Fossil Fuel Fearmongering at PJM Threatens to Waste Millions and Delay Renewables by Years
Gas power plant developers are searching for ways to salvage their investments in unneeded power plants. Their last attempt at this was thwarted, but they’re trying again.
For years, it’s been an open secret that PJM’s overestimates of how much power they need has driven a bubble in natural gas power plant investment. PJM’s markets have corrected and, just as when any speculative bubble pops, prices are dropping.
This shift leaves gas power plant developers searching for ways to salvage their investments in unneeded power plants. Their last attempt at this was thwarted, but they’re trying again. Their new scheme to manipulate market rules and force renewables out starts with spreading lies about imminent blackouts.
Generation needs transmission—after all, if power can’t get where it’s needed, it’s worthless. For traditional generation, planning this is straightforward: A traditional power plant needs enough transmission to deliver its full output. For renewables, things are more complicated. Since renewables produce varying amounts of power at different times, reserving enough transmission to cover their maximum output would result in expensive transmission lines sitting idle most of the time.
For years, PJM—the grid operator for a large swath of the Midwest and East—has used a simple rule of thumb to plan transmission for renewables. With lots more solar and wind coming on line, those rules needed to get more precise. PJM’s engineers concluded that renewables would need more transmission than they used to, but there’s actually enough spare transmission capacity to support what’s already been built. While those changes will increase the cost of building new renewables, they’re a vital part of ensuring reliability through the energy transition, and we’ve supported them.
This is where the gas industry came in. They’ve woven a fiction that the old transmission rules somehow created an immediate reliability risk, and the only way to fix it is to downrate all the existing renewables and force them to wait years for new transmission. And, no surprise, PJM would have to contract with more gas-fired plants to make up for all this lost renewable capacity. Let’s be absolutely clear: There is no reliability risk. PJM has studied this over and over and confirmed there’s no problem. PJM’s board reviewed and dismissed the gas owners’ complaints. The Federal Energy Regulatory Commission (FERC) considered and rejected the same complaint.
PJM is working to correct an old mistake in the assumptions about how to plan the power grid to handle renewables. The problem was caught in time, and the transmission system has enough spare capability to handle existing clean resources, even under the new rules. PJM has historically made comparable changes when traditional power plants were in similar situations: Plants already in operation were given additional transmission to comply with new requirements. But attempts by gas to hijack this policymaking to box out renewables and lock in their increasingly uncompetitive assets threatens much-needed progress in PJM’s energy transition.
So why are they doing this? The obvious answer is money. The gas industry’s demands amount to forcing perfectly good renewable resources and transmission to sit idle so consumers have to pay more gas plants to make up the difference. PJM estimates that this would cost ratepayers anywhere from $695 million to $1.1 billion over the next five years—hundreds of millions of dollars that will go straight to supporting private gas companies’ bad investments. Trying to convince regulators to put up false barriers is a classic anti-competitive strategy. PJM and FERC should not be fooled.
But there’s something even worse happening here. For all their flaws, regional transmission organization (RTO) discussions are usually fact-based and end with decisions that reflect engineering reality. But on this issue, we’re seeing a prolonged disinformation campaign that goes way beyond anything I’ve seen in my 14 years in the industry. Discussions are nearly a year behind schedule, largely because gas industry representatives constantly derail conversations to repeat discredited talking points. They’ve sent multiple people to the same meeting to hold staged “dialogues” without identifying that they’re working for the same organization. The behavior is so egregious that it’s hard not to speculate they’re playing for some external audience—after all, there seems to be a cottage industry making false claims about the need for fossil fuel and the reliability of renewable energy.
This is as dangerous as it is unnecessary. There’s enough spare capability on the transmission system now for nearly all existing renewables to meet the new standards without any construction. Those renewables would have gotten that capability for free if they’d been allowed to request it, so it’s just and reasonable to give it to them now. Moreover, allowing this kind of manipulation opens our power grid to becoming a tool of political patronage. If we let ideological grandstanding defeat rational discussion, we kick out one of the foundations that keep our electricity reliable. Letting our power grid be run by rooms full of people shouting over each other is a recipe for disaster.
The gas power plant owners behind this should do the right thing, face the consequences of their investment decisions, and go back to being good citizens of the electricity world. Failing that, both their tactics and their lies should be soundly rejected by FERC, PJM, and PJM’s stakeholders.