Unexpectedly low pricing in the Mid-Atlantic grid system was good news for renewables and bad news for certain nuclear plants. That makes for an ambivalent outlook for carbon emissions.
PJM operates the transmission grid spanning 13 states from the Mid-Atlantic to Illinois. It just held capacity auctions to ensure sufficient electricity supply for its 65 million constituents, resulting in considerably lower prices than the previous auction, Jeff reports.
That's good news for:
- The customers who ultimately bear the costs.
- Renewables, which expanded market share in spite of a Trump-era rule that many observers thought would hobble the competitiveness of clean power plants that benefitted from state support.
- Nuclear plants overall, as they cleared more than in the previous auction, despite the lower prices this year.
The surprisingly low prices were bad for:
- Coal plants, which lost market share, unsurprisingly.
- The Byron and Dresden nuclear plants owned by power producer Exelon, which failed to clear the auction. Exelon said it would shutter them by year's end if it doesn't get money from Illinois to keep them open.
The loss of existing nuclear plants reduces the country's carbon-free power fleet at a time when climate policy calls for rapidly expanding it. But the nuclear plants in PJM run a gamut of competitiveness.
Exelon says Byron and Dresden need subsidies to the tune of hundreds of millions of dollars over the next few years. Other Exelon nuclear plants cleared the auction, but the company may shut them down in 2023 “due to unfavorable market rules.”
And then there were all the other nuclear plants that were able to bid competitively and win, signaling they could operate with leaner margins than the previous auction suggested.
If, as the saying goes, only a poor craftsman blames his tools, what's a market participant that blames poor performance on market rules?
But there is complexity in how the PJM market overlays state policies. States' clean energy policies typically help renewables without recognizing the carbon-free quality of nuclear. A federal carbon tax, on the other hand, would support any carbon-free power plants relative to the carboniferous competition.
But when states do throw nuclear a bone, as Illinois did, it means shifting the public's cash to massive, profitable utilities, to support plants built decades ago.
And sometimes those same utilities wind up paying $200 million to settle federal bribery charges related to allegedly influencing the legislatures that decide on nuclear handouts.
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