By - Jim Vess

PJM could face reliability risks in early 2020s if more coal and nuclear generation is retired

Energize Weekly, November 7, 2018

The PJM Interconnection, the nation’s largest grid, can manage the announced closures of coal and nuclear plants even in the face of severe weather—but with the loss of additional generation, “the system may be at risk.”

The assessment comes from the PJM’s Fuel Security Analysis released Nov. 1, which was done as its grid, which serves the Mid-Atlantic and Midwest, faces a series of plant shutdowns.

FirstEnergy has announced the closure of about 4,000 megawatts (MW) of coal-fired generation and 4,000 MW of nuclear. American Electric Power plans to shut 1,590 MW of coal-fired generation by 2020.

A PJM analysis last spring found the system could absorb the losses without impairing reliability. The new study, however, was designed to “stress test” the system and find its “tipping out” looking out five years.

The analysis looked at 300 scenarios combining different load, power, plant retirements, fuel supplies and disruptions, customer demand and weather patterns—including a 14-day period of cold weather such as the Polar Vortex in 2014.

“PJM’s system can withstand an extended period of stress while remaining reliable,” the analysis said. “Even in an extreme scenario, such as an extended period of severe weather combined with high customer demand and a fuel supply disruption, the PJM system would still remain reliable.”

Key elements when the system comes under stress included onsite fuel inventory, oil deliverability, location of a fuel supply disruption, availability of non-firm natural gas service and pipeline configuration.

Demand response programs that can help manage load were also increasingly important when the grid was strained, the study said.

The analysis’ overall conclusion was that the system was “reliable under all but the most extreme scenarios.”

 But when additional generation capacity losses were added into the mix with cold weather, the analysis found its tipping point.

The analysis looked at two “escalated” generating-loss scenarios, one with the retirement of 32,216 MW by 2023 and 16,788 MW of new capacity added, and a second where 15,618 MW were retired by 2023 with no capacity replacement.

“When combined with extreme winter load, PJM’s analysis indicates that the two escalated retirement scenarios have similar results that indicate the system may be at risk for emergency procedures and load loss,” the analysis said.

At a press conference to unveil that study, PJM CEO Andy Ott said the grid operator might consider high payments or compensation for generators that store fuel onsite.

“While there is no imminent threat, fuel security is an important component of ensuring reliability—especially if multiple risks come to fruition,” the analysis said. “The findings underscore the importance of PJM exploring proactive measures to value fuel security attributes, and PJM believes this is best done through competitive wholesale markets.”

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