CleanTechnica is the #1 cleantech-focused
website
 in the world.


Clean Power PJM serves 13 states and the District of Columbia

Published on March 19th, 2012 | by Silvio Marcacci

25

Grid Operator’s Report Details Energy Market Shift to Clean Energy



 

PJM serves 13 states and the District of Columbia

PJM Interconnection is the country's largest grid operator

Regional transmissions organizations (RTO) may be the most important factor that you’ve never heard of in America’s shift toward a clean energy future.

PJM Interconnection’s 2011 State of the Market Report details how energy market forces in the highly technical RTO system are retiring coal power plants, encouraging renewable energy generation, and stimulating demand response while reducing consumer electricity costs.

RTOs, Defined

Think of RTOs as air traffic controllers of the electric grid, managing electricity generation and transmission over large regional grids to ensure reliable power supply at the lowest possible price. Wholesale power is bid into the system by generators in a competitive auction and purchased for sale to consumers by utilities, with overall demand being filled from the cheapest to most expensive power source.

Enter PJM, the largest RTO in the world, which manages the grid and wholesale electric market for 13 states and Washington, D.C. Its annual State of the Market Report is prepared by an independent market monitor to determine if market forces are working competitively across the system.

Coal is Not King

The 2011 report not only showed the market was working competitively, but also showed that a transition to lower emissions is possible without price spikes. In fact, the total price per megawatt-hour of wholesale power dropped 6.2 percent across the system.

Coal-fired generation suffered in 2011, and will likely continue to experience losses in the future. Electricity from coal lost two percent of the overall market, but the cost of that electricity increased nearly twenty percent, largely due to increased operational costs and environmental regulations requiring emissions control investments.

The costs of compliance are adding up and making dirty coal more expensive, and, thus, less attractive in PJM’s power market. “These investments may result in higher offers in the capacity market, and if units do not clear, in the retirement of some units,” said the report.

This means between 5,764 and 6,936 megawatts (MW) of coal generation may soon be forced to retire, according to the report. PJM lists between 26 and 30 coal plants “at risk” of being priced out of the market — meaning it could soon be dramatically cleaner.

Cost Advantage for Renewables 

Conversely, as the market itself makes coal power less profitable, renewable energy sources are gaining a cost advantage and investment is increasing in PJM. 98.2 MW of newly installed wind power capacity was added in 2011, boosting total wind generation 19 percent to 11.5 terawatt hours (TWh), while 15.3 MW of new installed solar power capacity spiked total solar generation an incredible 872 percent to 55.7 GWh.

Electricity generation in PJM by fuel source

2011 electricity generation by fuel source in PJM

Demand Response Growing Fast

Demand response, or the ability of customers to cut consumption in response to higher real-time electricity prices when electricity demand is highest, also continued its fast growth across PJM. Nearly 3,000 MW of demand are now registered in the market’s load management program, up from just 560 MW in 2008, and payments to demand response participants topped $500 million.

Demand response not only helps grid operators ensure the lights stay on during peak demand, but also prevents the use of peaking power plants, which are generally much more expensive to use.

Demand response growth in PJM

Competition Breeds Benefits

PJM’s report underlines the contribution market forces in RTOs can make to the clean energy transition, according to one group of electricity industry stakeholders.

“Competitive outcomes are generating important economic and environmental benefits for consumers in terms of energy efficiency, renewables, and other innovative technologies that contribute to an overall cleaner portfolio of energy resources to ensure the lights stay on,” said Joel Malina, executive director of the COMPETE Coalition. “The goal of a competitive power market is to provide power at the lowest possible price, consistent with cost.”

The group of 622 U.S. electricity industry stakeholders advocate for competitive electricity markets, and recently released a report on PJM’s Reliability Pricing Model. The long-term auction locks in electricity prices three years in advance, and COMPETE’s report cited up to 14 GW of demand response in PJM by 2014/2015.

Critics claim the shift from coal power will undermine the U.S. economy with price spikes and will force power failures, but PJM’s market report clearly proves them wrong and shows how cleaner sources of energy and energy management technology can work across the grid when competitive market forces are applied.

Print Friendly

Tags: , , , , , , ,


About the Author

Silvio is Principal at Marcacci Communications, a full-service clean energy and climate-focused public relations company based in Washington, D.C.



