Think the U.S. electric grid is immune to blackouts? Think again. The PJM interconnection just reported insufficient supply of new renewable technology to meet demand as the region which consists of 13 eastern states and the District of Columbia expects to retire 21 percent of its existing generating capacity through 2030. That is, fossil-fuel power plants are retiring much faster than renewable sources are being developed, which could lead to energy “imbalances” –shortages and blackouts. Further, renewable sources—largely wind and solar power—are unreliable as the sun must shine and the wind must blow, which means they are operating at only a fraction of their capacity.
About 94 percent of the 290 gigawatts power supply vying to connect to PJM’s grid is made up of renewables and storage projects. PJM’s reserve margin, the measure of spare power supplies versus peak demand, is expected to fall from 26 percent this year to 15 percent in 2030, if not lower, according to PJM’s report. The lopsided energy transition is resulting mainly from Biden’s energy policies and state mandates driving fossil fuel generation to shut down as renewable and storage projects are being developed. These are policy choices by political leaders and utilities are responding as directed.
PJM typically generates a surplus of power because of its current large fossil-fuel generating fleet, which it exports to neighboring grids in the Midwest and Northeast that helped to keep lights on when wind power plunged in the Midwest and central states recently. So, PJM’s reduction in its power reserves as 40,000 megawatts of coal and natural-gas plants retire by 2030 will affect more of the nation than just the 65 million consumers in its immediate territory.
PJM’s “low entry scenario” adds just over 15,000 megawatts of renewable capacity by 2030. Under its high entry scenario, capacity additions through 2030 would be twice that at 30,000 megawatts, but still short of making up for retired capacity, particularly when wind and solar generate at a level half or less of that of the retiring fossil fuel plants. According to the PJM report, the historical rate of completion for renewable projects is approximately 5 percent, in part because of permitting challenges.
For 2022, the renewable industry installed 25.1 gigawatts of capacity across the United States, representing a $35 billion capital investment. Renewable installations in 2022 were down 16 percent from the record set in 2021 and down 12 percent from 2020 installations. The industry faced a number of issues that slowed project development in 2022, including supply chain constraints, lengthy delays connecting projects to the grid, unclear trade restrictions, permitting obstacles and uncertainty over implementation of the lucrative provisions of the Inflation Reduction Act.
While renewable capacity additions are slow, climate policies of all kinds are accelerating fossil fuel retirements. Most projected power-plant retirements are “policy-driven” due to the steep costs of complying with Environmental Protection Agency regulations, utility-company ESG (environmental, social and governance) commitments, state renewable mandates, and the Inflation Reduction Act, which provides huge subsidies for wind, solar and batteries. EPA’s proposed “good neighbor rule” to be finalized soon is expected to force about 10,500 megawatts of fossil-fuel generation to shut down. ESG commitments are forcing coal plants to close. Illinois and New Jersey climate policies could close 8,900 megawatts. The PJM report separates expectations for future “policy-driven” closures from those retirements already planned. A reader, however, may assume a large percentage of the current planned closures were induced by other government policies previously promulgated.
PJM’s report follows multiple warnings from regulators at the North American Electric Reliability Corporation (NERC) that utilities, lawmakers, and grid operators need to better manage the pace of retirements or else risk more of the blackouts seen during recent weather events. According to NERC, retiring those resources without having replacements further threatens grid reliability, particularly as demand is growing. Demand for electric power is increasing due to the growth in data centers and the government’s push for the electrification of vehicles, heating and everything else. This push for increasing electrical demand is stressing the system, as there are not enough electricians to carry out the new government policies.
Other Pending Shortages
According to NERC, the Midcontinent Independent System Operator (MISO) expects a 1,300-megawatt shortfall this summer, having retired 5,900 megawatts of coal-fired and natural gas capacity since 2021. Based on announced retirements, MISO is projected to close nearly 60 percent of its installed coal capacity by 2030, according to America’s Power that has been warning utilities and relevant authorities to keep coal capacity online.
While nuclear plants do not produce greenhouse gas emissions, they have also been economically uncompetitive in some markets, leading to retirements. Increasing intermittent supplies of renewable energy which are granted first access to supplying electricity markets has meant that nuclear units are becoming increasingly called upon as backup sources, when they operate most efficiently as baseload, continuous sources. Since 2016, at least seven reactors totaling more than five gigawatts have been retired.
Conclusion
PJM’s report is a warning not only to PJM customers but to U.S. electric consumers as a power shortage at PJM has the potential to cascade across much of the United States. The United States faces a major electric supply challenge as power companies retire coal and natural gas-fired plants for policy and economic reasons, such as reducing maintenance and regulatory compliance costs or cutting greenhouse gas emissions.
In their place, utilities are building renewable units, particularly wind and solar power that cannot replace the reliable capacity retiring as Europe has found out this past winter when there was no wind to keep power flowing. It is clear that the green-energy transition is incompatible with a growing economy and improving living standards, and this becomes even clearer as the percentage of renewables increases in the market. Renewables do not provide reliable power 24 hours a day, 365 days a year, and shutting down coal, natural gas and nuclear plants will likely result in future outages.
