Is Natural Gas Threatening Grid Reliability?
If you’ve been paying attention to the power markets in recent years, you know that merchant coal and nuclear power plants are struggling to compete against natural gas-fired generation and renewable resources. For example, PJM Interconnection—the world’s largest competitive power market—in late May announced results for its annual capacity auction. It procured more than 165 GW for the June 1, 2020, to May 31, 2021, period with natural gas fueling the largest share of the cleared capacity (more than 75 GW).
Coal and Nuclear Stumble
It wasn’t that long ago that coal-fired generation dominated the PJM auctions. In the 2013/2014 capacity auction, for example, coal cleared more than 60 GW while gas was less than 50 GW. Since then, the trend has been nearly straight down, with only slightly more than 40 GW of coal capacity clearing the auction in 2020/2021.
The PJM auctions haven’t been particularly kind to nuclear generators either. Exelon’s Three Mile Island (TMI) and Quad Cities nuclear plants failed to clear the auction this year. The news had near-immediate consequences for TMI. The week after the auction results were released, Exelon announced it would retire the plant in September 2019, unless Pennsylvania enacts policy reforms.
Exelon has had some success getting states to provide support for struggling nuclear plants. The New York State Public Service Commission approved a “Clean Energy Standard” in August 2016, which provides subsidies for upstate nuclear plants. In Illinois, the legislature last December passed the “Future Energy Jobs Bill,” which will feed millions of dollars to Exelon each year to keep the Quad Cities and Clinton nuclear facilities open. The measures are being challenged in court, however, and unfavorable rulings could jeopardize the future of several nuclear plants.
While nukes often receive backing from clean energy advocates for their lack of carbon emissions, coal generators are not as fortunate. Rather, environmentalists are generally the most outspoken critics of coal, often suggesting its use be discontinued altogether.
Effects on Reliability
Understanding that coal and nuclear generation face serious retirement threats, PJM stakeholders raised the question: Is the grid becoming so dependent on natural gas and renewable resources that operational reliability could be adversely affected? Speaking at the American Society of Mechanical Engineers (ASME) Power and Energy Conference in Charlotte, N.C., on June 27, Michael Bryson, PJM’s vice president of operations, said, “The unspoken question of this is ‘Is there such a thing as too much natural gas?’ ”
To answer the question, PJM conducted a study designed to evaluate fuel diversity through the lens of reliability and to identify a range of resource mixes that could effectively manage reliability risk.
“One of the things we started out assuming was that more diversity means more reliability,” Bryson said. “What we found out as we looked through our results was that’s not necessarily true.”
In the end, reliability did not depend so much on a diverse resource mix; it depended on generator reliability attributes.