  • Pingback: Marcacci Communications

  • Pingback: Marcacci Communications

  • Pingback: Ball State Dedicates Largest Closed-Loop Geothermal System in America

  • silviomarcacci

    I’d like to address a few threads in these comments:

    First, while I run my own communications company, PJM is not my client and I have no interest in this report beyond it being good news for renewables and the climate. This is not a “PR piece” and I have a strict policy of not covering my clients.

    Second, I disagree with the assertion that renewables can’t supply more than 20 percent of a grid’s electricity without blackouts. This has happened several times in recent months, most notably in Texas and California. Multiple grid operators, notably PJM, are investing in advanced power management technology that allows them to balance intermittency. In addition, energy storage and concentrating solar power are slowly bringing renewables to baseload capacity. It’s not going to happen overnight – but it is happening.

    Third, coal is becoming more expensive across the US electricity sector, especially in market auctions like PJM where the price of power is bid in by generators. Multiple government and policy reports have found this trend. Simple economics are at play here – power producers tell the market operator at what price they can generate power, and the market accepts their bids from lowest to highest. As coal gets more expensive due to previously unaccounted-for externalities, it bumps down in the stack of accepted bids. Right now, nuclear and natural gas are the most direct beneficiaries. But as renewables come down in price, especially solar, they move up in the stack of accepted bids. Again, this is not going to happen overnight – but it is happening and that trend is shown by the amount of generation added in 2011.

  • John Smith

    Yea, right. And you’ll have pie in the sky when you die.

    But good luck here on earth when your energy bills go up and we still emit as much carbon dioxide as ever. That’s what Denmark’s experience has been.

    • Bob_Wallace

      I wonder if you got your info on the price of electricity from the CEPOS study? If so, you might want to read this….

      “In 2009, the Institute for Energy Research commissioned the Danish think-tank CEPOS (Centre for Political Studies) to report on electricity exports from Denmark and the economic impact of the Danish wind industry. This report[27] states that Danes pay the highest residential electricity rates in the European Union (partly to subsidize wind power), and that the cost of saving a ton of carbon dioxide between 2001 and 2008 has averaged 647 DKK (€ 87, US$ 124). It also estimated that 90% of wind industry jobs were transferred from other technology industries, and states that as a result Danish GDP is 1.8 billion DKK (US$ 270 million) lower than it would have been without wind industry subsidies.

      The report was later heavily criticised. Firstly Danish paper Ingeniøren claimed that the report was ordered and paid for by the American oil and coal lobby.

      Later, several Danish researchers and professors from all technical universities in Denmark, wrote a joint response to the report, refuting it[28].

      The report from CEPOS was even brought to Government level, where minister of Climate and Energy Lykke Friis discredited the work done by CEPOS and the report[29].”

      Wiki…

      and…

      “The cost of electricity in Denmark is high, but this is a result of tax policy, not wind. According to Eurostat, the European Union’s official statistics agency, the pre-tax price of electricity for an average medium household in Denmark is 120€ per MWh, which is virtually equivalent to the European average of 119€ per MWh. The pre-tax price of electricity in Denmark is actually 23 percent lower than Ireland as well as significantly lower than the United Kingdom (by 14 percent) and Germany (by 7 percent). After taxes are taken into account, the price comparison is slightly different: the electricity tax in Denmark means the net price of electricity is higher than the European average. But as the CEPOS study points out, this is a function of Danish policies, not a result of wind deployment.”

      http://switchboard.nrdc.org/blogs/ssuccar/the_danish_wind_experience_tru.html

  • rtcdmc

    I understand that this is a P.R. piece, but what shoddy analysis. “The market” is NOT making coal more expensive … the government is. Wind is up “an incredible 872%” to 55.7 GWH … which represents less than .1% of the total. So, it’s not even a rounding error. In short, based on the first table: hydro & gas generation are up, oil is down, and coal still generates almost half of our electricity. Pay attention to your own data!

    • Bob_Wallace

      In 2010 wind supplied 39,135 of the 1,847,290 thousand MWhs of electricity on the US grid.

      Wind provided 2.1% of the 2010 total. In 2011 wind apparently exceeded 3% of the total supply. The 2011 numbers have not yet been released, except for quarterly summaries which indicate that >3% was likely achieved.

      In 2011 coal produced 39% of our electricity. That’s a bit below “almost half”.

