Coal capacity took a big hit in the first quarter in PJM

Both coal and natural gas decreased in price in the first quarter of 2012 in the PJM region, although the decline in gas prices was substantially larger than the decline in coal prices, said a May 17 report, “2012 Quarterly State of the Market Report for PJM: January through March.”

The report, prepared by Monitoring Analytics LLC, the Independent Market Monitor for PJM, was filed at FERC.

“The results of the market dynamics in the first quarter of 2012 continued to be generally positive for new combined cycle gas units,” said the report. “The result of the continued decline in gas prices compared to coal prices was that the fuel cost of a new entrant combined cycle unit fell below the fuel cost of a new entrant coal plant in the first quarter of 2012. New entrant combined cycle net revenues were higher in about half the zones in the first quarter of 2012. The results of the market dynamics in the first quarter of 2012 continued to be generally negative for coal fired units. Net revenues declined for coal units in every zone in the first quarter of 2012.”

PJM Interconnection LLC operates a centrally-dispatched, competitive wholesale power market that, as of March 31, had installed generating capacity of 184,981 MW and more than 750 market buyers, sellers and traders of electricity in a region including all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

In the first quarter of this year, coal units provided 39.9%, nuclear units 36.3% and gas units 19% of total generation in the region. Compared to the year-ago quarter, generation from coal units decreased 11.6%, generation from nuclear units increased 8.3%, generation from natural gas units increased 66% and generation from oil units increased 54.2%.

Combined cycle units ran more often in the first quarter than in the same period in 2011, increasing from a 41.1% capacity factor in 2011 to a 63% capacity factor in 2012. Combined cycle units had a higher capacity factor than steam units, for which the capacity factor decreased from 51.8% in 2011 to 39.8% in the first quarter of this year. “Due to inexpensive natural gas, this trend may continue, as efficient combined cycle units replace coal steam units in the PJM footprint,” the report said.

Compared to the first quarter of 2011, generation from coal units decreased 11.6% and generation from natural gas units increased 66%. “If the impact of the increased coal from the newly integrated ATSI [American Transmission System] and DEOK [Duke Energy Ohio and Kentucky]zones is eliminated, generation from coal units decreased 25% in the first quarter of 2012 compared to the first quarter of 2011,” the report noted. 

Emissions controls in place on a lot of capacity, but more needed

In assessing environmental factors for coal plants in PJM, the report noted that coal and heavy oil have the highest SO2 emission rates, while natural gas and light oil have low to negligible SO2 emission rates. Many coal steam units in PJM have installed FGD (flue-gas desulfurization) technology to reduce SO2 emissions from coal steam units. Of the current 84,019.7 MW of coal steam capacity in PJM, 54,210.2 MW of capacity, 64.5%, has some form of FGD technology.

NOx-control technology is used by nearly all fossil fuel unit types. Coal steam, combined cycle, combustion turbine, and non-coal steam units in PJM have NOx controls. Of current fossil fuel units in PJM, 136,686.5 MW, or 89.8%, of 152,235.5 MW of capacity in PJM, have emission controls for NOx. While most units in PJM have NOx emission controls, many of these controls will need to be upgraded in order to meet forthcoming emission compliance standards. Future NOx compliance standards will require selective catalytic reduction (SCR) or selective non-catalytic reduction (SCNR) for coal steam units, as well as SCRs or water injection technology for HEDD combustion turbine units.

Coal units in PJM generally have particulate controls. Typically, electrostatic precipitators (ESP) or baghouses are used. In PJM, 81,754.7 MW, or 97.3%, of all coal steam unit MW, have some type of particulate emissions control. Most coal steam units in PJM have particulate controls in the form of ESPs, but many of these controls will need to be upgraded in order to meet forthcoming emission standards. Future EPA particulate standards will require baghouse technology or a combination of FGD and SCR, which many coal steam units have not installed, the report pointed out.

Lots of power plant retirements are in the queue

“A potentially significant change in the distribution of unit types within the PJM footprint is likely as a combined result of the location of generation resources in the queue and the location of units likely to retire,” the report said. “In both the EMAAC and SWMAAC LDAs, the capacity mix is likely to shift to more natural gas-fired combined cycle (CC) and combustion turbine (CT) capacity. The western part of the PJM footprint is also likely to see a shift to more natural gas-fired capacity due to changes in environmental regulations and natural gas costs, but likely will maintain a larger amount of coal steam capacity than eastern zones.”

A total of 955 MW of PJM capacity was retired in the first quarter, including 440 MW from American Electric Power (NYSE: AEP) and 515 MW from Edison International (NYSE: EIX), the report said. “The retirements were 955.0 MW of coal steam generation. Of these retirements, 440.0 MW were in the AEP zone, and 515.0 MW were in the ComEd zone.”

There is 16,547.7 MW of PJM capacity in the planning stages for deactivation by the end of calendar year 2019. Units planned for retirement in 2012 make up 6,012 MW, or 36% of all planned retirements. Of planned deactivations in 2012, about 2,185 MW, or 36.3% are located in the ATSI zone. Overall, 3,951.1 MW, or 23.8% of all retirements, are expected in the AEP zone. A total of 1,322.3 MW was retired in 2011, and a total of 955 MW retired in the first quarter of this year. It is expected that a total of 18,824.7 MW will have retired by 2019, with most of this capacity retiring by the end of 2015.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.