Thursday, August 29, 2024

Sen. Yaw To Introduce Bills To Establish PA Baseload Energy Development Fund Based On Texas Model; And Have One Permit For Power Plants

On August 28, Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee, announced he
would be introducing legislation to establish a Pennsylvania Baseload Energy Development Fund.

The Fund would provide low-interest grants and loans to finance the construction, maintenance, modernization and operation of electric generation facilities.

On August 29, Utility Dive also quoted Sen. Yaw as saying he planned to introduce a companion bill that requires a single “statute of limitations” for all of a power plant project’s permits.

“What happens is you get one permit, and then the groups that are opposed will delay things so that by the time you get to the end of the permitting process, the first permit has run out,” Sen. Yaw said.

Having a single statute of limitations on the permits would give project developers more certainty about the legal status of their permits, Sen. Yaw said.  Read more here.

“Pennsylvania alone supplies nearly 25% of baseload electric generation capacity to the grid,” Sen. Yaw said. “We must play a more active role in incentivizing generation and addressing looming reliability challenges with market-based solutions. The Pennsylvania Baseload Energy Development Fund can help us supply the grid with reliable, cost-effective energy, as well as the infrastructure and workforce to maintain it.”

Sen. Yaw has not released the actual language of the legislation, but said his Energy Fund will be modeled after the Texas Energy Development Fund, which he said has been successful in attracting baseload electric generation capacity. 

Initially funded at $5 billion of taxpayer money, the Texas fund was increased to $10 billion due to overwhelming response.

As reported by Utility Dive, the initial $5 billion Texas Energy Fund would fund loans to cover 60% of project costs for at least 100 MW that can connect to the Texas ERCOT grid before June 1, 2029.

More than 150 proposals were received for the funding in Texas, including 41 GW of mostly natural gas-fired generation. 

One goal of the Texas program, according to Lt. Gov. Dan Patrick, is to get "more natural gas plants in the ground as soon as we can get them." 

PA Exports Electricity

The Independent Fiscal Office reported in March Pennsylvania generated 236 million MWh of electricity in 2023 and exported 83 million MWh to other states.

Pennsylvania is fundamentally different from Texas, which maintains its own separate electric grid for political reasons and relies on its own electric generation with limited connections to surrounding grid operators for importing power.  Read more here.

A Third, A Third, A Third

The IFO said Pennsylvania is now dependent on one fuel for 59% of the state’s electricity generation--  natural gas-- followed by nuclear power-- 31.9%, coal-- 5.4% and 3.7% from other sources.

This mix is far from the one-third, one-third, one-third electric generation base that previously fueled Pennsylvania’s electric grid so it could export power to other states.

Sen. Gene Yaw (R-Lycoming) said in March of last year we need base electric generation fueled by a diverse mix of “fuels” to remain stable.  Read more here.

“I think about five years ago I toured with the Committee, the PJM site in Valley Forge. And I know one of the comments made at the time was that Pennsylvania had almost a perfect energy mix at that time,” said Sen. Yaw.

"We were about a third, a third, a third [in sources of fuel to generate electricity-- coal, natural gas and nuclear].”

“We didn't have any reliability issues at all.”  Read more here.

Diversifying PA’s Electric Grid

Diversifying Pennsylvania’s electric grid doesn’t mean force feeding the grid to become more dependent on one fuel subject to significant price spikes caused by international market conditions.

It was just in November of 2023, the Public Utility Commission alerted the public to huge price swings in the cost of natural gas-- 149% increase to 64.2% decrease-- and the cost of electricity-- 18.8% increase to 18% decrease-- driven by the price of natural gas.  Read more here.

The state certainly has plenty of gas-fired generation, but as we’ve seen gas infrastructure has vulnerabilities and is subject to price spikes, and nuclear electricity generation capacity is significant.

What we haven’t decided is what will make up that third leg to restore fuel mix diversity-- but there are significant renewable and storage facilities already approved by PJM for connection and coming online.

The question is-- will it be fast enough?

Market Moving To Renewables + Storage In Big Way

The new electric generation projects in the PJM Interconnection queue to be connected to the grid shows the market is moving in a big way to renewables + storage.

On January 22, the PJM Interconnection reported 40 Gigawatts of new electric generating capacity had cleared its review process in 2023.  It expects to clear another 26 GW of capacity in 2024 and 46 GW of new generation in 2025.  Read more here.

