Coal, nuclear, and some renewables and demand response lost ground and natural gas was the big winner when PJM Interconnection, the giant regional grid operator headquartered in Norristown, Pennsylvania, issued its latest call for proposals for new electricity supply.
The auction, covering the year beginning June 1, 2020, produced a base price of US$76.53 per megawatt/day.
That low, low price means the Quad Cities nuclear plant in Illinois and the infamous Three Mile Island plant in Pennsylvania, both operated by Exelon Corporation, won’t be able to sell their power into the system, “putting one of those financially crippled units (Three Mile Island) at risk of early retirement,” POWER Magazine reports. “Meanwhile, procurements for solar, wind, and demand response fell dramatically compared to last year, and drastic price declines could roil the market for coal generators.”
The auction results could also drive more coal plants out of operation and, over the longer term, “pressure margins for all other generators, including other gas-fired plants,” said Toby Shea, vice president and senior credit officer at Moody’s Investors Service.
Out of 2,824 MW of new capacity that PJM procured through the auction, 2,350 MW came from combined cycle gas plants. POWER Magazine notes that PJM also contracted for 7,820 of “demand resource participation” and 1,710 MW of device efficiency retrofits based on competitive prices.