Largest U.S. grid operator can comply with rule — study

Source: Hannah Northey, E&E reporter • Posted: Monday, September 5, 2016

The nation’s largest grid operator said it could comply with U.S. EPA’s Clean Power Plan while acknowledging its findings were based on unknowns about future nuclear reactor closures and gas pricing forecasts.

PJM Interconnection LLC, which spans 13 Mid-Atlantic and Midwest states, said in an analysis that power plants within its jurisdiction could comply without skyrocketing costs. PJM found the price of compliance would range from 1 percent to 3 percent of average wholesale electricity costs.

PJM conducted the study using confidential data from energy companies throughout the region and modeling a base case — one in which the Clean Power Plan didn’t exist — and seven possible compliance pathways state agencies might follow.

In all cases, PJM found power supplies would be adequate. It also said a regional approach would be cheaper than states pursuing separate plans.

PJM found that gas prices, should they continue to hover around $3 to $4 per million British thermal units for the next two decades, could drive the retirement of nearly 30 gigawatts of coal-fired generation and the addition of 35 GW of natural gas combined-cycle capacity. That would allow the region to comply with the rule more easily.

The grid operator also found its existing nuclear plants would become more profitable as time went on, coal plants would shutter and the value of carbon-free power would grow.

“Because of accelerated retirements, there would be no cost to achieve compliance, and the resulting emissions would be below the final Clean Power Plan targets, even without the Clean Power Plan,” wrote PJM.

But the operator also outlined the uncertainties that underlie such reports by including “sensitivities,” essentially changes in assumptions that alter the study’s outcome.

If nuclear plant operators, for example, make business decisions based on short-term economics, PJM found it could lose 6 GW of nuclear power by 2022.

PJM decided to plow ahead with studying the Clean Power Plan earlier this year despite a Supreme Court stay. Members of the Organization of PJM States Inc., which include utility regulators from 14 jurisdictions, requested the analysis (EnergyWire, March 11).

The Clean Power Plan aims to reduce power plants’ carbon dioxide emissions 32 percent below 2005 levels by 2030. For each state, the rule establishes a target emissions rate, or the amount of CO2 that could be emitted per megawatt-hour.