PJM gas capacity exceeds coal for first time

OREANDA-NEWS. June 03, 2015. Natural gas has edged out coal as the fuel with the most installed generating capacity in the PJM Interconnection for the first time.

The installed capacity from gas generators in PJM totaled 54,600MW in May, about 7pc more than the 50,900MW of installed capacity that came from coal. That marks a substantial reversal from last year, when coal had 12pc more installed capacity than gas.

Installed capacity refers to the nameplate summer capacity of a resource that can be delivered onto the grid. Coal is losing share to gas in PJM, the largest US electric grid, and other parts of the country amid a wave of retirements at plants not being retrofitted to comply with new Environmental Protection Agency emissions rules, namely the mercury and air toxics standards that took effect in April.

Another factor has been competition from low natural gas prices and renewables. A number of coal plants retired before the 1 June start of PJM's 2015-16 capacity year, chief executive Terry Boston said last week.

Coal and nuclear continue to produce the vast majority of PJM's energy. Coal plants generated 43.5pc of the grid's energy last year, trailed by nuclear with 34.3pc. Gas plants only provided 17.3pc of total energy, as about half of installed gas capacity comes from peaking plants that only run when demand spikes.

But the growing dependence on natural gas to meet peak demand has grid officials taking a closer look at whether the just-in-time delivery of the fuel could pose reliability risks, particularly in winter when pipelines are constrained. In response, PJM has proposed an overhaul to its capacity market to penalize generators that fail to perform during high demand, creating an incentive for generators to have a firm fuel supply.

Gas also holds a slight edge over coal in PJM's capacity market that will rise over the next two years. Gas generators now account for 32pc of the grid's committed capacity, slightly more than the 29pc provided by coal. By the 2017-18 delivery year, 37pc of committed capacity will come from gas, with just 27pc coming from coal.