Recently, the Federal Energy Regulatory Commission (FERC) convened a two-day technical conference to discuss resource adequacy issues facing grid operators. The conference examined challenges facing the capacity market for PJM Interconnection, the largest grid operator in the country. Last summer, PJM’s capacity auction saw an unprecedented spike in prices from roughly $29/MW-day to approximately $270/MW-day due largely to the growth in energy demand for data centers.
Michelle Bloodworth, President and CEO of America’s Power, spoke at the conference and highlighted steps that could be taken to ensure adequate capacity moving forward. Bloodworth pointed out that more than 100 coal-fired generating units, enough to power about 1,000 hyperscale data centers, are set to retire in the next five years alone. “We need to stop retiring [coal] units, and keep what we have,” she emphasized. Furthermore, a significant portion of planned coal retirements – more than 70 percent – are located in regions of the country that are at risk of electricity shortages over the next five years.
Federal regulations are largely responsible for many of these impending coal retirements. These regulations have made many coal plants too expensive to operate. Bloodworth thanked President Trump and his administration for recognizing the impending reliability crisis and declaring a national energy emergency.
Coal’s attributes as a dependable, dispatchable electricity resource make it uniquely suited to meet electricity demands during extreme weather events. Bloodworth reminded attendees of the important role coal played during last winter’s Polar Vortex. “Coal saved consumers and PJM upwards of $1.4 billion over four days,” she said, after natural gas prices spiked due to the heavy demand during the storm.
During the conference, Bloodworth also spoke about the other challenges facing coal-fired electricity generators, including agreements that generators have made with environmental groups to accelerate the shutdown of coal plants. “These accelerated retirements are in direct conflict with the need for more, not fewer, electricity resources,” she said. America’s Power is calling on FERC to open an investigation into these agreements which have given control over America’s power supply to professional environmentalist groups in violation of the Federal Power Act.
Among speakers at the conference, there was an emerging consensus that more must be done to preserve existing electricity sources like coal-fired power plants. “We’re still going to need more [electricity] to meet data center growth. If we lose the resources we have, the hole gets even deeper to dig out of,” said PJM’s Vice President of Market Design and Economics Adam Keech.
Panelists also shared ideas on how to improve the electricity market. Denis Foster Cronin, Vice President of Federal and RTO Regulatory Affairs for the East Kentucky Power Cooperative, raised concerns that many load serving entities (LSEs) may be over reliant on the capacity market. “The RPM Capacity Market was intended to secure the residual needs of the region and not be sole means through which LSE obligations were satisfied. Today, however, it appears that the RPM Capacity Market is being relied upon to meet more than residual needs … We believe that LSEs should be incentivized to develop a resource portfolio of some measure rather than, in the extreme, be permitted to bring no resources into the market to serve their load obligation,” she said.
The FERC conference successfully highlighted the challenges ahead. Now it will be incumbent on the agency, regulators, policymakers, and industry decisionmakers to take the steps necessary to preserve America’s coal fleet and ensure access to reliable electricity.