and 2030 with no clear source of replacement capacity…The current PJM interconnection queue does not include adequate thermal capacity to replace the potentially retiring thermal capacity.”
“State of the Market Report for PJM, January through June 2024”, Aug 8, 2024
“PJM continues to track concerns raised in the previous phase of this study – that as demand growth and thermal resource retirements accelerate and the pace of development and deployment of new resources continue to lag and may result in a shortfall in supply by 2030.”
“If the gas fleet of today remains as is, or decreases due to regulatory pressures, but additional storage resources do not get built at pace, immense pressure will be placed on natural gas to supply the ramping needs for the system.”
“Accelerating the Pace of New Entry Is Critical To Maintaining Reliability
In the near term, the pace of development of resources to replace thermal retirements while maintaining reliability must continue to be a focus. Because the future system will likely be powered by a largely intermittent and inverter based fleet, system complexity will only increase with these developments.”
“The electrification load adds additional electric vehicles (EVs) as well as additional electric heating, water heating and cooking…Additional electric heating will increase winter demand and create new risk in winter, whereas traditionally the predominance of risk is in the summer period.”
“Even with increasing polarization in seasonal utilization, flexible resources like natural gas and storage, are needed to manage system balancing and ramping needs.”
“Energy Transition in PJM: Flexibility for the Future”, June 24, 2024
For more about how the grid operates, watch “The Power Behind the Switch”
Sources
- https://www.monitoringanalytics.com/reports/PJM_State_of_the_Market/2018/2018-som-pjm-volume2.pdf
- https://americaspower.org/reliability-challenges-facing-pjm/
- https://www.ferc.gov/sites/default/files/2020-05/05-17-18.pdf
- https://psc.ky.gov/pscecf/2022-00402/[email protected]/07142023055115/ESM-4_D_energy-transition-in-pjm-resource-retirements-replacements-and-risks.pdf
- https://www.pjm.com/-/media/DotCom/library/reports-notices/special-reports/2023/energy-transition-in-pjm-resource-retirements-replacements-and-risks.ashx
- https://insidelines.pjm.com/pjm-publishes-2022-annual-planning-report/
- https://www.countoncoal.org/2023/03/pjm-sounds-the-capacity-shortfall-alarm/
- https://www.pjm.com/-/media/DotCom/library/reports-notices/special-reports/2024/20240624-energy-transition-in-pjm-flexibility-for-the-future.pdf
