PA Environment Digest Blog: PJM Electricity Auction: PJM Lost 2.8 Gigawatts Of Power Due To Reduced Reliability Rating Of Natural Gas Power Plants; Could Gain 12.2 Gigawatts By Increasing Reliability From Less Than 75% Now To An Achievable 90%

The Natural Resources Defense Council said the PJM Interconnection lost 2.8 gigawatts of power due to the reduced reliability rating of natural gas power plants during the most recent PJM electricity capacity auction.

EDF said PJM could add 12.2 gigawatts of power and eliminate its immediate electricity generation problems if they would work with states to require existing natural gas power plants to increase their reliability from 74% now to an achievable 90%.

NRDC made the comments on increasing natural gas plant reliability during a July 25 media briefing with the Pennsylvania Utility Law Project on the impact of the latest PJM electricity capacity auction [Recording of Briefing] and in comments to the Pennsylvania Public Utility Commission in January on adequacy of electricity supplies in Pennsylvania [Read more here].

Robert Routh, PA Policy Director for the Natural Resources Defense Council, said, "So we at NRDC have made this point to the Pennsylvania Public Utility Commission, in a couple forums, and have been in conversation with state legislators about how important it is that states and PJM take a no-excuses approach to gas winterization.

"So looking at the amount of gas-fired units that cleared in this last [PJM] auction and looking at their ELCC rating [Effective Loan Carrying Capability], if you could raise that reliability value to an entirely achievable 90% with effective winterization measures, you would add many gigawatts of capacity to the system, you'd save billions of dollars over the next few years, and you would do so in a way that is much more cost-effective and timely than any investments in trying to build out new gas-fired power plants, which will take five to seven years to reach commercial operation."

In comments to the PUC in January, the NRDC said PJM could add 12.2 gigawatts of capacity to the system by increasing natural gas power plant reliability.

"Critically, this buys PJM and project developers much-needed time to process the interconnection queue and build the storage, wind, and solar resources that will keep the system reliable well into the 2030’s," said NRDC.

Nature Gas Power Plant Operating Experience

Routh explained-- "Gas plants are being considered more unreliable by PJM these days because of lived experience.

“Even though individual gas-fired plants can be reliable, they have a disturbing tendency to fail in large numbers at the same time, particularly in the winter.

"So just thinking back over the course of this past decade, widespread gas failures were the primary cause of near blackouts in PJM, in both 2014 and 2022 with Winter Storm Elliott.

"And thinking outside of Pennsylvania, gas failures occurred with tragic results in Texas, with Winter Storm Uri in 2021.

"So I'm trying to think, from the experience in Winter Storm Elliott in 2022, over 60% of the gas plant failures in PJM were due to mechanical or preparation problems at individual plants so-- equipment failures, turbines freezing.

"And then, roughly a third of the outages were due to gas supply issues, which the majority of those appeared to be because of the loss of upstream supply, not as a result of, say, insufficient pipeline infrastructure.

"So during that storm in 2022, I believe Appalachian gas production, if I'm remembering right, fell by approximately 30%. [FERC report- 23% decline in Marcellus and 54% decline in Utica shale production. Read more here.]

"And so, before the July 2024 capacity auction, PJM didn't account for this risk of simultaneous plant failures in its markets and planning.

“And as a result, there was this false sense of abundance, of capacity that could not be relied upon during extreme events.

"So PJM had been planning around a summer peak that it was relatively well supplied for while the risks of winter blackouts grew.

"So after Elliott, after 2022, it became obvious that this was untenable, and PJM decided to reform its capacity market to use a more sophisticated risk assessment approach, considering the risk that gas plants would not be available when most needed.

"So the major de-rating of the gas fleet came during the last auction in July 2024. Plants that had been considered north of 90% available were reduced down to 79%.

"At least, that was the ELCC rating for gas combined cycle plants, which provided the majority of the gas resources offered into the market.

"And so that 79% ELCC rating last year, PJM de-rated it further down to 74% for this auction. So that's what resulted in, again, the majority of the decrease in gas that cleared the market this time, 2.8 gigawatts of which was strictly as a result of the derating from gas plants down, at least for combined cycle plants, down from 79 to 74%.

"And there were similar deratings, not quite as steep, but for combustion turbine and combustion turbine dual fuel gas plants.

"So that explains why gas has been, there's been a truing up of the system, to reflect the fact that gas plants cannot be relied upon under extreme conditions in the winter.

"And it helps speak to a reason why it would be beneficial for PJM to consider moving to a sub annual capacity market to better reflect the accreditation values of different resource types in different seasons.”

Click Here for Routh’s presentation slides.

Patrick Cicero, former PA Consumer Advocate and counsel to the Pennsylvania Utility Law Project also participated in the briefing. Read more here.

Click Here for Cicero’s presentation slides.

Click Here for a recording of the briefing.

Resource Links - PA Electric Grid:

-- 30 Stakeholder Comments Received By PUC On Adequacy Of Electricity Supplies In Pennsylvania; Increasing Natural Gas Power Plant Reliability To 90-95% Would Mean No Imminent Capacity Problem [PaEN]

-- PUC Invites Stakeholder Comments On The Issue Of The Adequacy Of Electricity Supplies In Pennsylvania [Background On Issue] [PaEN]

-- Guest Essay: Rewriting The Energy Story — Together - By Stephen M. DeFrank, Chairman, Pennsylvania Public Utility Commission [PaEN]

-- PUC: Brace For Higher Electric Bills As A Result Of Soaring Power Use; Consumers Should Review Energy Options [PaEN]

-- Spotlight PA: Why Pennsylvanians May See Higher Electric Bills This Summer And Next [PJM Auction, A.I. Data Center Power Demands]

-- House Committee Told PA Needs An Energy Policy, Doing Nothing Means We Are Going To Run Out Of Power; Overreliance On One Fuel-- Gas-- Is Raising Electricity Prices [PaEN]

-- PA Elected Officials, Consumer, Clean Energy Advocates Demand Electric Grid Operator PJM Act To Hold Down Electricity Costs [PaEN]