PJM Auction Adds More Natural Gas Capacity Versus Year Ago
Natural gas continued to gain in PJM Interconnection’s annual capacity auction held this month.
The auction cleared 1,000 MW more gas-fired generation than last year’s event, when 2,350 MW of gas-fired power cleared. Another new combined-cycle plant cleared in the latest auction, which procured power supplies for the period covering June 1, 2021 to May 31, 2022.
PJM is the nation’s largest grid operator, serving 65 million people in all or parts of 13 states and the District of Columbia, including shale-rich Ohio, Pennsylvania and West Virginia. Natural gas-fired generation has grown rapidly within the system in recent years, gains driven by abundant supplies and low commodity prices. Renewables have also continued to gain. Natural gas now accounts for more than 30% of PJM’s generation mix, compared to just a fraction more than a decade ago.
The annual auction is held to meet the region’s electricity needs three years ahead. Overall, PJM secured 163,627 MW for the 2021-2022 period. The auction produced a price of $140/ MW-day for much of the PJM footprint, compared with $76.53/MW-day in last year’s auction.
Prices were higher this year because of several factors, including continued low energy prices, which PJM said causes generators to seek revenues in the capacity market with higher offers. There was also a decrease in total cleared capacity, including a reduction of new generators. PJM secured 165,109 MW last year.