      Accuracy please….

      • rtcdmc

        The numbers you cite are not in the article. Citation? I understand you’re a believer, but Marcacci’s article amounts to nothing more than a piece of self-promotion wrapped in tangled logic.

        • Bob_Wallace

          Sorry.

          http://www.eia.gov/electricity/annual/

          You can get the quarterly numbers from the EIA site.

          As for the article – if you distrust the numbers then why not take that up with PJM Interconnection.

          You could start by reading their report – it’s linked.

          • Rob

            RTDMC, here’s an independent US EIA report which now does contain the summary data fro The US grid in 2011.
            http://205.254.135.24/electricity/monthly/

            Coal fell 6% in 2011 to supply 42% of the grid supply, in december it supplied 39% of generated power, the first time below 40% since the 1970s.
            Wind supplied 119,747 Gwh out of 4,105,734 or 2.9% of total generation.
            Renewables as a whole produced 12.6% of total grid supply in 2011 an increase 21% of the previous year.

          • Bob_Wallace

            Thanks Rob.

            The >3% for wind probably was based on spring winds when other generation would have been curtailed due to lower seasonal demand.

            I wouldn’t be surprised to see coal come back up a bit in 2012 as our economy recovers and demand rises.

  • ArrowSmith

    When the White House has to suffer blackout, then Obama will rethink his anti-coal agenda.

  • geezer117

    Wow! 100 MW of wind was added. The author seems to think that he can extrapolate from that to conclude that wind and solar will not cost more or deteriorate the reliability of the grid. Never mind that the Danes, who are farther down that road, pay four times as much as we in the US and have to buy power from neighbors when the wind does not blow.

    The author notes that coal costs are rising, without mentioning that Obama is deliberately pursuing that goal to advance his green agenda. The new EPA regulations have no basis in health risks; they are intended to bankrupt coal plants.

    You can’t change the physics of the thing. Wind and solar are inconstant sources that cost a lot more than coal or nuclear power. There are times when they produce no power at all. They consume huge land spaces, which are not available near large cities, where demand is highest.

    Wind and solar may contribute some to the grid, but they will never be the foundation of any industrial society.

    • Bob_Wallace

      Try thinking about what you wrote.

      Yes, the Danes buy power from their neighbors when the wind isn’t blowing. Their neighbors have other ways to generate power. But – their neighbors buy power from the Danes when cheap wind power is available.

      Coal causes no health risks? Do you really want to go out in public saying stuff like that?

      Both wind and solar are cheaper than new nuclear and new coal. It’s intellectually dishonest to compare the cost of new generation with generation built and paid off decades ago.

      And, if you do honest accounting, new wind is cheaper than old, paid off coal. Solar is no more, probably less.

      I’d suggest that you are blinded by coal smoke….

      • ArrowSmith

        You’re an idiot.

      • geezer117

        You are doing a little spinning here. First, coal today in fact does not present health risks. Regulations are extremely tight. There was no health basis for the new round of EPA regulations except to increase the costs of coal fired plants to where they are uneconomical, exactly as Obama himself promised.

        Second, the fact that Danes buy and sell power depending on the wind proves the point: wind is an adjunct to a fully functioning conventional power system, not a replacement. England and Germany have discovered that they have to keep full-capacity conventional power in spinning reserve.

        Lastly, in comparing costs, the fully-loaded cost of land is never figured for wind power. Sure, you can get enough land for a 100 MW wind operation at reasonable prices. But try finding 200 square miles of land for a wind farm to replace a sizable conventional power plant. Now the cost of land skyrockets. Again, wind makes sense as an adjunct, not a replacement.

        Now try to make the argument that the time is now to start shutting down conventional plants, because wind and solar is ready for prime time. Because that is precisely what the Greens are doing, and it will not end well for us.

        • Bobfwall

          “First, coal today in fact does not present health risks. Regulations are extremely tight. ”

          Those plants which are conforming to EPA regulations may have largely cleaned up their emissions. Not all plants have cleaned up and several will be closed.

          But that’s just for the emissions which harm the health of those who breathe their smoke. We’ve got to shut down coal for their CO2 emissions as well.

          ” wind is an adjunct to a fully functioning conventional power system, not a replacement.”