PJM said the new generation capacity includes almost all investor-driven renewable energy and storage-- 50.8% solar, 14.1% solar+storage, 12.7% storage and 6.1% wind.

Of the 72 GW of new generation in the queue, there are 108 projects in Pennsylvania with a capacity of just over 5 GW, according to PJM.  Read more here.

PJM has been saying for some time fossil fuel generation resources are retiring faster than they are being replaced by renewable generation and storage and urged states to avoid policies to push generation off the grid before adequate capacity can replace it.  Read more here.

PJM recommended states enact policies to facilitate quicker deployment of new generation and electricity transmission  infrastructure in the transition to a clean energy grid.  Read more here.

PJM and its stakeholders have also been working to overcome the vulnerabilities experienced in the natural gas infrastructure during Winter Storm Elliott in December 2022 and Winter Storm Gerri in January 2024 that caused significant, unanticipated gas-fired power plant outages.  Read more here.

In addition to questions about the reliability of natural gas during more extreme weather events, electricity generators have said the historically low PJM wholesale electricity prices are not high enough to support baseload power plants like coal, natural gas and nuclear.  Read more here.

But, that is changing due to changes in the electricity market.

Dramatic PJM Price Increases

On July 30, the PJM Interconnection reported its latest electricity auction produced a wholesale price of $269.92/MW-day for much of the PJM footprint for delivery in 2025-26-- 933% more than the  $28.92/MW-day cost for delivery in the 2024/2025 auction.

Auction prices were significantly higher across the RTO, PJM said, due to decreased electricity supply caused primarily by a large number of generator retirements, combined with increased electricity demand (data centers and cryptocurrency mining) and implementation of FERC-approved market reforms.

PJM said the higher prices send a clear investment signal across PJM’s 13 states and the District of Columbia.

PJM remains concerned with the slow pace of new generation construction.

PJM said approximately 38,000 MW of generation-- again mostly renewables and storage-- have been approved by PJM, but not built due to external challenges, including financing, supply chain and siting/permitting issues.  Read more here.

Need To Diversify Generation Mix

Tom Rutigliano, senior advocate with the Sustainable FERC Project at the Natural Resources Defense Council--

“The bill is suddenly due for an overreliance on fossil fuels and inadequate planning for a more affordable, diverse power grid in PJM. And customers throughout 13 eastern and midwestern states and D.C. will be the ones who pay the price.

“Make no mistake: this was foreseeable and preventable. This is what happens when regulators sideline a wealth of historically affordable clean energy resources waiting at their doorstep and the transmission needed to bring them online.

“For years, the largest grid operator in the eastern U.S. has all but refused to diversify its resource mix and bring new energy online, and instead opted to depend excessively on an aging fossil fuel fleet while ignoring its reliability failures.

“This sticker shock is a direct result of recent regulatory changes made to address those reliability failures.

“With so few gas alternatives online in PJM to absorb the shock, making up the difference is coming at a steep price that hard-working families and businesses in the region will pay – and revealing what a bad deal they had been getting for a supposedly reliable gas-run power system.

“Diverse power grids are critical for reliability, and now we see just how critical they are for affordability.

“With wind and solar only making up an abysmal two percent of resources in this auction, but the overwhelming majority of PJM’s project queue, it is clearer than ever that PJM needs to rapidly scale up new energy resources to protect customers and resilience.

“The cost of PJM’s interconnection delays has now reached billions of dollars. Leaders in PJM states must demand accountability and solutions from their grid operator before they have to pay billions more in the next auction just five months from now.”

Some other thoughts--

-- Kleinman Center For Energy Policy: The High Price Of Failing To Transition To Clean Energy In PJM Footprint; Next PJM Auction Is In December  [PaEN]

-- PennFuture: Dramatic PJM Electricity Price Increases Due To Forced Outages Of Gas Power Plants; Huge Backlog Of New Generation Projects; Demand Growth Driven By Data Centers, Cryptocurrency Mining [PaEN] 

-- Utility Dive Guest Essay: Getting Real About Electric Grid Reliability In PJM After July Capacity Auction - By Glen Thomas, Former Chair of the PA Public Utility Commission

NewsClips:

-- The Center Square - Anthony Hennen: Natural Gas Subsidy Plan Rolled Out To Stabilize Grid [Sen. Yaw’s Energy Development Fund ]

