The PJM Interconnection is facing greater reliability risks as power plant retirements in coming years threaten to outpace capacity additions.
Grid operator staff expect about 40GW of existing thermal capacity could be retired by 2030, according to a report released on 24 February. But at the same time, load demands on PJM are expected to grow by an average 1.4pc/yr and no more than 31GW of accredited new capacity may be added to the grid.
"The projections in this study indicate that the current pace of new entry would be insufficient to keep up with expected retirements and demand growth by 2030," PJM said.
The grid's board has ordered PJM's Resource Adequacy Senior Task Force to consider how to improve risk modeling, particularly for winter generation and reliability, according to a letter sent to stakeholders also on 24 February. It also wants the task force to examine compensation for generating units designated as required for reliability purposes as well as possible changes to the capacity accreditation process "to ensure that the reliability contribution of each resource is accurately determined and aligns with compensation."
While PJM maintained grid reliability during a major winter storm in late-December, "we believe this event demonstrates a need to focus on PJM's rules and processes to ensure reliability is maintained both now and throughout the transition," PJM said in its letter to stakeholders.
The board wants PJM to submit a proposal on potential capacity market "enhancements" by 1 October 2023. It also is considering whether to apply any proposed changes to auctions earlier than the 2027-28 base residual auction.
In the report released on 24 February, PJM staff projected the grid's reserve margin would shrink to 5-15pc in 2030 from 23-26pc this year.
The 40GW of potential retirements PJM outlined represent 21pc of the grid's installed capacity. It consists of 6GW of capacity that was taken off line last year, another 6GW of already-announced retirements for 2023-26, 25GW of potential retirements related to state and federal policies as well as 3GW of potential economic retirements.
About 60pc of PJM's expected retirements are coal units and 30pc are natural gas. Coal-fired generation accounted for 89pc of retired capacity in 2022, PJM said.
On the other hand, PJM expects only 15GW-31GW of new capacity to be accredited by 2030 despite having 290GW of interconnection requests currently in its queue. Most of the interconnection requests are for renewable energy, which PJM said has an historical rate of completion of 5pc.
For natural gas additions, PJM's study assumes that only natural gas plants currently under construction or proposed upgrades to existing gas plants will actually be completed. That means just 3.8GW of the 17.6GW of gas projects in PJM's queue will be ready for the grid operator's 2023-24 delivery year starting on 1 June 2023, and that natural gas capacity in 2030 will be no more than 5GW greater than it currently is.
Another 12GW of potential natural gas additions have reached the stage of signing interconnection service agreements, but it is still unclear if generators will move forward with adding the capacity, PJM said.
"If significantly more natural gas capacity achieved commercial operation, it could help avoid reliability issues," PJM said.