          That would be correct had you said “a component”. Wind, alone, would not give us the 24/365 grid we need. But it is almost certain to be a major player and a supplier of cheap electricity.

          “Lastly, in comparing costs, the fully-loaded cost of land is never figured for wind power.”

          A dumb argument. 98% of the land inside a wind farm is still available for original use. Farming, ranching or wildlife habitat continue on around the turbine footings.

          If you knew about the economics of ranching or farming you would know that the 2% of land leased for turbine footings are major income sources for the farmer or rancher who has been making a much harder living from the other 98%.

          The politics of wind has changed in very red states because wind is producing income for land owners, jobs and tax revenue for local and state governments. If wind was not paying its way you wouldn’t have Republican governors going to Washington to campaign for more support for wind.

  • Roger L

    Hey Silvio:

    You are drawing a big stretch by this report, coal and nuclear still dominate with over 80% of the total so the grid is still stable. By saying the following,” will force power failures, but PJM’s market report clearly proves them wrong” you are not being truthful. This report says that with 80% of the grid still base load plants such as nuclear and coal, renewable intergration is workable. But to go further at this point is not truthful, it is only speculation. In particular, power failures could still occur because renewables as currently configured cannot provide either voltage or frequency stabilization which a base load nuclear or coal plant can. It is still to be seen whether renewables can safely be intergrated at more than say 20% in any market.

    • Bob_Wallace

      In 2011 coal provided 39% of the electricity on the US grid.

      In 2010 nuclear provided 19.6%. (I don’t have the 2011 numbers yet.)

      Together, that’s about 60% from coal and nuclear, not 80%.

      We apparently could cut coal to zero and nuclear to 7.5%, getting 70% from non-hydro renewables, 15% from natural gas, and 7.5% from hydro.

      (Dr. Alexander MacDonald, Director of the Earth System Research Lab at the) U.S. National Oceanic and Atmospheric Administration (NOAA) was in Vancouver on Friday for the American Association for the Advancement of Science’s annual convention and mentioned in a talk there that clean, renewable energy (not even including hydroelectric) could cheaply supply 48 states of the continental U.S. with 70% of its electricity demand by 2030. The other 30% would be half from fossil fuels and half from nuclear and hydro.

      “NOAA embarked on the renewables project three years ago, collating 16 billion pieces of weather data derived from satellite observations and airplane observations and weather station reports,” Scott Simpson of the Vancouver Sun writes.

      “Then it designed a program to filter the information to remove unlikely venues for wind or solar power arrays – such as national parks and urban areas – and came up with a map showing robust wind resources in the middle of the continent and decent ones in the northeast Atlantic states, as well as strong solar production areas in the desert southwest.”

      But here’s where the NOAA researchers stepped beyond the good to the great, research-wise: they balanced potential power production and electricity demand to determine, how, where, when, and to what extent clean energy could produce the electricity we need. The end result — 70% of electricity demand….”

      http://cleantechnica.com/2012/02/20/clean-energy- could-supply-u-s-with-70-of-electricity-by-2030-no aa-director-says/

      When the price of storage drops we can replace the natural gas and nuclear with less expensive stored renewable power.

      We’ve already got the nuclear and hydro. As the nuclear plants wear out we can replace them with storage.

  • Bob_Wallace

    This 26 to 30 coal plants that might be priced out of service, are any part of the ~100 plants listed for early closure due to high emission levels?

    Or it this another couple dozen on top of that number?

  • jimmydimmy

    If only geothermal could harness its potential, West Virginia geothermal would wipe out coal, nuclear, oil and methane. Whats the status on Google’s deployment of more geothermal?

    • Bob_Wallace

      The chore right now is developing the gear to drill the holes that hot rock/enhanced geothermal needs. Drill rigs built for oil/gas wells aren’t up to the job. Geothermal needs larger diameter holes.

      There are at least four distinctly different technologies being tested, no winner has yet emerged.

      Then there’s work to do to figure out how to best fracture the rock to allow water to flow in and steam to flow out.

    • http://cleantechnica.com/ Zachary Shahan

      I’ve been thinking/wondering the same — no news.

  • anderlan

    I think you mean that wind increased to 11.5 TERA Watt-hours (TWh), not GigaWatt-hours (GWh). The almost tenfold increase in solar from 5.7 to 55.7GWh is still spectacular news.

Back to Top ↑