-- Utility Dive: PA Senator [Sen. Yaw] To Introduce Energy Fund Bill, Bill To Require One Permit With One  ‘Statute of Limitations’ For Power Plant Projects

-- Utility Dive: PJM December Electricity Auction Prices Could Jump 157% Over July Auction, Morgan Stanley 

-- Utility Dive: Texas Energy Fund Elects 17 Gas-Fired Power Plant Projects Totaling Almost 10 GW For Possible Loans 

-- Reuters: Texas Energy Fund Approves Gas-Fired Power Plants For Next Stage Of Consideration

Resource Article Links - Electric Grid:

-- Pennsylvania’s Electric Grid Is Dependent On One Fuel To Generate 59% Of Our Electricity; Market Moving To Renewables + Storage  [PaEN]

-- PJM Electricity Auction Price 9 Times Higher Than Previous Auction-- $269.92/MW-Day For 2025/26 Delivery Compared To $28.92/MW-Day In 2024-25; Extreme Weather Risk Big Factor [PaEN]

-- Natural Resources Defense Council: The Cost Of Slow-Walking Clean Energy Can Be Seen In Latest PJM Electricity Prices  [PaEN]

-- PennFuture: Dramatic PJM Electricity Price Increases Due To Forced Outages Of Gas Power Plants; Huge Backlog Of New Generation Projects; Demand Growth Driven By Data Centers, Cryptocurrency Mining  [PaEN]

-- Kleinman Center For Energy Policy: The High Price Of Failing To Transition To Clean Energy In PJM Footprint; Next PJM Auction Is In December - By John Quigley, Senior Fellow, Kleinman Center  [PaEN]

-- Guest Essay: Pennsylvania May Not Be Able To Keep All The Lights On In Four Years - By Terry Fitzpatrick, Energy [Utilities] Association of PA

-- House Committee Told Governor’s Energy Plan Diversifies Energy Generation, Avoids One-Fuel Dependence, Improves Grid Reliability, Lowers Consumer Costs, Generates Jobs; Or Upends Competitive Markets [PaEN] 

-- Senate Republicans Pass Bill Authorizing An Authority To Take Over Permitting Large-Scale Energy Projects; Eliminating Public Comment; Waiving Any Regulation; Providing Immunity From Prosecution; Barbers Reviewing Permits?  [PaEN] 

-- PA House Republicans Announce Energy Package, Including An Energy Advocate Within DEP To Veto Any Action That Would Impact PA’s Energy Portfolio And An Independent Energy Office With The Same Power [PaEN] 

-- PJM Makes Multiple Reliability-Focused Improvements To Prepare For Winter To Deal With 70% Natural Gas, Other Generator Nonperformance In 2022   [PaEN]

-- PJM Reports Natural Gas Power Plants Were Over Half The Forced Outages During Winter Storm Gerri In January; Special Procedures Used For Gas Generators Raised Questions About Market Impacts   [PaEN]

-- New NERC Winter Reliability Assessment Finds Elevated Risk Of Blackouts In Extreme Weather Conditions; Natural Gas Supplies Still Vulnerable To These Conditions With 'Devastating Consequences'   [PaEN]

-- US EIA Report Shows How Winter Storms Have Reduced US Natural Gas Production, But Disruptions Can Happen Any Time Of The Year   [PaEN]

PA Oil & Gas Industry Public Notice Dashboards:

-- PA Oil & Gas Weekly Compliance Dashboard - August 24 to 30 - Water Pipeline Blowout; 9-Year-Old Hits Conventional Gas Well; 5 Abandoned Shale Gas Wells  [PaEN] 

-- Range Resources Shale Gas Water Pipeline Suffers Blowout In Washington County  [PaEN]

-- 9-Year-Old Drives Tractor Into Conventional Well Causing Gas Leak  [PaEN] 

-- PA Oil & Gas Industrial Facilities: Permit Notices, Opportunities To Comment - August 31 [PaEN] 

-- DEP Posted 66 Pages Of Permit-Related Notices In August 31 PA Bulletin  [PaEN]

Related Articles:

-- Sept. 19 Webinar: A Year Later: Have Leaders Addressed Health Concerns From Natural Gas Development Raised In University Of Pittsburgh Public Health Studies?  [PaEN]

-- DEP Oil & Gas Technical Advisory Board Meets Sept. 5 On Strategies To Prevent Well Abandonments; Injection Well Primacy; Tracking Water Contamination; Other Topics  [PaEN] 

