Dive Brief:
- PJM Interconnection said coal generation could decline by as much as 42% under the Clean Power Plan – but if natural gas prices rise significantly the numbers could go the other way as well.
- According to Argus Media, the nation's largest grid operator sees smaller reductions in coal usage under most scenarios and even the potential for expanded coal use if gas prices rise.
- Coal use on the grid has been declining, however, and last month natural gas installed capacity in the PJM market surpassed coal for the first month ever.
Dive Insight:
Any way you slice it, coal usage is declining. Even absent the Obama administration's Clean Power Plan, plants are being shuttered and natural gas and renewables are moving in. That's largely the takeaway from PJM's most recent analysis, but the operator also sees the potential for unexpected outcomes as well.
According to Argus, PJM also examined many scenarios with smaller reductions in coal use, and even increased use should gas prices rise and renewables required backup.
But PJM is already shifting away from coal. Last month, gas capacity totaled 54,600 MW compared to just shy of 51,000 MW of coal – the first time gas capacity was higher than coal.
The CPP, alongside EPA's Mercury and Air Toxics Standards, will take 90 GW of coal capacity off the table, according to federal projections. Just this year, 12,000 MW will be mothballed due to the MATS rules that went into effect in April and aim to reduce levels of mercury, dioxins and other toxic emissions.
Coal still generated about 44% of PJM's electricity last year, however, with nuclear contributing about a third. Gas made up less than 20% of the total, because the plants only run when demand is high.