Coal Zoom | Missing the Heart of the Story

Missing the Heart of the Story

March 20, 2024 - Over the past few weeks, both The Washington Post and The New York Times have discovered the sudden reemergence of soaring electricity demand and its collision with the nation’s teetering supply of power.

The Post feature, which ran on the front page the morning of the State of the Union, was dramatically titled, “Amid explosive demand, America is running out of power.”

Both articles dug into the outsized role of data centers and AI, alongside electrification and ballooning investment in domestic manufacturing, in driving new demand. And both pieces warned that the nation’s supply of electricity is unlikely to keep pace.

But these features completely missed the heart of the story on why the nation is rapidly approaching an electricity shortfall.

As NMA’s president and CEO Rich Nolan explained in a letter to the editor to The Post, failing to cover the rapid loss of the nation’s coal fleet due to regulatory pressure was a glaring omission.

As he pointed out, The North American Electric Reliability Corp. (NERC), which oversees the reliability of the nation’s grid, warned in December of blackout risks for most of the country over the next decade. The leading cause is the collision of rising demand along with the rapid loss of 83 gigawatts of existing baseload power plants, power plants capable of generating electricity to power 60 million homes.

NERC specifically warned against environmental regulations and energy policies “that are overly rigid” and jeopardize “the orderly transition of the resource mix.”

PJM is Case in Point

The unwillingness to cover the threat posed by the EPA’s regulatory onslaught isn’t exactly surprising but boy does it miss the elephant in the room.

While grid operators and reliability regulators are certainly concerned by soaring demand, it’s the loss of dispatchable capacity they’ve singled out as the key threat to the nation’s ability to keep the lights on.

Manu Asthana, President & CEO of PJM Interconnection, the nation’s largest electricity market serving 65 million Americans, testified to Congress last year that, “we will need to slow down the retirement or restriction of existing generation until replacement capacity is deployed… frankly, we see this as the single largest risk in the energy transition.”

And he has very good reason to be deeply concerned. As alarming as NERC’s projection of 83 GW of lost capacity is, it’s almost certainly a significant undercount.

PJM, alone, projected last year it will lose 40 GW of generating capacity by 2030 – 21% of the market’s existing capacity – with only 31 GW of additions in the same period. And just last week’s PJM’s Independent Market Monitor (IMM), PJM’s watchdog, forecast that projection to be far too conservative.

The IMM warned that PJM risks losing nearly 58 GW in mostly fossil fuel power-generating capacity before 2030 from a combination of regulatory pressure and falling market prices eroding the competitiveness of essential dispatchable capacity. Any way you do the numbers, even in the best scenario if those planned additions materialize, they’re operating at a deficit.

Where exactly that replacement capacity will come from is a deeply troubling question. As the IMM report noted, PJM’s queue of 200-plus GW of renewable additions is likely to only add 30 GW of new connections based on historical completion rates. And of those 30 GW, only 11 GW are expected to be capacity resources that can be counted on to meet peak demand. New natural gas additions are also no cure-all for the projected power supply shortage.

A massive ramp up in new gas generating capacity would require significant new firm gas pipeline capacity. And as the IMM observed, “given current constraints on the gas pipeline system, the potential sources of the firm gas supply required to replace potential retirements are not clear.” If the alleged purpose of all of these efforts is to decrease reliance on fossil fuels and transition to renewables, the logic behind shuttering well operating fossil fuel plants to replace them with new fossil fuel plants is hazy, at best.

The rapidly approaching capacity crisis in PJM is indicative of challenges emerging across the country. The energy transition is being woefully mismanaged with no single agenda more concerning than EPA’s regulatory onslaught.

As Rich Nolan concluded in his letter to The Post, “our current energy policy trajectory has us barreling toward an utterly avoidable and unnecessary electricity crisis. Americans deserve to know exactly what decisions are causing it.”