-- State, United Mine Workers Announce First-In-PA Registered Apprenticeship Program To Plug Oil And Gas Wells Abandoned By Conventional Well Owners; DEP Issued 711 Violations For Well Abandonment So Far In 2024  [PaEN]

-- Appalachian Regional Commission Selects Job Training, Revitalization Groups For Communities Impacted By Coal, Power Plant Closures; Underserved, Marginalized Communities; 5 In PA Serving Coal, Oil & Gas Counties  [PaEN] 

-- Pittsburgh Works Together Releases New Report: The PJM Grid In Peril: What Will Keep The Lights On?  [PaEN]

-- Sen. Yaw To Introduce Bills To Establish PA Baseload Energy Development Fund Based On Texas Model; And Have One Permit For Power Plants  [PaEN] 

-- Ready For 100% Montgomery County: Communities With Half The County Population Support Clean Energy Future  [PaEN] 

-- DEP Permitting Efficiency: 19,222 Permits Since 11/2023; Decisions On 15,794;  2 Currently Eligible For PAyback Did Not Meet Decision Deadlines; No Application Fees Refunded [8.27.24]

-- Washington & Jefferson College To Host Pittsburgh Regional Carbon Capture Conference Oct. 22 In Washington County  [PaEN] 

NewsClips:

-- TribLive Guest Essay: Gov. Shapiro Needs To Step Up His Environmental Game - By Tom Pike, Protect PT 

-- Public News Service: Shale Gas Fracking Boom In PA Raises Health, Environmental Concerns

-- Tribune-Democrat: Shapiro, Mineworkers Create Apprenticeship To Plug Oil & Gas Wells Abandoned By Conventional Well Owners

-- Wilkes-Barre Times: State Announces Apprenticeship Program To Plug Oil, Gas Wells Abandoned By Conventional Well Owners

-- TribLive: PA Apprenticeship Program Expands To Including Training To Plug Oil, Gas Wells Abandoned By Conventional Well Owners

-- Pittsburgh Business Times: State, United Mine Workers Partner On New Apprenticeship On Plugging Oil & Gas Wells Abandoned By Conventional Well Owners

-- The Center Square - Anthony Hennen: Natural Gas Subsidy Plan Rolled Out To Stabilize Grid [Sen. Yaw’s Energy Development Fund ]

-- Utility Dive: PA Senator [Sen. Yaw] To Introduce Energy Fund Bill, Bill To Require One Permit With One  ‘Statute of Limitations’ For Power Plant Projects

-- Reuters: Texas Energy Fund Approves Gas-Fired Power Plants For Next Stage Of Consideration 

-- Utility Dive: Texas Energy Fund Elects 17 Gas-Fired Power Plant Projects Totaling Almost 10 GW For Possible Loans

-- Utility Dive: PJM December Electricity Auction Prices Could Jump 157% Over July Auction, Morgan Stanley 

-- The Center Square - Anthony Hennen: Pittsburgh Works Report: Red Tape, New Power Plant Delays Put PJM Electric Grid ‘In Peril’

-- Utility Dive Guest Essay: Getting Real About Electric Grid Reliability In PJM After July Capacity Auction - By Glen Thomas, Former Chair of the PA Public Utility Commission 

-- PennLive Guest Essay: Troubling Times Are Ahead For American Energy - By Commonwealth Foundation  [59% Of Energy On PA’s Electric Grid Comes From One Fuel]

-- TribLive Guest Essay: Biden Clean Power Plant Reboot Will Cripple PA’s Energy Affordability - By Sen. Greg Rothman (R-Cumberland)  [Need To Diversify Our Energy Generation Away From 59% Natural Gas To Prevent Price Spikes]

-- WHYY/BillyPenn: PECO Customers Could Face Double-Digit Electricity Bill Increases Next Year; Experts Blame Growing Demand, Lagging Transition To Renewable Energy

-- Inside Climate News: US Appetite For Electricity Grew Massively In First Half Of 2024; Solar Power Rose To The Occasion

-- Chesapeake Bay Journal - Ad Crable: Air Monitoring Study By CNX Resources Finds Fracking ‘Poses No Public Health Risk’; Environmental Groups Critical

-- WHYY: Philadelphia Gas Commission Passes Rules To Limit Public Participation In Budget Process

[Posted: August 28, 2024]  PA Environment Digest

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