By - Jim Vess

PJM has had the biggest growth in natural gas-fired generation of any U.S. market

Energize Weekly, October 24, 2018

The PJM Interconnection, the largest U.S. wholesale electricity market, has in the last five years added the most natural gas-fired capacity of any grid in the country, according to the federal Energy Information Administration (EIA).

PJM has seen the closure or announced closure of coal-fired and nuclear plants on its grid, while steadily adding natural gas capacity.

Natural gas capacity has grown to 70 gigawatts in 2018 from 60 gigawatts in 2013. Over the same period, coal-fired capacity dropped to less than 60 gigawatts from about 75 gigawatts.

“The increase in PJM’s capacity factors for natural gas-fired generators is the largest of any regional transmission organization in the country in the past five years,” the EIA said. “Capacity factors are an indicator of how often a generator is run, and the combination of additions of natural gas-fired capacity in the region and higher capacity factors have meant that utilities in the PJM Interconnection have been generating more electricity using natural gas.”

Nevertheless, electricity from coal-fired plants in 2017 still narrowly exceeded the electricity from natural-gas plants, 250 million megawatt-hours to about 200 million megawatt-hours. In 2013, coal-fired plants produced more than twice as many megawatt-hours as natural gas.

The increased natural gas capacity has come from the addition of more efficient combined-cycle technology, with the average annual capacity for natural gas-fired combined-cycle plants in PJM first surpassing those of coal-fired generators in 2015. Since 2013, 95 percent of the new gas-fired capacity has been combined-cycle.

Low natural gas prices have made natural gas more cost competitive with coal. The monthly average cost of Central Appalachian coal in the PJM increased almost 20 percent between 2013 and 2017 to $3.30 per million British thermal units (MMBtu). By comparison, the cost of natural gas on a MMBtu basis dropped below coal in 2014 and has remained lower than coal, save for winter price spikes.

While adding new combined-cycle gas plants some coal and some nuclear units have been retired changing the grid’s generation mix. Between 2013 and 2017, 14.4 gigawatts of coal-fired capacity were shuttered, 19 percent of the region’s total. At the same time, 11 gigawatts of new natural gas capacity came online, while 1.8 gigawatts of natural gas were also retired. Natural gas capacity grew by 18 percent.

“Higher capacity factors for natural gas-fired combined-cycle generators in recent years also indicate a fundamental shift in day-to-day operations of these power plants,” the EIA said. Natural gas-fired generators were traditionally used either for immediate load or peaking. More recently, the combined-cycle plants have become more competitive with coal for meeting baseload demand, increasing the retirement of coal plants.

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